Case: Kedarnath Jute Manufacturing Co. Ltd Vs. The Commercial Tax Officer, Calcutta &amp; Others

2. The material facts are as follows: The appellant is a public limited company registered as a dealer under the Act, having its registered place of business at Calcutta. In respect of the accounting year ending with 31st December, 1954, in the return for the year the assessee had shown its gross turnover at Rs.70,99,928-10-0 and claimed exemption under two heads, namely, (i) under S.5(2)(a)(i) of the Act Rs. 1,33,730-6-6; and (ii) under S. 5(2)(a)(ii) thereof Rs. 69,65,979-9-6. After deducting the said amounts from the gross turnover the assessee showed its taxable turnover at Rs. 218-9-0 and deposited the tax of Rs. 9-12-6 on the said amount in the treasury. The Commercial Tax Officer by notice dated April 22, 1955, fixed August 4, 1955, for hearing the assessee in respect of its return. Under S. 5 (2) (a) (ii), the appellant in order to claim exemption thereunder had to furnish declaration forms duly filled in and signed by registered dealers to whom the goods were sold by it. After taking some adjournments of the enquiry it appears that in the second week of January 1957 the assessee found that its file containing 147 declaration forms received from its dealers in respect of the goods received from it was missing. The assessee, it is said, made various attempts to get duplicate forms of declaration from the dealers, but on account of circumstances over which it had no control and because of the unhelpful and hostile attitude of the Commercial Tax Officer within whose jurisdiction the said dealers functioned, it was not able to furnish the duplicate forms for all the declarations that were lost. On August 8, 1957, the summoning the dealers to produce the necessary documents in order to prove that they had issued the declaration forms to him, but the said officer did not issue the requisite summons to the parties concerned. The assessee then filed an application to the Commissioner of Commercial Taxes, West Bengal, for directions to issue duplicate declaration forms, but that application was rejected. The revision filed to the Revenue Board was also dismissed. On November 21, 1957, the Commercial Tax Officer made an order of assessment disallowing the assessees claim for exemption in respect of the said sales made to the purchasing registered dealers amounting to Rs.22,46,00-0-6 and levied on it additional tax of Rs.1,49,778-4-6. The assessee thereafter filed a petition under Art. 226 of the Constitution in the High Court of Calcutta for issuing an order directing the respondents, i.e., the Commercial Tax Officer and the Commissioner of Commercial Taxes, West Bengal, not to implement the said assessment order. The said application came up, at the first instance, before Sihna, J., who dismissed the same. On appeal a Division Bench of the said High Court confirmed the order of Sinha, J. Hence the present appeal.

Court's reasoning:
9. Sub-rules (3) and (4) of R.27A are not helpful to the appellant. They provide only safeguards against abuse of the declaration forms by the purchasing dealers; they do not enable the selling dealer to either directly apply or to compel the purchasing dealers to apply for duplicate forms; nor do they enjoin the appropriate authority to give the selling dealer a duplicate form to replace the lost one. We realise that the section and the rules as they stand may conceivably cause unmerited hardship to an honest dealer. He may have lost the declaration forms by a pure accident, such as fire, theft, etc., and yet he will be penalised for something for which he is not responsible. But it is for the Legislature or for the rule-making authority to intervene to soften rigour of the provisions and it is not for this Court to do so where the provisions are clear and unambiguous10. There is an understandable reason for the stringency of the provisions. The object of S. 5 (2) (a) (ii) of the Act and the rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the two fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a declaration form in the manner prescribed under the section. The liberal construction suggested will facilities the commission of fraud and introduce administrative inconveniences, both of which the provision of the said clause seek to avoid11. The decision of this Court in State of Orissa v. M. A. Tulloch and Co. Ltd., (1964) 15 STC 641 (SC), does not help the appellant. That decision was concerned with S. 5 (2) (a) (ii) of the Orissa Sales Tax Act, 1947. That section was similar in terms to S. 5 (2) (a) (ii) of the Act in question, but there was no proviso to that section in the Orissa Act similar to the one found in the present section. That makes all the difference, for it is the proviso that imposes the condition. But under R. 27 (2) made under the Orissa Act "a dealer shall produce a true declaration in writing by the purchasing dealer or by such responsible person as may be authorised in writing in this behalf by such dealer that the goods in question are specified in the purchasing dealers certificate of registration as being required for resale by him or in the execution of any contract." This Court held that the said mandatory provision was inconsistent with S. 5 (2) (a) (ii) of the Orissa Sales Tax Act, and to avoid that conflict it reconciled both the provisions by holding that the rule was only directory and, therefore, it would be enough it was substantially complied with. The said provisions may afford a guide for amending the relevant provisions of the Act and the rules made thereunder, but do not furnish any help for construing them.