Law: Sales Tax Act, 1990

Section: 2(5AB),2(25),3,3(1)(a),14,23,23(2),33(5),33(7),33(8)

Law: Sales Tax Rules, 2006

Section: 6,6(1),6(3),6(4)

 SUMMARY;Facts of the Case:The appellant, engaged in the manufacture and taxable supply of bakery and sweets products with sales totaling Rs. 54,628,920 during the relevant tax period, remained unregistered under the Sales Tax Act, 1990. The department, upon scrutiny of income tax records, concluded that the taxpayer was liable for sales tax registration under section 14 read with section 2(5AB) of the Act but had failed to register.A show cause notice dated 05.10.2016 was issued. The taxpayer did not respond. Consequently, an Order-in-Original dated 03.03.2017 was issued under section 11 of the Sales Tax Act, 1990, raising a demand of Rs. 9,064,987, along with default surcharge under section 34 and penalties under sections 33(5), 33(7), and 33(8).On appeal, the Commissioner Inland Revenue (Appeals) upheld the original order. The taxpayer then filed the present second appeal before the ATIR.________________________________________Legal Issue:Whether a taxpayer who is not registered under the Sales Tax Act, 1990 can be subjected to sales tax liability, surcharges, and penalties without first undergoing compulsory registration in accordance with Rule 6 of the Sales Tax Rules, 2006?________________________________________Arguments:• Taxpayer’s Representative (AR):o Cited that the appellant was not registered at the time of issuance of show cause notice or the Order-in-Original.o As per legal precedent and statutory provisions, sales tax cannot be imposed unless a person is duly registered.o The entire proceedings were ultra vires the Act, lacking lawful basis.• Departmental Representative (DR):o Argued that under section 2(25), a person liable to be registered is deemed to be a "registered person".o Therefore, the department was justified in creating liability based on taxable activity.________________________________________Findings of the Tribunal:The Tribunal conducted a detailed review of the statutory framework and judicial precedents and ruled as follows:1. Section 2(25) and Rule 6 Interpretation:A person liable to be registered must be compulsorily registered first by the department following due process under Rule 6 of the Sales Tax Rules, 2006,…