Prince Plastics & Chemical ... vs Commissioner Of Sales Tax And Ors.
2002 Latest Caselaw 1037 Del

JUDGMENT

Vikramajit Sen, J.

1. This bench of nine writ petitions raises common questions of law, in the context of facts which are essentially similar. In the petitions it has been prayed that a writ, order or direction be issued quashing Rule 8(4)(c) of Delhi Sales Tax Rules, 1975 (hereinafter referred to as 'the Rules') on the grounds that it is ultra vires the provisions of Section 4(2)(a)(v) of the Delhi Sales Tax Act, 1975 (hereinafter referred to as 'the Act'). The immediate grievance of the Petitioners pertains to the non-issuance of Sales Tax Forms (ST-1 Forms). Upon being accorded registration, dealers such as the Petitioners are both a purchasing as well as selling dealer inasmuch as when goods are transferred to another registered dealer without charging sales tax they fall in the category of a selling dealers. At the same time, in other transactions those very petitioners may be purchasing goods from another registered dealer without payment of sales tax, and in such cases they would be categorised as the 'purchasing dealers'. The legal imbroglio in these writ petitions has arisen because the Petitioners, as the 'selling dealers', have sold goods to one of the respondents 'purchasing dealer' on the latter's assurance that they will supply requisite ST-1 Forms to the former. Instead, it has transpired that the Sales Tax Department has declined to issue ST-1 Forms to the purchasing dealers in this batch of writ petitions either for the reason that they have relinquished their registration, or because they have not complied with the sundry provisions of the Act and the Rules. There may also be other reasons which would empower the Department to refuse to issue ST-1 Forms but we are not required to cover all the eventualities in this judgment. The consequence of Department's declining to issue ST-1 Forms is that the Petitioners would become liable to deposit sales tax in respect of the transactions in which they are the selling dealers. The further consequence would be that unless the Petitioners deposit the sales tax payable on these transactions they would inexorably render themselves vulnerable for non-issuance of ST-1 Forms in other transactions where they may wear the mantle of purchasing dealers. Eventually they may also encounter the extreme penalty of facing derecognition under the Act. The Petitioners contention is that they are being made to suffer the consequences of failures and defaults on the part of purchasing dealers, in which they have played no part whatsoever. It is also their submission that under the scheme of the Act they are precluded from charging sales tax from other registered dealers, since such a demand would invite prosecution under the Act. Mr. Mahna, the learned counsel for the Petitioners, has also argued that they are in a hapless position and would be compelled to incur sales tax liability for events which are not within their control. The learned counsel for the Respondent-Sales Tax Department, on the other hand, contend that the Petitioners are liable to pay sales tax on every sale, and would be entitled to deduct the value of only those transactions in respect of which they are in a position to provide ST-1 Forms. If these Forms are unavailable to them for whatsoever reason, they are responsible for payment of the tax. Even if they are innocent parties they must absorb the purchasing dealers failure to fulfill its responsibilities under the Act. The State should not lose its tax entitlement.

2. The avowed objective of the Act is to levy a tax on the sale of goods in the National Capital Territory of Delhi. This is evident from a reading of its Preamble. This objective is achieved by Section 3, the charging section, which stipulates that every dealer whose turnover exceeds the taxable quantum shall be liable to pay tax on all sales effected by him. It needs to be underscored that the section does not prohibit either multiple taxation or multipoint taxation, but on the contrary, envisages it. Although the issue before the Constitution Bench in J.K. Jute Mills Co. Ltd. v. The State of Uttar Pradesh and Anr., [1961] 12 STC 429, concerned the legislative competence of the Legislature, the Hon'ble Supreme Court had made the following pithy observations, reiterating its earlier pronouncements:

"But it is urged on the strength of certain observations in The province of Madras v. Boddu Paidanna and Sons, [1942] F.C.R. 60; 1 S.T.C. 104 that a sales tax is a tax on the occasion of sale, and that therefore it could not be imposed with retrospective operation. This contention is, in our judgment, wholly without substance. Now, the point for decision in that case was whether a tax imposed by a Provincial Legislature on the sale of oil by a person who manufactured it was bad on the ground that it was in essence of excise duty. While a sales tax could be imposed by a Provincial Legislature, an excise duty could be imposed only by the Federal Legislature. In holding that the tax in question was a sales tax and not an excise duty, the court observed as follows:-

"The duties of excise which the Constitution Act assigns exclusively to the Central Legislature are, according to the Central Provinces Case, [1938] 1. S.T.C. 1, duties levied upon the manufacturer or producer in respect of the sale of goods, which the Act assigns exclusively to the Provincial Legislatures, is a tax levied on the occasion of the sale of the goods.

Plainly a tax levied on the first sale must in the nature of things be a tax on the sale by the manufacturer or producer; but it is levied upon him qua seller and not qua manufacturer or producer".(P.101).

In the context, the words, "on the occasion of the sale" have reference to the character of the transaction and not to the point of time at which the duty becomes leviable, and they have no bearing on the question as to when such a tax could be imposed.

And then it is argued that a sales tax being an indirect tax, the seller who pays that tax has the right to pass it on to the consumer, that a law which imposes a sales tax long after the sales had taken place deprives him of that right, that retrospective operation is, in consequence, an incident inconsistent with the true character of a sales tax law, and that the Validation Act is therefore not a law in respect of tax on the sale of goods, as recognised, and it is ultra vires entry 54. We see no force in this contention. It is no doubt true that a sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the Legislature. This question is concluded by the decision of this Court in The Tata Iron & Steel Co. Ltd. v. The State of Bihar, [1958] S.C.R. 1355; 9 S.T.C., 267. The following observations of Das, C.J., bearing on this question must be quoted:-

"Under the 1947 Act the primary liability to pay the sales tax, so far as the State is concerned, is on the seller. Indeed before the amendment of the 1947 Act by the amending Act the sellers had no authority to collect the sales tax as such from the purchaser. The seller could undoubtedly have put up the price so as to include the sales tax, which he would have to pay but he could not realise any sales tax as such from the purchaser. That circumstance could not prevent the sales tax imposed on the seller to be any the less sales tax on the sale of goods. The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to collect the sales tax as a tax from the purchaser does not do away with the primary liability of the seller to pay the sales tax. This is further made clear by the fact that the registered dealer need not, if he so pleases or chooses, collect the tax from the purchaser and sometimes by reason of competition with other registered dealers he may find it profitable to sell his goods and to retain his old customers even at the sacrifice of the sales tax. This also makes it clear that the sales tax need not be passed on to the purchasers and this fact does not alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller. The buyer is under no liability to pay sales tax in addition to the agreed sale price unless the contract specifically provides otherwise."

3. At the most, the intent behind the devising of the C Forms or ST-1 Forms is to "avoid multipoint taxation and enable a dealer passing on the burden of sales tax in such a way that it ultimately reaches the buyer-consumer" (see Shri Krishna Engineering Co. case Infra). Section 2(e) defines a 'dealer' to mean any person who carries on the business of selling goods in Delhi. Thereafter Sub-section (k) of Section 2 defines 'registered' to mean registered under the Act. Significantly, although the nomenclature 'registered dealer' has been ubiquitously used in the Act, this term has not been defined in Section 2. However, it does not create any controversy in assuming it to mean any dealer who has been accorded registration under the Act. Section 2(o) defines 'turnover' as the aggregate of the amounts of sale price receivable or actually received by any dealer in respect of any sale of goods. As in the case of the term 'registered dealer', the definition of 'taxable turnover' is not contained in Section 2 of the Act. For the meaning of 'taxable turnover' we must travel to Section 4(2) of the Act which clarifies that for the purposes of the Act, taxable turnover means that part of a dealers turnover which remains after deducting there from the sundry transactions mentioned in Sub-section (a) thereof. None of these, however, postulates that all sales to registered dealers per se qualify as deductions. There are three provisos to Section 4(2)(a) of the Act, the penultimate declares that no deduction in respect of any sale referred to in Sub-clause (v) shall be allowed unless a true declaration in the prescribed form duly filed and signed by a dealer is furnished to the selling dealer. The last proviso is also of immense import as it specifies that where goods are not utilised by the purchasing dealer for the purposes mentioned in Sub-clause (v), the price of such goods shall nonetheless be deductible from the turnover of the selling dealer and instead, shall be included in the taxable turnover of the purchasing dealer. It indicates that the selling dealer is not responsible for ensuring that goods are used for the purpose for which they are sold (See also State of Madras v. Radio and Electricals Ltd. [1966] 18 STC 222. Such an investigation would be carried out by the Department and if misutilisation is detected, the value of the transaction will be added to the account of the purchasing dealer. Section 6 of the Act explicitly places the burden of proof on the selling dealer if its case is that any sale is not liable to the payment of tax; this provision rubs against the grain of the Petitioners' contentions.

4. We shall now deal with the gravamen of the argument advanced by Mr. Mahna that once registration is granted to a dealer, other similarly registered dealers are prohibited from charging tax from them in regard to any sale transaction between them. We are unable to subscribe to such an extreme proposition as it is neither supported by any provision of the Act nor by any judicial pronouncement. Since a consideration of the provisions in question, viz. Section 4(2)(a)(v) and Rules 7 and 8(4) will repeatedly recur, they are given below for ease of perusal.

DELHI SALES TAX ACT, 1975

"4. Rate of tax

(1) .....

(2) For the purposes of this Act, "taxable turnover" means that part of a dealer's turnover during the prescribed period in any year which remains after deducting there from:

(a) his turnover during that period on -

.....

(v) sale to a registered dealer;

(A) of goods of the class or classes specified in the certificate of registration of such dealer, as being intended for use by him as raw materials in the manufacture in Delhi of any goods, other than goods specified in the Third Schedule or newspaper,-

1. for sale by him inside Delhi; or

2. for sale by him in the course of inter State trade or commerce, being a sale occasioning, or effected by transfer of documents of title to such goods during the movement of such goods from Delhi;

or

3. for sale by him in the course of export outside India being a sale occasioning the movement of such goods from Delhi, or a sale effected by transfer of documents of title to such goods effected during the movement of such goods from Delhi, to a place outside India and after the goods have crossed the customs frontiers of India; or

(B) of goods of the class or classes specified in the certificate of registration of such dealers as being intended for resale by him in Delhi, or for sale by him in the course of inter-State trade or commerce or in the course of export outside India in the manner specified in sub-item (2) or sub-item (3) of item (A), as the case may be; and

(C) of containers or other materials used for the packing of goods, of the class or classes specified in the certificate of registration of such dealer, other than goods specified in the Third Schedule, intended for sale or resale.

(vi) .....

PROVIDED that no deduction in respect of any sale referred to in Sub-clause (iv) shall be allowed unless the goods, in respect of which deduction is claimed, are proved to have been sold by the dealer within a period of twelve months from the date of his registration and the claim for such deduction is included in the return required to be furnished by the dealer in respect of the said sale:

PROVIDED FURTHER that no deduction in respect of any sale referred to in Sub-clause

(v) shall be allowed unless a true declaration duly filled and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars in the prescribed form obtainable form the prescribed authority is furnished in the prescribed manner and within the prescribed time, by the dealer who sells the goods:

PROVIDED ALSO that where any goods are purchased by a registered dealer for any of the purposes mentioned in Sub-clause (v), but are not so utilised by him, the price of the goods so purchased shall be allowed to be deducted from the turnover of the selling dealer but shall be included in the taxable turnover of the purchasing dealer; and

(b) .....

20. Cancellation of certificate of registration-(3) Notwithstanding anything contained in Sub-section (1) and (2), the Commissioner may at any time for reasons to be recorded in writing and after giving the dealer an opportunity of being heard, cancel the certificate of registration held by such dealer from such date as the Commissioner may specify in this behalf-

(a) if the dealer has failed to pay any tax (including any penalty) due from him under any provisions of this Act; or

(b) if the dealer holds or accepts or furnishes or causes to be furnished a declaration for the purposes of Sub-clause (v) of Clause (a) of Sub-section (2) of Section 4 or Section 5 which he knows or has reason to believe to be false; or

(c) if the dealer who has been required to furnish the security under the provisions of Section 18 has failed to furnish such security;

(d) if the dealer contravenes or has contravened any of the provisions of this Act; or

(e) if the dealer has been convicted of an offence under this Act or under the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941) as then in force in Delhi; or

(f) if there is any other reason which in the opinion of the Commissioner warrants such cancellation.

DELHI SALES TAX RULES, 1975

7. Conditions subject to which a dealer may claim deduction from his turnover on account of sales to registered dealers,--(1) A dealer who wishes to deduct from his turnover the amount in respect of sales on the ground that he is entitled to make such deduction under the provisions of Sub-clause (v) of Clause (a) of Sub-section (2) of Section 4, shall produce:

(a) copies of the relevant cash memos or bills recording that the sales are cash sales or sales on credit; and

(b) a declaration in Form ST-1 duly filled in and signed by the purchasing dealer or a person authorised by him in writing:

PROVIDED that no single declaration in Form ST-1 shall cover more than one transaction of sale except in cases where the total amount of sales made in a year covered by one declaration is equal to or less than Rs. 20,00,000 or such other amount as the Commissioner may, from time to time, specify in this behalf in the Official Gazette:

PROVIDED FURTHER that where, in the case of any transaction of sales, the delivery of goods is spread over different years it shall be necessary to furnish a separate declaration in respect of goods as delivered in each year.

(2). The declaration in Form ST-1 shall be furnished by the selling dealer to the appropriate assessing authority up to the time of assessment by it:

PROVIDED that if the appropriate assessing authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or declarations within the aforesaid time, that authority may allow such declaration or declarations to be furnished within a further period not exceeding three months from the date of order of assessment provided this period falls within the period of limitation prescribed for making an assessment.

3. Notwithstanding anything contained in Sub-rule (1) if the Commissioner on an application made by a dealer and after making such enquiries as he may consider necessary, is satisfied that the dealer is not in a position to furnish all or any of the declarations referred to in Sub-rule (1) above on account of loss of such declaration or declarations due to the fire or flood or riots beyond the control of the dealer, and that the application of Sub-rule (1) will cause undue hardship to the dealer, he may by an order in writing exempt such dealer from furnishing such declaration or declarations, subject to the conditions as are hereinbelow mentioned and to such further conditions as may be specified by the Commissioner in the order.

CONDITIONS

(1) That the application is made within 30 days of the event, i.e. fire or flood or riots, as the case may be, stating the fact and circumstances in which the loss took place and also shall state the evidence on which he relies in support of such facts. The application shall be duly signed and verified by the dealer in the manner as is provided in respect of returns.

(2) That the loss had taken place at the place of business of the dealer.

(3) The provisions of Sub-rule (3) of Rule 7, shall mutates mutants apply to the furnishing of exemption certificates from the diplomatic missions, their personnel and specialised agencies as specified under Rule

11.

8. Authority from whom the declaration form may be obtained, and use, custody and maintenance of records of such forms and matters incidental thereto,--(1) .....

(4)(a) If, for reasons to be recorded in writing the appropriate assessing authority is satisfied that the declaration forms have not been used bona fide by the applicant or that he does not require such forms bona fide, the appropriate assessing authority may reject the application or it may issue such lesser number of forms as it may consider necessary.

(b) If the applicant for declaration forms has, at the time of making the application, failed to comply with an order demanding security from him under Sub-section (1) of Section 18, the appropriate assessing authority shall reject the application.

(c) If the applicant for declaration forms has, at the time of making application-

(i) defaulted in furnishing any return or returns in accordance with the provisions of the Act or these rules, or in payment of tax due according to such return or returns; or

(iia) not filed proper Requisition Account of the declaration forms required by him, or

(iib) not filed proper utilisation account in Form ST-2B of forms issued to him in advance together with the returns for the period during which the forms were utilised; or

(iii) been found by an appropriate assessing authority having some adverse material against him, suggesting any concealment of sale or purchase or of furnishing inaccurate particulars in the returns;

the appropriate assessing authority shall, after affording the applicant an opportunity of being heard, withhold, for reasons to be recorded in writing, the issue of declaration forms to him and the appropriate assessing authority shall make a report to the Commissioner about such withholding within a period of three days from the date of its order:

PROVIDED that the appreciate assessing authority may, instead of withholding declaration forms, issue to the applicant, with the previous approval of the Assistant Commissioner appointed under Sub-section (2) of Section 9 of the Act, such forms in such numbers and subject to such conditions and restrictions as it may consider reasonable:

PROVIDED FURTHER that notwithstanding the provisions of any other rule, the issue of declaration forms to an applicant to whom a certificate of registration under the Act has been granted for the first time, shall be withheld by the appropriate assessing authority, until such time as all the returns for the return period commencing from the date of validity of this certificate of registration are furnished and tax due according to such return is paid by him:

PROVIDED FURTHER that the appropriate assessing authority, subject to such conditions and restrictions, as may be imposed by the Commissioner, issue to applicant dealer, declarations forms for which Requisition Account cannot practically be filed.

PROVIDED FURTHER that notwithstanding the provisions of this rule or any other rule, the appropriate assessing authority may withhold the issue of declaration forms-

(a) to an applicant who has been granted a certificate of registration under the Act without prescription of security under Section 18, or

(b) If in his opinion the security already furnished is inadequate taking into consideration the provisions of Section 18;

until such time as the applicant dealer furnishes a security or an additional security as may be prescribed by an order in writing after affording the dealer an opportunity of being heard.

(d) Where the appropriate assessing authority does not proceed under Clause (a), Clause (b), or Clause (c), it shall issue the requisite number of declaration forms to the applicant".

5. Reliance has been placed on State of Maharashtra v. Suresh Trading Co., [1998] 109 STC 439, by Mr. Mahna, but in doing so he has quite apparently glossed over the distinguishing features. The Hon'ble Supreme Court opined that the 'purchasing dealer is entitled by law to rely upon the certificate of registration of the selling dealer and to act upon it. Whatever may be the effect of a retrospective cancellation upon the selling dealer, it can have no effect upon any person who has acted upon the strength of a registration certificate when the registration was current.' For these pronouncements to be applicable to the Petitioners before us, the Forms should have been made available along with the transaction in question, and such Forms should have been retrospectively invalidated by the Department. Neither of these situations exist in the present petitions and this is the watershed between them. This is also why the pronouncements of Division Bench in Giriraj Sales Corporation v. State of Gujarat and Ors., [2002] 125 STC 369, are of little assistance to the Petitioners. Two decisions of this Court have been relied upon by the Petitioners to buttress their contention that one registered dealer is prohibited from charging Sales Tax from another. It will be evident from the extracted provisions that neither the Act nor the Rules suggest so. In Modern Automobiles (I) v. Union of India and Anr., [1984] 56 STC 85, a Learned Single Judge was entreated to issue a writ or order directing the DGS&D, Government of India, not to insist on charging/collecting Sales Tax from the registered dealer. It was the Petitioners contention that neither the Act nor the Rules confer any right on the purchasing dealer for an exemption and the selling dealer is not statutorily bound to accept ST-1 Forms from them. The Learned Single Judge was of the opinion that by necessary implication, the selling dealer was bound to accept the Declaration. On a superficial reading of this decision one may reach the conclusion that unqualified deductions/exemptions are mandated by Sections 4(2(a)(v)(B) of the Act and Rule 7(1) of the Rules. While it may be expected that a Judge should draw necessary and obvious inferences from statutory provisions in order to give rational effect to their intendment, it is impermissible for him to subscribe his own words into the statute. It was precisely for this reason that the Learned Judge held that since ST-1 Forms were being offered by the Purchasing Dealer to the Selling Dealer (DG S & D) contemporaneously with the request for not charging Sales Tax, the Act implied that the exemption should be permitted to it by the concerned Selling Dealer. This is the farthest extremity to which we understand the Modern Automobiles case (supra) to have travelled. It is certainly not an authority for the proposition that sales tax cannot be charged by a registered dealer from another registered dealer. The same position prevails in respect of the decision of a Division Bench of this court in Praveen Motors Store and Anr. v. Union of India and Anr., S.T.I. 1985 Delhi High Court 4, a cursory reading whereof may lead to the erroneous conclusion palpably reached by the learned counsel for the Petitioners. The Judgment is a short one, proceeding almost entirely on first principles. What may have escaped the attention of the Petitioners is the fact that, as in the previous case, along with the request for abstention from charging Sales Tax, ST-1 Forms were simultaneously offered to be furnished by the Purchasing Dealer. When this factor is kept in focus, the fulcrum of the Petitioners argument is fractured, and the premises that the said exemption is available even where ST-1 Forms have not been supplied in respect of the relevant transaction, disintegrates completely. For facility of reference the relevant portions of the Judgment in Praveen Motors Store case (supra) are reproduced below:

"3. As the petitioner is a registered dealer, it is claimed that he has not to pay the sales tax. The petitioner has tendered the ST-1 Form by which a registered dealer can purchase goods free of payment of sales tax.

4. The scheme of the Delhi Sales Tax Act is that a registered dealer can collect sales tax, but this can only be done in accordance with the provisions of Section 22 of the Act. Section 50(g) makes it an offence to collect tax except in accordance with the Act and the Rules.

5. When a registered dealer sells goods to another registered dealer, that sale is exempt from tax by the definition of 'turnover' contained in Section 4(2)(a)(v). Thus, when the Director General of Supplies and Disposals sold the goods to the petitioner, the sale was not to be included In the Director General's 'taxable turnover'. It is when the registered dealer makes the sale to a non-registered dealer or an ordinary purchaser, that the tax is to be charged. It is only necessary to refer to the second proviso to Section 4(2)(a), which shows when the sale to a registered dealer is tax-free. That proviso reads as follows:-

"Provided further that no deduction in respect of any sale referred to in Sub-clause (v) shall be allowed unless a true declaration duly filled and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars in the prescribed form obtainable from the prescribed authority is furnished in the prescribed manner and within the prescribed time, by the dealer who sells the goods."

The form is referred to as Form ST-1. Once the ST-1 Form is furnished by the purchasing registered dealer, the selling registered dealer cannot charge the sales tax from the purchaser.

6. This is, therefore, a very clear case following from the manner in which sales-tax is collected under law. The sales tax is not chargeable when one registered dealer sells to another registered dealer who furnishes an ST-1 Form. This is the scheme of taxation under the Act.

7. It follows, that in this particular case, the Director General of Supplies and Disposals, could not insist on the sales tax being paid by the registered dealer purchasing the goods. Such a charge would be contrary to law and would amount to a criminal offence under Section 50(g) of the Act.

8. As the Director General of Supplies and Disposals seems to be unwittingly committing the offence, we have no hesitation but to issue a writ directing that the sale to the petitioner will be without charging sales tax provided that a valid ST-1 Form is supplied by the purchasing dealer. That has already been done, so we would allow the petition. Similar petitions have previously been allowed and we would expect this practice to come to and end as a Government Department cannot be a party to a criminal offence. Having made the position clear, we would refrain from passing any order as to costs at this stage as under the interim order, the purchaser has already been allowed to take the goods without paying the sales tax.

Dated: 14.11.1984. Petition allowed."

6. Mr. Mahna, the learned and defatigable counsel for the Petitioners, has relied on the decision of the Hon'ble Supreme Court in State of Madras v. Radio and Electricals Limited and Anr., [1966] 18 STC

222. In our view it is of no avail to the Petitioners. The concerned sale of goods related to the Central Sales Tax Act, 1956. The question before the Hon'ble Court was whether on a Purchasing Dealer in one State furnishing a Form 'C' to the Selling Dealer in another State, the Sales Tax Authority could deny to the Selling Dealer the benefit of concessional rates under Section 8(1) of the Central Sales Act, 1956, on the view that the certificate in Form 'C' mentions more purposes than the one for which the goods were intended to be used, or that the goods were incapable of being used for the purpose for which they were declared to be purchased, or that the goods were applied for some other purpose not mentioned in the certificate in Form 'C'. It was in this context that the Hon'ble Supreme Court observed that if the certificate is defective and that it does not set out all the details, or that it contains false particulars etc. the transaction will not be admitted to concessional rates. It observed as follows:

"The Act seeks to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce. Though the tax under the Act is levied primarily from the seller, the burden is ultimately passed on to the consumers of goods because it enters into the price paid by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has provided in respect of sales of declared goods which have special importance in inter-State trade or commerce, and other classes of goods which are purchased at an intermediate stage in the stream of trade of commerce, prescribed low rates of taxation, when transactions take place in the course of inter-State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a

registered dealer, and the goods purchased are specified in his certificate: but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules and the representation is recorded in the certificate in Form 'C' the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under Section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer. The selling dealer is under the Act authorised to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form 'C'. He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form 'C'. There is nothing in the Act or the Rules that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer."

We fail to appreciate any manner in which this decision can be interpreted to indicate that the Selling Dealer cannot change Sales Tax where the Purchasing Dealer does not simultaneously furnish ST-1 Forms. The ratio of the judgment is precisely what the third proviso to Section 4(2)(a)(v) of the Act states. On an ST-1 Form being furnished by the Purchasing Dealer to the Selling Dealer the latter need not investigate as to whether the goods have actually been put to the use ostensibly declared by the former. Giving full effect to the observations in Radio and Electricals Limited case (supra), as is our bounden duty, we are fortified in our conclusion that exemption from inclusion in the total turnover of the Selling Dealer is possible only where the requisite ST-1 Form is produced. The embargo on charing tax under the Act is only in those instances where the Purchasing Dealer contemporaneously offers ST-I Form to the Selling Dealer. The Sales Tax Department is neither privy to nor is it concerned with any assurances that might have been exchanged inter se these parties. Quite frequently ST-1 Forms are obtained from Sales Tax Department by the Purchasing Dealer, but for sundry reasons are not forwarded to the Selling Dealer. The only legal recourse is for the Selling Dealer to file a suit for the recovery of the Sales Tax from the Purchasing Dealer. There is no reason to deviate from this position merely because, by a mutual arrangement between the dealers, the supply of the ST-1 Forms is procrastinated to a future dates. It should be recalled that, for the benefit of the assessed, the Rules permit the filing of exemption Forms till the time of assessment, this is probably the reason why dealers postpone their obtainment. There is no reason for the consequence of the dealer's acts of omission or commission to visit the Department. The Act or the Rules do not prohibit the simultaneous furnishing of ST-1 Forms; they in fact envisage it. We are reproducing the Application Form for issue of declaration in Form ST-1 admittedly adopted by the Sales Tax Department for over thirty years. The Form specifically envisages the supply of such Forms to the dealer in advance of transactions.

"Application Form for Issue of Declarations in Forms ST-1

To

The Assessing Authority,

Ward No. .....

1. Name an style of the business:

2. Full addresses:

3. Local R.C. No.:

4. No. of unutilised forms in hand:

5. No of forms now required:

6. Return period quarterly/monthly:

7. The period/year up to which the assessment has been last made:

8. Whether all returns due till date since the last assessment have been furnished and the tax due according to them paid? If not, state the defaults and reasons thereof.

9. Whether the amount of arrears of tax still remains payable. If so, state the year and the amount of arrears and reasons o non-payment.

I do hereby solemnly affirm and declare that the above information is true and correct to the best of my knowledge and belief.

Signature of the dealer

Status.....

Please deliver....forms to Shri... an employee of my firm. His signatures are as attested below:

Signature of dealer

Signature of Shri....

Signature attested

Signature

FOR OFFICIAL USE

1. Signature of the applicant tally/do not tally with those on record.

2. Verified that the dealer has filed all returns up-do-date. If not, mention defaults.

3. Arrears due, if any: Year Amount Local or Central Remarks."

7. We now need to deal with an important question pertaining to the supply of Form by the Sales Tax Department to the dealers. As has been seen, the legal provisions enable their issuance in advance. Mr. Mahna had drawn attention to Department Circular No. 18 of 1987-88 which, inter alia, states that "so far as issue of ST-1 Forms is concerned, the assessing authorities may restrict issue of ST-1 Forms relating to time barring period i.e. 1983-84 only. However, there is no restriction on the issue of ST-1 forms relating to non-time barring period in such case, where the assessing authority feels it necessary to do so; specially in such cases where a dealer is required to furnish ST-1 forms to another dealer for assessment of cases to be assessed on priority basis like newly registered dealers and cases involving seized/ surrendered documents". Learned counsel for the Petitioners has justifiably relied on this Circular to state that the extant practice of the Sales Tax Department is that ST-1 Forms are normally not available. The Circular No. 51 of 1999-2000 declares that "forms can be issued in advance under the newly inserted third proviso to Rule 8(4)(c) in respect of purchases made from such an organisation or a registered dealer who compulsorily asks for the form at the time of transaction itself. For this, the registered dealer shall apply in Form ST-2C or in Form -2C as the case may be, when such a dealer utilises the said form obtained by him in advance, he shall submit the utilisation account of the same in Forms ST-2B or in Form 2B as the case may be, together with his return for the quarter for which the forms were used". There are other paragraphs in various Circulars which are indicative of the fact that the prevalent practice is that Forms are furnished for past transactions, and that they are supplied when the Assessment is to be completed. Learned counsel appearing for the Respondent Department candidly conceded that this is the practice, with the caveat that the Forms can be collected in advance also. However, they have stated that this practice has developed primarily for the convenience of the assesses, since availability of the Forms become critical only when an Assessment is to be completed. It is also their submission that Forms are applied for by the Dealer after the lapse of months and years of the transaction only when the Assessment is to be completed. Late filing of application is largely responsible for the predicament that the Petitioners have found themselves in. We expect that in every instance where a Dealer applies for Forms they would be immediately supplied in conformity with the sundry Circulars. Otherwise, the Department would be playing fast and loose, a practice deprecated by the Apex Court in Commissioner of Police Bombay v. Gordhandas Bhanji, .

8. In this batch of writ petitions the challenge is directed to the vires of Rule 8(4)(c) of the Rules, on the ground that they traverse beyond the ambit of Section 4(2)(a)(v) of the Act. The grievance of the Petitioners is not that they have requested the Sales Tax Department for issuance of the Forms in advance and this has been turned down, but that their purchasing dealers should be supplied with ST-1 Forms regardless of whether such dealers have relinquished their registered status, or have committed other infractions of the Act and Rules. Keeping the scheme of the Act in perspective, and the representations to the pubic made in terms of the various Circulars issued by the Sales Tax Department, the latter would not be justified in declining to supply the Forms on the date on which an application has been made by the dealer. Since this is neither the grievance or the prayers in these writ petitions, we need to say no more. However, even if a Purchasing Dealer has applied for ST-1 Forms but has not received them for any reason, the Selling Dealer is not automatically exonerated from liability, nay the statutory duty to collect tax, since the ST-1 Form is not forthcoming. Traders are apparently quite willing to run the risk of one amongst many transactions going sour, so far as supply of these Forms is concerned. It is not uncommon for a purchasing dealer to renege on its assurance to supply ST-1 Forms to the selling dealer. The State does not thereupon forfeit its entitlement for sales tax. Extending this a little further, there is likewise no reason for the State to lose its revenue merely because the Purchasing Dealer is unable to obtain such Forms because of this falling in arrears. It is the Dealer, because of its own acts of omission, who has broken the chain whereby tax is arranged and devised by the Department to be collected at a single point only. It is wholly illogical to place the State in such a position where it cannot recover its sales tax deus at all. Although equity plays only a minuscule role in fiscal matters, even if such considerations were to be applied, there would still be no justification for an application adverse to the interests of the State. The dealer who has chosen to trust the other dealer must suffer for his mercantile recklessness. This is the risk they run and if for any reason, including a subsequent decision of the Sales Tax Department to withhold the supply of ST-1 Forms to a Purchasing Dealer they are put in an uncomfortable position of having to pay the tax and initiate appropriate legal action for recovering it from the Purchasing Dealer, so be it. The State is entitled to its tax, where the requisite ST-1 Form is unavailable for any reason.

9. It has been contended on behalf of the Petitioners that in some instances ST-1 Forms have been issued to a dealer in 1997-1998 in respect of transactions covered in Assessment Year 1994-1995. However, this would not validate the non-collection of Sales Tax by another dealer for a previous or current period even on the application of principles of estoppel against the Sales Tax Department. The scheme of the Act is that either ST-1 Form should be available or tax should be collected. If a dealer shows such diligence as to investigate the issue of ST-1 Forms for a particular period, it would have been further the best advised to insist on their supply even for the transaction intended to be completed by them.

10. The decision of the Hon'ble Supreme Court in Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer and Ors., [1995] 16 STC 607, has been relied on by both adversaries in these proceedings. The assessed had suffered the misfortune of irretrievably misplacing its file containing 147 declaration forms received from its dealers. It made various attempts to get duplicate forms from the dealers, but for circumstances beyond the assesseds control, as also because of the 'unhelpful and hostile attitude of the Commercial Tax Officer' it was not able to furnish duplicate forms. The case was governed by the Bengal Finance (Sales Tax) Act, 1941 which at the material time did not contain any provision for the supply of duplicate forms. Incidentally, this Act had been extended to Delhi until the Delhi Sales Tax Act, 1975 came into force. It appears that the Bengal Act has since been amended so as to contain a provision similar to that contained in the Act permitting the supply of duplicate forms. The Apex Court observed as follows:

"The only question, therefore, that arises is whether under Section 5(2)(a)(ii) of the Act the furnishing of the declaration forms issued by the purchasing dealers was a condition for claiming the exemption there under.

In substance Section 5(2)(a)(ii) exempts from taxable turnover all sales to a registered dealer of goods of the class of classes specified in the certificate of registration of the dealer as being intended for the purposes mentioned therein. But the said exemption is made subject to a proviso. Under that proviso, in the case of such sales a declaration form duly filled up and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars on a prescribed form obtainable from the prescribed authority has to be furnished in the prescribed manner by the dealer who sells the goods. Under Rule 27A of the Bengal Sales Tax Rules, 1941, hereinafter called the Rules, a dealer who wishes to claim the said exemption shall on demand produce such a declaration in writing signed by the purchasing dealer. Sub-rule (2) thereof enjoins on a dealer not to accept and on the purchasing dealer not to give a declaration except in the form prescribed. The other rules make stringent provisions to prevent the misuse of the said forms.

.....

Section 5(2)(a)(ii) of the Act in effect exempts a specified turnover of a dealer from sales tax. The provision prescribing the exemption shall, therefore, be strictly construed. The substantive clause gives the exemption and the proviso qualifies the substantive clause. In effect the proviso says that that part of the turnover of the selling dealer covered by the terms of Sub-clause

(ii) will be exempted provided a declaration in the form prescribed is furnished. To put it in other words, a dealer cannot get the exemption unless he furnishes the declaration in the prescribed form. It is well-settled that "the effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it". see "Craies on Statute Law", 6th Edn., p.217.

.....

Sub-rules (3) and (4) of Rule 27A are not helpful to the appellant. They provide only safeguards against about 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 he 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 the rigour of the provisions and it is not for this Court to do so where the provisions are clear and unambiguous.

There is an understandable reason for the stringency of the provisions. The object of Section 5(2)(a)(ii) of the Act and the rules made there under 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 gods, 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 well nigh 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 twofold 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 facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid."

(emphasis supplied)

11. It needs to be appreciated that the approach recommended by the Hon'ble Supreme Court in Kedar Nath's case (supra) is that the taxing statue must be strictly construed. Even though the Court expressed the view that unmerited hardship to an honest dealer had resulted, it declined to alleviate their plight by undertaking the statutory engineering carried out by this Court in Modern Automobiles case (supra) and Praveen Motors cases (supra) by locating implied powers in that Act for the issuance of duplicate Forms. Kedar Nath's case (supra) leaves no room for doubt that unless declaration forms are available, a deduction from he taxable turnover cannot be claimed. Where no relief was granted even though Forms had been received by the Dealer, a fortiori, no deduction from the total turnover is available where Forms were not obtained and/or supplied at all.

12. This approach was also adhered to by the Hon'ble Supreme Court in State Bank of Travancore v. Income Tax Commissioner, Kerala, The minority view was that hypothetical income (pertaining to bad-debts) which may have theoretically accrued but had not actually frutified could not be brought to change. The majority abjured sympathetic consideration and observed that a "citizen is entitled to the benefit of every ambiguity in a taxing statute but where the law is clear, considerations of hardship, injustice or anomaly do not afford justification for exempting income from taxation." The Constitution Bench had been earlier, in A.V. Fernandez v. The State of Kerala, , opined that, however great the hardship may appear to the judicial mind, "in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the revenue satisfies the Court that the case falls strictly within the law, the subject can be taxed." A new years later another Hon'ble Constitution Bench in Commission of Sales-tax, U.P. v. Modi Sugar Mills Ltd., observed thus - "In interpreting a taxing statute, equitable consideration are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency." The approach adopted in the decisions of this spirit in Modern Automobiles case (supra) and Praveen Motors case (supra) inasmuch as it runs contrary to that advocated by the Hon'ble Supreme Court appears to be per incuriam.

13. On first reading the decision of the Hon'ble Supreme Court in Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and Ors., [1953] 4 STC 114 , cited by Mr. Mahna, appears to support the proposition presented by him. The ratio that was crystallised was that a pre-existing right of appeal could not be destroyed by an amendment if it had not been made retrospective and that a provision which is calculated to deprive an assessed of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. The Apex Court had accordingly held that the appeal should not have been rejected on the ground that it was not accompanied by satisfactory proof of the payment of the assessed tax. For the present purposes it is indeed significant that the vires of a provision mandating the deposit of assessed tax had not been challenged and the Court did not pronounce on this point even en passent. The next precedent pressed by Mr. Mahna is Divisional Forest Officer v. Presiding Officer and Ors., , but, in our analysis, it militates against the Petitioner's arguments. The factual matrix of the case is pivotal to its understanding. The purchasing dealer had not supplied the ST Forms to the appellant in order to claim statutory deductions. At the material point in time it had gone into liquidation and the Official Liquidator, instead of supplying these Forms issued a certificate verifying the sales. It was not a case where the ST Forms were not forthcoming at all. The Court did not consider it appropriate to dispense with the furnishing of the Forms. Relief was granted on a concession of the States. The decision indicates that meticulous compliance withe the statutory provisions was considered by the Hon'ble Supreme Court to be mandatory. There is no merit whatsoever in Mr. Mahna's contention that the Forms/Declaration is nothing but a "certificate of confirmation" of the transaction. If this were so, the Court would have accepted the Liquidator's certification. If this decision is to provide any succour to the Petitioner (all of whom are selling dealers) they must prevail upon the purchasing dealers to procure the ST-1 Forms. Unfortunately for the Petitioners, this appears not to be possible. The observations of the Apex Court in Divisional Forest Officer's case (supra) are contained in the following passages:-

"There is no doubt that it is the dealer who wishes to deduct from his gross turnover the amount in respect of a sale exemptable under Sub-clause (ii) of Clause

(a) of Sub-section (2) of Section 5 can approach the assessing authority for being granted the said form or forms in order to avail of the benefit of Rule 26. It is equally not denied that the appellant and the Corporation is such person. In the first place, it was for the appellant to apply for the grant of those forms to the assessing authority, then to have them duly filled and the counterfoils put to use as part of his return. It seems that the forms were neither solicited by the appellant nor by the Corporation in order to shift the liability of payment of sales tax to the purchaser who could, in the event of sale on his behalf pass on the liability onwards to the last sale.

Mr. R.S. Sodhi, learned counsel appearing for the State of Punjab, is candid enough to state that should the appellant now apply to the assessing authority for he grant of the requisite form/forms, there is no doubt that such form of roms will be provided to the appellant for putting them to use for the sales involved since the authenticity of the sales cannot be disputed, it being government to government (government-owned corporation) sale. The question is only of shifting the responsibility. Once that is accomplished the forms duly filled have to be signed by the Corporation, at present under liquidation. It is liquidator who is enjoined under the law to perform his part in making the form or forms vibrant and use worthy. We are thus of the view that the State of Punjab and the assessing authority on one part and the buyer-Corporation and its liquidator on the other are under the legal responsibility of facilitating the appellant transfer his liability towards payment of sales tax for the sales involved in the relevant assessment year. The facilitate the appellant to do the same, we issue directions to the respondents concerned to perform their duties as enjoined under the Act and once that is done, it would be open to the appellant to move the sales tax authorities for a suitable review so as to undo the orders already passed by them on the basis that the requisite Form ST XXII has not been produced. This relief to the appellant should suffice. Let the exercise commence within six weeks from today and be finalised as quickly as possible.

As a result this appeal is allowed, the judgment and order of the High Court is set aside and the matter is streamlined to be adjusted in the manner above-stated. No costs."

14. A recent decision of the Decision Bench of this Court, titled Shri Krishna Engineering Co. v. Commissioner of Sales Tax - CWP 3304/97, has been heavily relied upon by learned counsel for the Petitioners. However, in our view the applicability of this judgment to the controversy that rages before us is greatly exaggerated. No doubt, in that case Sub-clause

(ii) inserted in Clause (c) of Sub-rule (4) of Rule 8 of the Delhi Sales Tax Rules, 1975 by Notification dated 11.2.1997 was declared ultra vires the authority of the Lt. Governor of the NCT of Delhi and was consequently struck down. However, the Petitioners' impression that the Judgment covers the present controversy on all fours, is misplaced. The only similarity is that the Petitioners in those batch matters had assailed the said provisions because of a refusal by the Respondent-Department to issue Sales Tax Forms on the grounds that arrears of Sales Tax existed against the applicants. It must immediately be clarified that the applicants were the Purchasing Dealers themselves and arrears of Sales Tax were assignable to their account. As has already been pointed out, in the present case it is the Selling Dealers who have approached this Court because of the Department's refusal to issue the Forms to their Purchasing Dealers, for the reason that the latter had large outstanding of sales-tax. The controversy in the above decision is articulated in paragraph 8 of the erudite judgment. Three points had been formulated -

(i) The amended rule is in excess of rule making power of the Lt. Governor or in other words, is beyond the delegated legislative authority and hence is ultra vires the power of the rule making authority; (ii) The rule causes an unreasonable restriction on the petitioner's fundamental right to trade and hence is violative of Article 19(1)(g) of the Constitution; (iii) The amended rule having not been laid on the floor of Parliament as provided by Section 72 of the Act, has ceased to be enforceable. Before spelling out the reasons why the Division Bench had found the provisions to be ultra vires, it recorded the following observations the topicality of which can scarcely be over-emphasized.

"(13) This mechanism of passing on the burden of tax is made by the Act conditional upon the purchaser-dealer making available a declaration duly filled in and signed by him and containing the prescribed particulars in the prescribed proforma. Such proforma is available from the prescribed authority. If the purchaser dealer is not in a position to produce declaration in the prescribed proforma within the prescribed time, then the seller-dealer cannot claim the benefit of Sub-section (2) of Section 4. The figure of sales becomes liable to be included in the figure of his taxable turnover."

We have been strengthened in large measure in reaching the view taken in this judgment because of the extracted observations. The opinion of the Division Bench was that the Act did not "provide for withholding of the issuance of form n the eventuality of the applicant dealer being a defaulter or in arrears of tax. The rule-making power contained in Section 71 does not specifically confer the power on the Administrator to provide for categories of the dealers or the disqualifications by reference to which the issuance of forms may be denied by the prescribed authority". It has been contended by learned counsel appearing on behalf of Department that after observing that Sub-section (1) of Section 71 of the Act incorporated a general rule making power conferred on the Administrator the Division Bench proceeded only to peruse Sub-section (2) of that Section. We do not intend to ponder on this issue since we have been informed that the Special Leave Petition against this decision has been admitted by the Hon'ble Supreme Court. The Apex Court is, therefore, seized with this matter and is the proper forum for advancing such arguments. Our concern in these batch of matters is whether the Selling Dealers can canvass that the Department has no authority to refuse to issue Sales Tax Forms to Purchasing Dealers or allow deductions to the Selling Dealers and whether any of the provisions of Rule 8 of the Rules empowers it do so; if there is such a power, we are called upon to pronounce on its vires.

15. Before considering the ratio in the Shri Krishna's case (supra) we shall consider some of the other precedents discussed therein. In Dawar Brothers v. State of Madhya Pradesh and Ors., [1979] 44 STC 286 , the Division Bench of the Madhya Pradesh High Court held that Rule 8(1-A)(f), of the Madhya Pradesh Sales Tax (Central) Rules, 1957, in so far as it empowered the Sales Tax officer to withhold the issuance to the purchasing dealer of the blank declaration forms ('C' Forms) prescribed under Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957, on the grounds either that the purchasing dealer has defaulted in furnishing the return under the Madhya Pradesh General Sales Tax Act, 1958, or that he is in arrears of tax under the State Act, is ultra vies the rule-making authority of the State Government under Section 13(3) and (4) read with Section 8(4) of the Central Sales Tax Act, 1956. The Division Bench opined that the rule-making power of the State Government under Section 13(3)(4) of the Central Act cannot be used by the State Government as a device for the realisation of its own dues under the State Act. In arriving at their decision the Division Bench drew support from the observations of the Hon'ble Supreme Court in M/s. Khemka and Co. (Agencies) Pvt. Ltd. v. State of Maharashtra, , where it was held that liabilities and outstanding dues in respect of the Central Act should be differentiated from those arising out of the State Act, and that the powers and penalties contained in the Central Act cannot be extrapolated into the State Acts. The Court pronounced that where the assessed commits default in payment of tax under the Central Act within the prescribed time, in the absence of any specific provision for the imposition of penalty for such default in the Central Act, the provisions for the imposition of penalty for such defaults in the State Sales Tax Acts are not attracted, and hence no penalty could be levied under the State Sales Tax. Neither of these decisions can be applied to the facts of the present case. The Respondents are not employing any of the provisions of the Central Sales Tax Act to sustain the legality of the impugned rules. The object of a State Act would ordinarily not extend to the recovery of dues under the Central Act. This is the essence of the above decisions.

16. We have encountered a conundrum in that the opinion of a Division Bench of this Court in the case of Gupta Trading Co. and Ors. v. Delhi Administration and Ors., [1986] 62 STC 7 , had not been brought to the notice of the Bench which decided Shri Krishna's case (supra) and the two views are essentially divergent. In the earlier decision the registered dealer had filed a writ to ensure supply of ST-1 Forms in the face of the Department maintaining that it had disentitled itself from this benefit because of rampant irregular use of Forms already supplied to it. It had also been contended that since there was no irregularity alleged in the purchases made, the Department could not decline to issue ST-1 Forms which had sole reference to such purchase. The Division Bench rejected the contention and opined that sales could not be looked at in isolation as they were an integral part of the overall business activity of the Dealer; the clandestine disposal of goods to the detriment of sales-tax collection could not be overlooked and preventive steps to protect the Department's interests could be adopted. Before dismissing the writ petition the Division Bench observed that "Rule 8(4)(c) also permits the assessing authority to withhold the issue of ST-1 forms for reasons to be recorded in writing, in case of default in furnishing any return or returns together with documents, etc. Discovery of adverse material suggesting any concealment of sale or purchase or furnishing inadequate particulars in the return may also result in disentitlement of such forms."

17. In Shri Krishna's case (supra) the Court, therefore, had to investigate firstly whether there was any provision in the Act which authorised the withholding of Forms on the grounds of the applicant being in arrears of tax. The Court perused Sub-section (2) of Section 71 of the Act but could not locate any power contained therein. It was in those circumstances that it arrived at the conclusion that the newly added Clause (ii) in Clause (c) of Sub-rule (4) of Rule 8 of the Rules was ultra vires the powers of the Lt. Governor. In these petitions we are not concerned with that provision, since it is no longer on the statute book as a result of that judgment.

18. In the decisions rendered by the Hon'ble Supreme Court in Commissioner of Income Tax, Andhra Pradesh v. Taj Mahal Hotel, [1971] 82 ITR 44 and Rallis India Ltd. v. State of Andhra Pradesh, [1980] 45 STC 456 , it has been reiterated that Rules are meant only for the purpose of carrying out the provisions of the Act and they cannot take away what is conferred by the Act or whittle down its effect. To this proposition we may add the observations of the Hon'ble Supreme Court recorded in The State of Kerala v. K.M. Cheria Abdulla and Company, [1965] 16 STC 875 . It said that the "power to frame rules is conferred by the Act upon the State Government and that power may be exercised within the strict limits of the authority conferred. If in making a rule, the State transcends its authority, the rule will be invalid for statutory rules made in exercise of delegated authority are valid and binding only if made within the limits of the authority conferred." The pronouncements in M/s. Bharat Barrel and Drum Manufacturing Co. Pvt. Ltd. and Anr. v. The Employees' State of Insurance Corporation, , are in similar vein. In Bimal Chandra Banerjee v. State of Madhya pradesh and Ors., [1971] 81 ITR 105 , the Apex Court had opined that tax could not be imposed by any bye-law or rule unless the statute under which the subordinate legislation is made specially authorises the imposition, assuming that power to tax can be delegated to the executive.

19. The enquiry before us, therefore, must be directed towards a search within the provisions of the Act or the unassailed Rules bestowing upon the Department discretion to decline to issue Declaration Forms to a party on the grounds that it had already entered into sales transactions with another registered dealer. It has been emphasised by learned counsel for the

Respondents, in our view rightly so, that the generality of the provisions of Sub-section (1) of Section 71 should be given their full effect so as to enable the making of Rules for the full implementation of any provisions of the Act. So long as it does n to result in the delegate performing a legislative function, there can be no quarrel with this proposition. Where there is a general provision, such as in the first sub-section of Section 71, followed by several enumerations, such in its second sub-section, the most practical interpretation is that the subjects falling within the enumerated sub-section would vest rule-making power in the delegate regardless of whether they have been specifically traversed in the Act itself. Effect is thereby given to both the sub-sections. The intent in such cases would be that the Legislature had considered the enumerated subjects not to be of such importance as would require them to be spelt out in the Act itself. Unless this approach is followed the general provisions pertaining to rule-making powers, such as in Section 71(1), would be rendered wholly otiose. Canone of statutory interpretation abhor such a result.

20. The provisions before the Apex Court in State of Kerala v. M. Appukutty, [1963] 14 STC and those before us are in pari materia. Section 19(1) of the Madras General Sales Act, 1939 empowered the State Government to "make rules to carry out the purposes of the Act". Rule 17 conferred powers to assess escaped turnover, although the substantive provisions of the Act did not expressly deal with the power and procedure for assessment of escaped turnover. The Court held the assailed Rules to be intra vires and opined that the rule making powers were to be found in Sub-section (1) and the function of Sub-section (2) were merely illustrative.

21. Similarly, in State of Mysore etc. v. M.L. Nagade & Gadag and Ors., AIR 1983 Supreme Court 762 , Section 172 of the Hyderabad Land Revenue Act conferred rule making powers 'for the purpose of carrying out the provisions of the Act. The Apex Court reiterated that a "guide-line need not be found in the impugned provision. The same may be collected from the setting in which the provision ins placed, the purpose for which the Act is enacted and even the preamble of the statute in which the provision is incorporated. A legislation or statute is enacted to achieve some public purpose and the policy of law and the object sought to be achieved can furnish reliable guide-lines for he exercise of discretionary power." Adopting this approach, and recollecting that the object of the Delhi Sales Tax Act is to charge and collect sales-tax, and Rule furthering this objective ought to receive judicial imprimatur. It should also be borne in mind that the devices of exemption forms constitute the exception and not the norm.

22. It is the contention of learned counsel appearing for the Sales Tax Department that consequent upon the striking down of Sub-clause (ii) in Clause (c) of Sub-rule (4) of Rule 8 of the Rules in Shri Krishna's case (supra) the earlier provision must be deemed to have been restored into the statute book. The difference in these two provisions was that in the amended Sub-rule (ii) the default that was envisaged was in making the payment of the amount of tax assessed or penalty imposed by the Assessing Authority in respect of which "no orders for Installment/stay had been obtained from any competent Authority" whereas in the unamended Sub-rule (ii) the default was in making the payment of the amount of tax assessed or penalty imposed by an appropriate Authority, "which the applicant admits to be due from him and which is not in dispute". The argument advanced on behalf of the Department is wholly without merit in view of the pronouncements of the Hon'ble Supreme Court in West U.P. Sugar Mills Association and Ors. v. State of U.P. and Ors., [2002] 126 STC 190 , to the effect that once an old rule has been deleted or repealed and substituted by a new rule, the old rule would not revive when the new rule ceases to be operative. Accordingly, in the interregnum between the pronouncing of the judgment in Shri Krishna's case (supra) and the amendment to the Act and Rules by Notification dated 12.9.2001 we must proceed on the premise that Sub-clause (ii) in Clause (c) of Sub-rule (4) of Rule 8 of the Rules was not in existence. It needs to be clarified that the manifold amendments introduced by the Notification have attained statutory force on the passing of the Delhi Sales Tax (Second Amendment) Act, 2000 (Delhi Act No. 1 of 2001).

23. Let us now return to the relevant statutory provisions prior to their alteration by the said Notification and by Delhi Act No. 1 of 2001. Foremost amongst all, is the second proviso to Section 4 of the At, the effect of which is that the selling dealer's taxable turnover would perforce include all transactions, regardless of whether they are between registered dealers, excepting and excluding only those transactions in respect of which a Declaration is available. The language of the Act is explicit and admits no controversy. It is certainly arguable that the incorporation of the words "in the manner and subject to such conditions as may be prescribed" into the second proviso of Section 4 and the first proviso of Section 5 of the Act by the said Delhi Act No. 1st of 2001 is a needless or superficial surplusage in view of the sweep of Section 71(1) of the Act. It is also of consideration significance that the Petitioner have not assailed Rule 7 which is patently predicated on Section 4 and 5 of the Act. This provision mandates that in order to qualify for or avail of the exclusion, deduction or exemption of a transaction from the dealers turnover, ST-1 Forms should have been obtained when the sale took place or latest by the time the Assessment comes to be completed. This Rule, therefore, annihilates the simplicist argument that if the subject transaction is between registered dealers it per se qualifies for the enjoyment of exemption from payment/collection of sales tax.

24. We also feel the need to observe that there is no novelty in the impugned Rule. It merely gives effect to Section 43(5) of the Sales Tax Act 1975 which deals with Appeals. For case of reference the Section is reproduced below:

"43(5) No appeal against an order of assessment with or without penalty or against an order imposing the penalty shall be entertained by an appellate authority unless such appeal is accompanied by a satisfactory proof of the payment of tax with or without penalty or, as the case may be, of the payment of the penalty in respect of which the appeal has been preferred:

Provided that the appellate authority may, if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order-

(a) without payment of the tax and penalty, if any, or as the case may be, of the penalty, on the appellant furnishing in the prescribed manner security for such amount as it may direct; or

(b) on proof of payment of such smaller sum, with or without security for such amount of tax or penalty which remains unpaid, as it may direct:

Provided further that no appeal shall be entertained by the appellate authority unless it is satisfied that such amount of tax as the appellant may admit to be due from him has been paid."

25. Despite having a good case a party may receive an unfavorable order/judgment. It may then not only suffer the discomfort of taking steps to have the order corrected in appeal, but may additionally have to comply with onerous pre-conditions for the hearing of the appeal. In Shyam Kishore and Ors. v. Municipal Corporation of Delhi and Anr., , somewhat similar pre-conditions for the disposal of an appeal against an assessment order had come up for consideration before the Hon'ble Supreme Court. Under the MCD Act an appeal against the assessment cannot be heard without pre-deposit of the tax. It was held that the appellate authority has no jurisdiction to waive the condition or stay the collection of tax pending disposal of the appeal. The Apex Court also relied that despite these stringent requirements, the remedy of an appeal was nonetheless an alternative remedy thereby discouraging the invocation of extra-ordinary powers of the High Court under Article 226 and 227 of the Constitution. As we have already mentioned, the impugned Rules merely implement this settled principle of law. In Shyam Kishore's case (supra), the plea that the provision for deposit of duty or penalty pending appeal whittles down the appellant's right of appeal and is, therefore, ultra vies, did not find favor with the Hon'ble Supreme Curt. The Court relied on its previous observations in Vijay Prakash D. Mehta and Anr. v. Collector of Customs (Preventive), Bombay, viz.-"right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant." This position was once again reiterated in Gujarat Agro Industries Co. Ltd. v. The Municipal Corporation of the City of Ahmedabad and Ors., . It was again articulated in State of Haryana v. Maruti Udyog Ltd and Ors.

etc. etc. in the syntax of Sales Tax legislation, in these words:-

"There cannot be any dispute that right of appeal is the creature of the statute and has to be exercised within the limits and according to the procedure provided by law. it is filed for invoking the powers of the superior Court to redress the error of Court below, if any. No right of appeal can be conferred except by express words. An appeal, for its maintainability, must have a clear authority of law. Sub-section (5) of Section 39 of the Act vests a discretion in the appellate authority to entertain the appeal if it is filed within sixty days and the amount of tax assessed along with penalty and interest, if any, recoverable from the persons has been paid. The aforesaid restriction is subject to the proviso conferring discretion upon the appellate authority to dispense with the deposit of the amount only on proof of the fact that the appellant was unable to pay the amount. Before deciding the appeal, the appellate authority affords in opportunity to the party concerned to either pay the amount or make out a case for the stay in terms of proviso to Sub-section (5) of Section 39 of the Act. Once the conditions specified under Sub-section (5) of Section 39 are complied with, the appeal is born for being disposed of on merits after hearing both the sides."

This dicta is not confined only to taxation matters and applies with equal force even to civil appeals, as would be obvious on a reading of the decision in Kondiba Dagadu Kadam v. Savitribai Sopan Gujar and Ors., .

26. When we travel further through the Act and peruse Section 20(3) we find several situations in which the Commissioner has the discretion the cancel the Dealers' registration, inter alia failure to pay tax including penalty, and accepting or furnishing a false declaration. Section 21 obligates the Dealer not only to pay tax but also to furnish returns of turnover by the prescribed dates. Section 23 covers all the circumstances concerning assessment to Sales Tax. Section 25 contains provisions pertaining to payment and recovery of tax. Mr. Mahna had urged that since Sub-section (7) mentions that dues are recoverable as arrears of land revenue, the Department should proceed against the purchasing dealers and not penalise the selling dealers. We find no substance in this argument as the sub-section does not obliterate the selling dealers duties under the Act, namely to collect tax where the purchasing dealer fails to furnish the requisite Form. It should also be noted that the right to file an appeal, bestowed by Section 43, stipulates in Sub-section (5) that it shall be entertained only if it is accompanied by satisfactory proof of the payment of tax with or without penalty; these provisions appears not to have been highlighted before the Bench which decided Shri Krishna's case (supra). All these Sections must be conjointly borne in mind while considering the sweep of Section 71(1). Since the statute itself deals with these sundry topics it is clearly illusory to challenge the vires of the Rules on the platform that they travel beyond the Act itself. The primary intendment of the Act is to levy and collect tax. Every device, including all stipulations pertaining to the dealer-friendly declaration forms, are incorporated to implement the objectives of the Act. They cannot be conceived as ultra vires the statute. We have reached this conclusion after carefully cogitating on all parts of Rule 8(4)(c), and are unable to detect any hiatus between the Act and the Rules on the subjects traversed therein. The purchasing dealers have defaulted on three statutory obligations, inter alia under Sections 21, 23 and 24 of the Sales Tax Act. The Petitioners, who have sold goods to them without compliance of the Act including Sections 4 and 5 cannot expect to be impervious to payment of sales tax, which would otherwise be irretrievably lost. As we have already observed above, the selling dealers have legal remedy against their purchasing dealers, and should have initiated timely and appropriate legal recourse with diligence.

27. Since we have endeavored to discuss threadbare all the issues raised before us, it is unnecessary to dwell on the legal nodus of whether the Petitioners' possess sufficient locus standi to urge the prayers contained in these petitions. Since they are likely to make good the shortfall in the payment of sales-tax they should not be precluded from agitating upon the vires of Rule 8(4)(c). However, this does not lead to the conclusion that the petitioners also posses necessary legal character to further claim that ST-1 Forms shall be issued to their purchasing dealers, where efforts of the latter are either not forthcoming, or have proved to be sterile.

28. The Petitions are without merit and are dismissed. The Petitioners have filed applications for the issuance of directions to the Respondents for supply of sales tax exemption forms. They have also filed applications for temporary injunction. Since we have found no merit in the writ petitions themselves all these applications along with other pending applications are also dismissed. However, in view of the understandable misconstruction by the Petitioners of the decision of Shri Krishna case (supra) we desist from awarding costs.