ASSESSING AUTHORITY, PATIALA DISTRICT PATIALA AND ORS. versus M/S. PATIALA BISCUITS MFG. CO. NOW AS DALMIA BISCUIT PVT. LTD.

Citation: [1977] 3 S.C.R. 85 · Decided: 01-03-1977 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Dismissed

Judgment (excerpt)

! 
85 
ASSESSING AUTHORITY, PATIALA DISTRICT PATIALA AND 
A 
ORS. 
v. 
M/S. PATIALA BISCUITS MFG. CO. NOW AS DALMIA 
BISCUIT PVT. LTD. 
March 1, 1977 
[P. N. BHAGWAT!, R. S. SARKARIA AND S. MURTAZA FAZAL Au, JJ.] 
Punjab General Sales Tax Act, 1948-Assessee entitled to certain deductions 
if seller and buyer are negisflered dealers-Both applied for registration-('crtifi-
cates issued later ttdth retrospective effect-Dealers-If sl1011/d be in physical pos-
session of registration certificate at the ti1ne of sale to claini deduction. 
According to s. 5(2) (a) (ii) of the Punjab General Sales Tax Act, 
1948, 
tnxable turnover means the part of a dealer's gross turnover during any period 
which remains after deducting therefron1 the turnover <luting that period, 
on 
sales to a registered .dealer of goods declared by him in a prescribed form as 
being intended for re-sale in the State. Section 7 ( 1) provides that no dealer 
shall carry on business as a dealer unless he has been registered and possesses 
a registration certificate. Rule 5 of the Punjab Geti.eral Sales Tax Rules, 1949' 
n 
c 
as amended in October 1966 provid~s that the certificate of registration issued 
D 
by the Assessing Authority shall be valid from the date of receipt by him of the 
application for registration or from the date of commencement of the liability 
to pay tax whichever is later. 
Rule 26 provides that a dealer claiming deduc-
tion under s. 5(2) (a) (ii) shall produce on demand the cash memos or bill and 
a declaration in writing. by the purchasing dealer that the goods specified in the 
certificate of registration are for use by him. 
· 
The assessee (respondent) and the purchasing dealer, the sole selling agent 
of the assessee, made applications on January 1, 1966 for registration as dealers. 
E 
The registration certificates were issued to them on March 27, 1966 with retro· 
spective effect from January 1, 1966. 
The Assessing Authority rejected the assessee's claim for deduction under 
s. 5(2)(a)(ii) of sales made by them to the purchasing dealer on the ground 
that during the period between January 1 and March 31, 1966, the purchasing 
dealer was not in possession of the registration certificate. 
In a petition under Art. 226 of the Constitution the High Court held 
that 
F 
since t?e certificate of regi~tra~ion ?ad been granted :with effect from January 1, 
1966, 1.e. the date of application, it could not be said that the sales during the 
quarter were to an unregistered dealer. 
On appeal it was contended that to be entitled to deduction under the Act 
both the purchasing and .selling dealers should be in physical possession of the 
registration certificate at the time of sale. 
Dismissing the appeal, 
G 
HELD: The assessees were entitled to deduction under s. 5(2) (a) (ii) in 
respect of sales made by them to the purchasing dealer during ·the quarter. 
[90 0] 
. 
(a) At t~e re!evant t~me, the registering au~hority was fully competent to 
issue the !eg1stration cer~1fic~te to the dealer with retrospective effect fron1 the 
date of filinc: of the application. The amendment of r. 5 made in October 1966 
did not c_onfe.r any new or additional power on the registering authority but V.'as 
H 
-Only clarrficatory of the law. .The language of s. 7 is clear that the registering 
authority had the power to give effect to the registration from the date of making 
the application. [90 F; A] 
A 
B 
c 
D 
E 
86 
SUPREME COURT REPORTS 
[1977] 3 S.C.R. 
(b) The \Vords "has been registered and possesses a registration certificate" 
i:._1 s. ,7 ( 1) should be construed in accord \Vith the general tenor of the section as 
a \Vhole, and in a manner which would avoid 
oppressive, 
unreasonable 
and 
nnomalous results. 
So construed it could never be the intention of the legisla-
ture that a dealer liable to pay tax, who has in compliance with the requirements 
of s. 7(2) and (3) done all which lay in his power to obtain the registration 
certificate, should pull down his shutters and keep his business closed under pain 
of being punished and await indefinitely the pleasure and leisure of the 
pres-
cribed authority in issuing the registration certificate. 
Adoption of such a cons-
truction '"'ould be to make an applicant liable to punishment for the laches and 
delays of the authority and its office. 
[90 B·CJ 
Chandra Industries v. The Punjab State & Ors. 29, S.T.O. 558, approved. 
( c) The requirement of- r. 26 will be substantia1ly satisfied if t

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