POLESTAR ELECTRONIC(P) LTD. versus ADDL. COMMISSIONER, SALES TAX DELHI

Citation: [1978] 3 S.C.R. 98 · Decided: 20-02-1978 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Case Allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
98 
POLESTAR ELECTRONIC(P) LTD. 
v. 
ADDL. COMMISSIONER, SALES TAX DELHI 
February 20, 1978 
(M. H. BEG, C.J. AND P. N. BHAGWATI, J.] 
l11terpretation of statutes-Pfa;n and 
fUlturaf nzeaning--Construction 
of a 
taxing statute-letter of law or spirit of la1v-Construction of provi.Jion ex-
posing an assessee to penalty, 
Bengal Finance (Sales Tax) Act, 1947 as applied to Union Territory 
of 
Delhi-Sections 2(5) & 5(2)(a)(ii)-To get the benefit of sale for resale or 
to a manufacturer-Whether subsequent sale (J'hould be wi!/1in Union Territory 
of Delhi. 
Bengal Finance (Sales Tax) Act, 1947 was applied to the Union Terdtorr. 
of Delhi subject to certain 
modifications by a notification 
dated 28-4-195 . 
Every dealer whose gross turnover exceeds the taxable quantum is liable to 
pay tax on sales effected by him after a specified date and while ho is liable 
to pay tax, he! cannot carry on business u'llless he gets himself registered and 
possesses a registration certificate. The tax is leviable on a dealer in respect 
of his taxable turnover. To compute 
taxab:e turnover of a 
dealer, certoa.in 
deductions are required to be made from h's gross turnover and one of the 
deductions is that set out in secticn 
5(2) (a) (ii). What is permitted to 
be 
deducted under this provision is turnover of sales to a registered dealer of soeds 
of the class or classes specified in his certificate of registratiion as being mten· 
ded for resale by him or for use by him as raw materials in the manufacture 
of goods for sale. 
The first proviso enacts that the turnover of sales covered 
by s. 5(2)(a)(ii) would be deductable only if a declaration duly filled in and 
sign.ed by the Registered! dealer to whom the goods are sold and containing 
the prescribed pa;~ticulars iri prescribed form is furnished by the Sellin$ dealer. 
The requirement of such declaration as condition of deduction is clearly intended 
to prf:vent fraud -and promote administrative efficiency. The second proviso 
provides that where any goods specified in ~e certificate of registration are 
purchased by a registered dec>.!er As being intended for resale· by him or for 
use by him as raw materials in the manufacture of goods for sale but are 
utilised by him for any other purpose the price of the goods purchased •hall 
be allowed to be deducted from the gross turnover of tihe selling -dealer but 
shall be included in the taxable turnover of the purchasing dea1er. 
There are broadly two groups in which the appeals and the 'WTit petitions 
can be divided. One group consists of appeals where the assessees purchased 
goods of the cla'ls spe·cified in thC' certificate of registration as being_ intended 
for resale by them and furnished to the dealers selling the goods, declarations 
in the prescribed form stating that the 
goods were 
intended for resale and 
thereafter resold the goods though not 
within the territory of Delhi. 
'I he 
second group consists of appea.ls where the assessees purchased goods of the 
class specified in the certificate of registration as being intended for use by 
them as raw materials in the manufacture of goods for sale and furnished to 
the prescribed particulars in prescribed form is furnished by the selling dealer, 
the dealers selling the goods declarations in the prescribed form stating that 
the goods were purchased by them for use as raw materials in the manufacture 
of goods for sale and thereafter used the goods purch~sed as raw materials 
in the mamufactnre of goods, in some· cases outside Delh: and in some others 
inside, but in the lat!er. so.1d the: goods so manufactured outside Delhi. 
The-
High Court of Delhi negatived the oonteintion of the assessees that they 
'W·ere 
not covered by the second proviso to s. 5(2)(a)(ii). The High Court took 
the view that for the purposes of s. 5(2) (a)(ii) and the second proviso, re6ale 
of the goods purchased was confined to resa_Je inside Delhi and so also u..se 
of the goods purchased as raw materials in the mooufacture of goods 
and 
' 
i 
POLESTAR LTD. v. c.s.T. 
99 
sale of manufactured goods were required to be inside Delhi and, theref<?re, 
A 
if the assessees resold the goods outside Delhi or used them as raw ma-t~n~Is 
in the manufacture outside 
Delhi, or even if the 
manufacture ·woo inside 
Delhi sold the goods manufactured outside Delhi, there was utilisation of the 
goods by the assessees for a purpose other than that for which they were pur-
chased an4

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