Case: Assessing Authority, Patiala District Patiala Andors Vs. M/S. Patiala Biscuits Mfg. Co. Now As Dalmiabiscuit Pvt. Lt

2. M/s. Patiala Biscuits Manufacturers Pvt. Ltd. (hereinafter referred to as the assessees) appointed M/s. Rajpura Biscuit Company as their sole selling agents. The agents made an application on January 1, 1966 in the appropriate form for registration as a dealer under the Punjab General Sales Tax Act, 1948 (hereinafter called the Act). On the same day, the agents (referred hereafter as the purchasing dealer) made a similar application for obtaining registration certificate under the Central Sales Tax Act. The appropriate Assessing Authority accepted both these application and on March 27, 1966 issued the registration Certificate with effect from January 1, 19663. The assessee filed their return for the quarter ending March 31, 1966 in April, 1966 and claimed deductions under Section 5(2) (a) (ii) in respect of sales of the value of Rs. 32, 56, 267-35 made by them between January 1, 1966 to March 31, 1966 to the purchasing dealer. The Assessing Authority Patiala rejected this claim and assessed tax, amounting to Rs. 1, 99, 558.94, on the proceeds of the sales made by the assessee to the purchasing dealer between January 1, 1966 and March 27, 1966. The reason given by the Assessing Authority for refusing this relief to the assessees was that during this period the purchasing dealer was not in possession of the registration certificate, the same having been issued only on March 27, 19664. The assessee impugned the validity of this order of the Assessing Authority by a writ petition in the High Court, under Articles 226/227 of the Constitution. The High Court held that since the certificate of registration had been granted with effect from January 1, 1966, which was the date of the application, it could not be said that the sales during this period commencing from January 1, 1966, were made to an unregistered dealer. It further noted that apart from the assessees, the purchasing dealer had also, been taxed with regards to the same transactions resulting in double taxation which was against the basic scheme of the Act, the Rules and the Notifications issued thereunder.On these premises, the High Court allowed the writ petition and quashed the impugned order to the extent to which it was contrary to Section 5(2) (a)(ii) of the Act in respect of sales made between January 1, 1966 and March 27, 1966 : The High Court however granted a certificate under Article 133 (1)(a) and (c) of the Constitution, on the basis of which the Revenue has come in appeal to this Court.

Reasoning: 14. Taking the last point first we are of opinion that the amendment of Rule 5 by the Punjab Government Notification, dated October 10, 1966, did not confer any new or additional power on the registering Authority. The power to grant the registration Certificate with effect from the date of the application was already there. The amendment was only clarificatory of the law as it stood prior to it. It only made explicit which was formerly implicit. A definite indication is available in the language of sub-section (5) read with sub-sections (2) and (3) of Section 7, itself, that the registering Authority had the power to give effect to the registration from the date of making the application15. As regards the requirement enjoined by the Forms prescribed under Rule 26, to enter the number of the registration certificate in the declaration of the purchasing dealer at the time of sale, the same has to be viewed with reasonable flexibility and reconciled with Rule 5 as clarified by the Notification, dated October 10, 1966. Thus construed harmoniously with the related statutory provisions, the requirement of Rule 26 will be substantially, satisfied, if the number of the registration certificate, granted subsequently, but covering retrospectively the period of the sales in respect of which deduction is claimed is supplied by the claimant along with the declaration of the purchasing dealer at the time of assessment to the Assessing Authority17. It is thus clear as daylight that at the relevant time, also, the registering Authority was fully competent to issue the registration certificate to the dealer with retrospective effect from the date of filing the application. A perusal of the registration certificate would show that it was, in terms, made effective from January 1, 1966. This is manifest from the words "the dealer is liable to pay tax w.e.f. January 1, 1966" used by the Authority, prominently, in the heading of the Certificate18. It necessarily follows therefore, that during the period from January 1, 1966 to March 27, 1966, also the purchasing dealer was a registered dealer possessing a registration Certificate within the contemplation of Section 7(1) of the Act. This being the correct position, the assessees were entitled to the deduction under Section 5(2) (a) (ii) of the Act in respect of the sales made by them to the purchasing dealer during the whole of the quarter ending March 31, 1966. The High Court was therefore, right in determining the question posed, in favour of the assessees and against the Revenue.