Commr of Commercial Taxes and Others vs Jugal Kishore Sadani and Others

M.M. Dutt, J.—These two appeals have been preferred by the appellants, who are the Commissioner of Commercial Texas, the Commercial Tax Officer, Bhowanlpur Charge and the State of West Bengal against two orders of D. K Sen J. one dated December 22, 1981 allowing the amendment of the writ petition and the other dated March 26, 1982 allowing the writ petition itself. The writ petitioner, Jugal Kishore Sadani, who Is the respondent No. 1 In these appeals has been carrying on the business of watches and spare parts under the name and style of "Sadani Watch Co." at 14. Radha Bazar Street, Calcutta since 1978. The petitioner has been acting as an agent and or a distributor of watches of the respondent no 2, the Hindusthan Machine Tools Limited, a Central Government Company (hereinafter referred to as H M.T) In the usual course of business, the petitioner used to place orders on HMT for supply of watches and, along with the orders, used to issue blank declaration forms duly signed by the petitioner. H.M.T. used to accept the orders and keep such declaration forms with them. After the delivery was effected against such an order, the petitioner would be called upon by the H M T. to make entries In the declaration form, on the reverse thereof, of the particulars of watches supplied by HMT, After the entries were made, the petitioner and the representative of H.M.T. would countersign the declaration form. In 1980 81 the petitioner. In the usual course of business pieced certain orders on H M T. along with declaration forms, the particulars of which are as follows :

(a) Order No 1980 81/HMT/105 dated 1 8.1980 for twenty thousand pieces of watch to be supplied In August. September and October, 1980 along with the declaration form No. E/l 367531 signed by the petitioner.

(b) Order No. 1980 81/HMT/106 dated 1712 1980 for ten thousand pieces of watch to be supplied in December 1980 and January 1981, with declaration form No. A/1-367563.

(c) Order No. 1980 81/HMT/107 dated 2. 2. 1981 for forty thousand pieces of watch to be supplied In February and March 1981, with declaration form No. A/1 367564.

(d) Order No. 1980-81 /HMT/1 dated 17. 4.1981 for supply of one lakh pieces of watch to be supplied between 17. 4.1981 and 31. 3 1982 with declaration form No E/1 -367565.

The said declaration forms (Form XXIV) are required to be produced by a dealer before the Commercial Tax Officer under rule 27A(1) of the Bengal Sales Tax Rules, 1941, hereinafter referred to as the Rules, for the purpose of claiming the benefit of lower rate of tax.

Against the first order dated August 1, 1980 far twenty thousand pieces et watch, the petitioner received the supply of a total quantity of 9,883 pieces of watch between August 1980 and October 1980. In November 1b80, a further supply of 4.000 pieces of watch was made by H. M. T, According to the petitioner, although the aid supply of 4,000 pieces of watch was covered by the declaration form No. E/ 1-367561, H. M. T. insisted on the submission of a fresh declaration form and payment of 15% of sales tax against each transaction. Alter various negotiations between the petitioner and H. M. T" the petitioner had to pay 15% of sales tax. It is the case of the petitioner that in or about November 1980, the appellants searched the office of the petitioner and in course of such search seized certain documents of the petitioner. In view of such seizure, the petitioner could not fill up the declaration form by making an entry in the tame the exact figure of the supply effectted by H. M, T. In the month of November 1980. It appears that there was a dispute between the petitioner end H, M. T, over the supply of watches. The last supply that was made by H. M. T. to the petitioner was 4,000 pieces of watch In April and May 1981 end, thereafter, no supply was affected by H. M. T. alleging that the petitioner had not deposited the sales tax dues for the month of November 1980. and that the said four incomplete declaration forms had not been regularised by the petitioner in spite of repeated requests. The said allegations were denied by the petitioner and it was stated by him that at ell material time- he was ready and willing to make necessary endorsements en the reverse of the said declaration forms As H.M.T. refused to make any further supply, the petitioner filed a writ petition in this Court against HMT. In the writ petition, the appellants were impleaded as parties respondents. The petitioner, inter alia, prayed for the issue of a writ In the nature of a Mandamus commanding HMT to effect supplies to the petitioner as per the order of the petitioner dated April 17, 1981 and to allow the petitioner to make necessary endorsements on the reverse of the blank declaration forms submitted be him being the said declaration forms Nos. E/1 36751, E/1-367563 and E/1 -367564 and to countersign the same. No relief was, however, claimed against the appellants Including the State of West Bengal and the Sales Tax Authorities,

On the said writ petition, ne Rule Nisi was issued, but copies of the same were served on the respondents thereto including the appellants and HMT. The appellants and HMT entered appearance in the proceeding and filed affidavits-In-opposition. In the affidavit in-opposition filed by HMT It has been stated that the said four declaration forms were duly Issued by the Sales Tax Authorities to the petitioner and the petitioner in his turn gave those to HMT against orders placed by him. It has been averred that the said declaration forma could not be utilised by any one other than HMT. Further, it has been stated that the normal practice was that alter the transactions were completed, the petitioner would came to the office of HMT and make endorsements on the reverse of the declaration forms In respect of transactions covered by the same and, if the signatures of the petitioner were not there, he would put his signatures.

In the affidavit-in-opposition filed en behalf of the appellants (respondents nos. 3 4 and 6 in the writ petition) and affirmed by one Rabindra Nath Kumar, Commercial Tax Officer, Central Section, it has been stored, inter alia, that the petitioner''s office was searched and some documents were seized. On receipt of information from the petitioner''s records, the office of HMT was also searched by the appellants and the four declaration forms were seized and kept in their custody for the purpose of investigation. It is contended that possession of the said blank declaration forms by HMT was illegal and, accordingly the same were seized.

After the appellants had disclosed in their affidavit the seizure of the said four declaration forms, the petitioner made an application for amendment of the writ petition inter alia, praying for Incorporation in the writ petition of the fact of seizure of the said four declaration forms by the appellants, a contention that the seizure of the said four declaration forma was illegal and a prayer directing the appellants to forthwith return the said four declaration forms to the HMT or to such other persons as the Court might appoint be as to enable the petitioner and HMT to regularise the same and the latter to submit the said declaration forms along with their returns to the Sales Tax Authorities. The learned Judge, by his order dated December 2, 1981, allowed the said application for amendment and, ultimately, by his judgment dated March 26 1982 allowed the writ petition directing the Sales Tax Authorities to return to HMT the said four declaration forms with a further direction that HMT would be entitled to record the transactions on the said declaration forms in accordance with law and if and when the said forms were submitted by HMT in their sales-tax assessment proceedings, the authorities would also consider the same In accordance with law.

The appellants, being aggrieved by the raid two orders of the learned Judge have preferred these two appeals.

We may first of all consider the question as to whether the learned Judge was justified in allowing the amendment of ''the writ petition. In the unamended writ petition, the petitioner preyed, inter alia, that HMT should be directed to permit the petitioner to make necessary endorsements on the reverse of the blank declaration forms submitted by the petitioner. After the petitioner came to know from the affidavit affirmed on behalf of the appellants that the said four declaration farms were seized by the appellants, the-petitioner prayed for amendment of the writ petition contending that the seizure of the same was illegal and claiming that the appellants should be directed to return the same to HMT so as to enable the petitioner and HMT to regularise the same and to enable HMT to submit the same with their returns to the Sales Tex Authorities. The appellants were already parties in the writ petition. It is true that no relief was claimed against them, for the petitioner was under the impression that the said declaration farms were in the custody of HMT. If the petitioner was aware of the fact of seizure by the appellants of the four declaration forms, at the time he tiled the writ petition, there would not have been any necessity for amendment. The claim of the petitioner is that he should be allowed to make necessary endorsements on the back of the declaration forms and his case is that as he was under the impression that HMT was in possession of the same, he asked for relief only against HMT. In view of the facts stated above, we are unable to accept the contention made on behalf of the appellants that by the amendment as allowed by the learned Judge, the nature end character of the writ petition has been changed. It be an amendment of pleadings the nature and character of the suit: or proceeding is not changed and no new and inconsistent case is naught to be made, the Court should, in our opinion, giant such amendment, provided the party seeking the amendment is not guilty of laches or negligence, and in case the amendment is allowed, it will not cause any serious prejudice to the other party. In the instant case, there are no such circumstances which would justify the refusal of the prayer for amendment of the petitioner. The appellants, in our opinion, has not been, in the least prejudiced by such amendment. In the circumstances, we held that the learned Judge was perfectly justified in allowing the application for amendment of the petitioner.

Now we may deal with v the ether appeal directed against the order of the learned Judge allowing the writ petition to the extent indicated above. The principal question involved in this appeal is whether the seizure of the four declaration forma was legal. It has been vehemently urged by Mr. Naranarayan Gooptu, learned Senior Government Advocate appearing on behalf of the appellants that the possession of the said four blank declaration forms by HMT was illegal and that justified the appellants to seize the same for the purpose of investigation against HMT and the petitioner. It is not disputed that the said four declaration forms were Issued by the Commercial Tax Officer to the petitioner in accordance with the provision of rule 27 AA of the Rules. u/s 4 of the Bengal Finance (Sales Tax) Act, 1941, hereinafter referred to as the Act, every dealer whose gross turnover during any year exceeded taxable quantum shall be liable to pay tax under the Act on ail sales effected. Section 5 of the Act lays down the lower rate of tax to be levied on the taxable turnover of a dealer under certain circumstances. Clause (aa) of section 5(i) provides for payment of one per cent of taxable turnover of a dealer to represents to a registered dealer of section goods. The proviso to clause (es) of section 5(1) inter alia provides that the said clause shall not apply to any sale referred to in that clause unless the dealer selling the goods furnishes in the prescribed manner a declaration containing prescribed particulars In the prescribed form obtainable in such manner and subject to such conditions and restrictions as may be prescribed from the prescribed authorities duly filled up and signed by the registered dealer to whom the goods are sold. It is clear from the proviso that In order to avail himself of the benefit of clause (aa), the dealer selling the goods has to furnish a declaration form containing some particulars and duly filled up by the registered dealer to whom the goods are said. The declaration form has to be obtained by the purchasing dealer in accordance with the prescribed manner. Rule 27 AA lays dawn the procedure for obtaining the declaration form. The seller of good a gets the declaration form from the purchasing dealer who has to obtain the same In accordance with rule 27 AA.

It Is not disputed by the appellants that the said declaration forms were obtained by the petitioner in the manner prescribed by rule 27 AA. It is also not in dispute that the petitioner has delivered the declaration forms to H.M.T. relating to the orders placed by him for supply of watches "n different dates. The only source of a seller of goods to get a declaration form is the purchaser, who is a registered dealer. In the instant case, the purchaser, namely, the petitioner having obtained the declaration forms in a lawful manner in accordance with rule 27 A and H.M.T, having received the declaration forms to the petitioner for the putpus of effecting supply of watches as per orders placed by the petitioner, the possession of the declaration forms by H M.T. it prima facie lawful. It is, however, urged on behalf of the appellants that as the said declaration forms were not filled up by the petitioner, the possession of such blank declaration forms, three of which are not even signed by the petitioner, was illegal to support of this contention much reliance has been pieced to behalf of the appellants on sub-section (4) of section 22 of the Act which deals with offences and penalties Sub section (4) provides as follows;

(4) Whoever has in his possession any inscribed form reteired to In the proviso to clauses (aa) or (bb) of sub section (1) of section 5 or in the proviso to clause (a) of sub-section (2) of that section, not obtained by him or by his principal or agent In accordance with the provisions of this Act, or any rules made thereunder, shall be deemed to have committed the offence of criminal breech of trust u/s 405 of the Indian Penal Code (Act XLV of 1860) and every such person who commits such criminal breach of trust, shall be punishable with imprisonment of either description for a term which may extend to three years or with fine or with both.

Sub-section (4) of section 22 has not. In our opinion, any bearing on the contention of the appellants. The declaration forms having been lawfully obtained by the petitioner in accordance with rule 27 AA of the Rules, the provision of subjection (4) of section 22 has no manner of application. Similarly, rule 27A also does not support the contention of- the appellants that the possession of the blank declaration forms of H M T, was illegal. Rule 27A, inter alia, provides that any dealer claiming the benefit of lower rate of tax in respect of sale referred to in clause (aa) of section 5(t) email, on demand, produce in respect of such sale, among others, a declaration in Form XX, V obtainable, subject to the provisions of the 27 AA, by the purchasing dealer on application from the appropriate Commercial Tax Officer and duly filled in and signed by the purchasing dealer or by a person duly authorised in this behalf by such dealer. Under rule 27a, in order to claim the benefit of lower tale of tax the dealer, who is the seller, has to produce before the Commercial Tax Officer, among others, a declaration form obtained by the purchasing dealer in accordance with rule 27 AA and duly filled in and signed by him. Neither section 22(4) nor rule 27A prohibits any purchasing dealer from delivering to the seller who is also e registered default under the Act, blank declaration farm in respect of any genuine and been fide transaction, provided such deliration forms have been obtained by the purchaser in lawful manner in accordance with the provision of rule 27 AA of the Rules.

In the instant case has been noticed earlier, except the declaration form No. E/1 367561 (he three other declaration forms are unsigned, but all the declaration forms have been addressed to H.M.T. and bear the seel of the petitioner. Further, each so these four declaration terms have been delivered by the petitioner to H. M. T. with a covering letter where by the petitioner has pieced his order for supply of watches. It is, therefore, apparent that the declaration forms were handed over by the petitioner to H. M. T. bona tide for the purchase of watches as per orders placed by him. We have already referred to the case of the petitioner as to the normal practice of handing ever by him of blank declaration forms to H. M. T. From the practical point of view also, the petitioner could not deliver to H. M. T, the declaration forms duly filled in by him. After the'' petitioner places an order with H. M. T. he cannot anticipate that H M. I. will be in a position to carry out his order by effecting supply of the number of watches as sped-, tied in the order at a tints, it is impossible for him to know about the particulars of watch to be supplied under any particular order pieced by him. in the circumstances, he has to leave the declaration form with H. M. T. so that the particulars may by entered on the reverse of the form as end when the supplies would be made by H.M.T"., H M.T. also cannot dispense with the submission of the declaration forms by the petitioner till all supplies are effected as per the orders of the petitioner without realising the sales tax payable on the sale price of each piece of watch. The seller must be sure that the purchasing dealer has the necessary declaration form before he can forego realisation of usual sales tax en the sale of goods. It cannot be said to be unreasonable if the seller Insists on the delivery of the declaration form before he supplies the goods to the purchasing dealer as security for not charging the usual sales tax on such sales. It may So happen in a case that the purchasing dealer after getting delivery of the goods may nut submit the declaration form as a result of which the seller twill suffer loss inasmuch as he is to pay the sales tax on such sale. The Sales Tax Authorities cannot exempt the seller from payment of sales tax en the ground that the purchasing dealer did not submit the declaration form duly filled in by him. S(r) from the practical aspect also H. M. T. was justified in keeping in its possession the blank declaration forms which will be filled up and signed by the petitioner after the supplies ere made against the orders of the petitioner. This is also supported by the note in the form itself Sign against last entry" and this can only be done after all the supplies are made and entered in the form."

13.. For the reasons aforesaid, we are of the view that the possession of the said four declaration forms by H. M. T. was quite lawful, and that the appellants had illegally and without any reasonable justification seized the said four declaration forms from the custody of H. M. T. The learned Judge is, therefore, perfectly justified in directing the Sales Tax Authorities to return to H. M T. the said tour declaration forms forth with and further directing that H. M. T. will be entitled to record their transactional in the said forma In accordance with law and If and when the said forma are submitted by H. M T. in their sales tax assessment proceedings, the authorities concerned will consider the same In accordance with law.

In the result, we affirm the judgment of the learned Judge In allowing the said application for amendment and the writ petition to the extent Indicated above and dismiss both the appeals.

There will, however, be no order as to casts.

As prayed for on behalf of the appellants, we away the operation of this judgment for a period of two weeks from date.

Monoj Kumar Mukherjee, J.

I agree.