COMMISSIONER OF SALES TAX DELHI AND ORS. versus M/S. SHRI KRISHNA ENGG. CO. AND ORS.

Citation: [2005] 1 S.C.R. 825 · Decided: 25-01-2005 · Supreme Court of India · Bench: S.N. VARIAVA
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

COMMISSIONER OF SALES TAX DELHI AND ORS. 
A 
v. 
M/S. SHRI KRISHNA ENGG. CO. AND ORS. 
JANUARY 25, 2005 
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.t-!. KAPADIA, JJ.] 
B 
Sales Tax: 
Delhi Sales Tax Act, 1975, Section 4(2)(a)(v)-Delhi Sales Tax Rules, 
1975-Rule 8(4)(c)-Sale transaction-Purchasing dealer failing to submit C 
ST-/ form-liability of selling dealer to pay sales tax-Held, selling dealer 
is liable to pay sales tax-Object of the Act being to check evasion and 
collection of tax, State cannot lose its tax entitlement. 
The question which arose in present appeals is whether selling dealer 
who is not issued ST-1 forms by their purchasing dealer is disentitled to D 
claim benefit of Section 4(2)(a)(v) of Delhi Sales Tax Act, 1975 and liable 
to pay tax on such transaction. 
Appellant-assessees contended that they were suffering due to failure 
and defaults on the part of purchasing dealers, in which they have played E 
no part whatsoever and 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; that as per Rule 8(4)(c) 
tax assessed must be paid as a condition for issuance of forms. The 
condition to deposit assessed amount of tax is a substantive provision of 
law going to the root of the right of the dealer to receive forms; that the F 
impugned rule has been passed beyond the powers conferred under Section 
71(2)(b) of the Act and therefore the rule is in excess of the jurisdiction 
and authority of law and as such is liable to be quashed; that the 
Administrator cannot take upon himself the power of the Parliament in 
making any substantive amendments in the Act or the Rules. 
G 
Revenue contended that a measure which is intended to check the 
evasion of tax is a valid measure and it is in public interest to see that in 
the guise of freedom of trade, they do not evade the payment of tax; that. 
the power of Administrator to provide for further safeguards to prevent 
825 
EI 
826 
SUPREME COURT REPORTS 
[2005] J S.C.R. 
A evasion of tax and to enable the Revenue to check such evasion and collect 
tax is liable to be upheld so long as it does not contravene any specific/ 
express provision of the Act. 
Disposing of the appeals, the Court 
B 
HELD: 1.1. The objective of Delhi Sales Tax Act, 1975 is to levy and 
collect tax on the sale of goods in the National Capital Territory of Delhi. 
Levy of tax is meaningless if the tax is not collected. It can never be the 
intention of lawmakers to keep on levying tax without any effort to collect 
the tax so levied. [838-Ff 
C 
lndo International Industries v. Commissioner of Sales Tax, Uttar 
Pradesh, (1981) 47 STC 359; State of Tamil Nadu v. MK. Kandaswami and 
Ors. (1975) 36 STC 191 and N. V. Bagi v. commissioner of Commercial Taxes 
in Karnataka, (1991) 83 STC 449, referred to. 
1.2. The entitlement to deduction under the Act, postulates two 
D requirements, sale to a registered dealer and submission of a true 
declaration filled and signed by the registered dealer in the prescribed 
forms (ST-1). Selling/Purchasing dealers, 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 provide ST-1 Forms. In the event of 
E the said forms being unavailable to them for whatever reason, they are 
responsible for payment of the tax. The State cannot lose its tax 
entitlement, in the light of the purpose and object of the Sales Tax Act. 
The intent behind the devising of ST-1 forms/C 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. 
F 
[839-D-E, Gf 
A .. V Fernandez v. The State of Kera/a, AIR (1957) SC 657, referred 
to. 
Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd., AIR (1961) 
G SC 1047, cited. 
1.3. The scheme of the Act is that either ST-1 Form should be 
available or tax should be collected. If a dealer shows such indulgence as 
to delivery of ST-I Forms for a particular period, he takes the risk. The 
H Sales Tax Department is neither privy to nor is it concerned with any 
COMMR. OF SALES TAX v.SHRI KRISHNA ENGG. CO. [LAKSHMANAN, J.] 
827 
~ 
assurances that might have been exchanged inter se between the selling A 
and purchasing dealers in the matter of furnishing ST-I Forms. There is 
no reason for the consequences of the dealers' acts of omission or 
com
Excerpt shown. Read the full judgment & AI analysis in Lexace.