Allahabad High Court
Satya Pal Singh Brick Field vs Commissioner, Sales Tax on 12 September, 1986
Equivalent citations: [1987]65STC23(ALL)
Author: A.P. Misra
Bench: A.P. Misra
JUDGMENT A.P. Misra, J.
1. The present revision arises out of the proceeding under Section 15-A(1)(c) of the U.P. Sales Tax Act. The assessing authority imposed a penalty of Rs. 8,000 for the assessment year 1982-83.
2. In appeal filed by the assessee, the Assistant Commissioner (Judicial), Sales Tax, allowed the appeal in part and reduced the amount of penalty to Rs. 1,000. Aggrieved, both the applicant and the department preferred second appeals before the Sales Tax Tribunal. The Tribunal by means of its order dated 10th October, 1985, dismissed the appeal filed by the applicant and allowed the appeal filed by the department. By virtue of the said order, the Tribunal restored the penalty as fixed by the assessing authority. The present revision is confined to the later part of the case by virtue of which the Tribunal allowed the appeal of the department. It is significant to mention here that the present proceeding was initiated on account of concealment detected when the (S.I.B.) seized the account books of the assessee. Exhibit No. 8 and exhibit No. 7 reflected concealment of sales tax. Apart from this, some other papers were also detected. The suppression of these details clearly reflected the concealment of sales tax made by the applicant.
3. The question which arises is whether the penalty should be worked out on the basis of the actual concealment found or on the basis of the difference between the returned turnover and the assessed turnover.
4. Learned counsel for the applicant referred to both unamended and the amended section. He urged that after the amendment of Section 15-A(1)(c), which became effective from 1st March, 1973, the imposition of penalty could not be on the basis of the difference of assessed tax and the disclosed turnover. According to him, as per amended section, under Section 15-A(1)(r)(ii) it can only be on the basis of the actual concealment found. He made emphasis on the word used "thereby" therein. The argument was that "thereby" only qualifies the preceding sub-clauses mentioned therein. The present case is a case of concealment covered by Sub-clause (c) of the aforesaid section.
5. To appreciate the controversy raised in the present case, unamended Section 15-A(1)(a), (b) and (c) is quoted below :
(1) If the assessing authority in the course of any proceedings is satisfied that any dealer-
(a) has without reasonable cause failed to furnish the return of his turnover which he was required to furnish under Section 7, or has without reasonable cause failed to furnish it within the time allowed and in the manner prescribed ; or
(b) has concealed the particulars of his turnover or deliberately furnished inaccurate particulars of such turnover ; or
(c) has without reasonable cause, failed to pay, within the time allowed the tax assessed on him, he may direct that such dealer shall pay, by way of penalty, in the cases referred to in clauses (a) and (c), in addition to the amount of tax payable by him, a sum not exceeding 25 per cent of the tax due if the tax is up to rupees 10,000 and not exceeding 50 per cent of the tax due if the tax is above rupees 10,000 and in the cases referred to in Clause (b), in addition to any tax payable by him, a sum not exceeding one and one-half times the amount of tax, which would have been avoided, if the turnover, as returned by such dealer had been accepted as the correct turnover :
Provided that no penalty shall be imposed under the foregoing clause-
(i) except after notice to the dealer, and
(ii) in a case falling under Clause (a), until a period of 60 days has expired after the date on which the return is required to be furnished under Section 7.
6. Learned counsel for the applicant further urged that the unamended provision provided for imposition of penalty on the basis of the turnover as filed and the actual turnover assessed. He argued that the legislature in unamended section deliberately used the words "as returned by such dealer" and on account of this avoidance of tax as referred to therein could only be between the tax as assessed and the turnover as filed. He further urged that it is significant that after the amendment the aforesaid words have been dropped. For ready reference; the amended Section 15-A(1)(c), (d), (1), (m) and (r)(ii) is quoted hereunder :
(1) If the assessing authority is satisfied that any dealer or other person-
...
(c) has concealed the particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover ; or
(d) has maintained or produced false accounts, registers or documents; or ...
(1) issues or furnishes a false certificate or declaration by reason of which a tax on sale or purchase ceases to be leviable under this Act or the rules made thereunder; or
(m) makes use of a prescribed form of declaration or certificate which has not been obtained by him or by his principal or agent in accordance with the provisions of this Act or the rules made thereunder ; or ...
(r) otherwise acts in contravention of the provisions of this Act or the rules made thereunder, it may, after such inquiry, if any, as it may deem necessary, direct that such dealer or person shall pay, by way of penalty, in addition to the tax, if any, payable by him,-
...
(ii) in a case referred to in Clause (c), Clause (d), Clause (h), Clause (i), Clause (m) a sum not less than fifty per cent, but not exceeding one and one half times, of the amount of tax which would thereby have been avoided.
7. His argument is that now after the amendment since the aforesaid words were omitted, the word "avoided" used in Clause (r)(ii) must be read as referred to therein.
8. On the other hand, learned standing counsel urged that there is no significant change between the unamended section and the amendment which was brought into existence on 1st March, 1973. His argument is that the words "as returned by such dealer" as used in unamended section was dropped for a deliberate purpose. In unamended section since the clause of penalty was confined to concealment of the turnover, while in amended section it was enlarged to cover other sub-clauses, some of which have no co-relation with the turnover. It is now relevant to consider the sub-clauses referred to in (r)(ii) where if the retention of the words "as returned by such dealer" would have been there whether it could have been effectively applied in co-relation with the sub-clauses mentioned therein.
9. It is significant that Sub-clause (b) of the unamended section is retained as Sub-clause (c) after the amendment and similarly Sub-clauses (a) and (c) have now been retained as Sub-clauses (a) and (e). In unamended section the words "as returned by such dealer" only qualify to Clause (b) and not (a) and (c). It cannot be doubted that Clause (b) earlier was for the concealment of the particulars of the turnover and for deliberately furnishing inaccurate particulars of such turnover. Since penalty in Clause (b) was in relation to turnover, the language used therein was for that particular purpose. After the amendment since in Clause (r)(ii) it not only relates to the concealment and deliberately furnishing inaccurate turnover but also the cases falling in clauses (d), (1) and (m). Clauses (1) and (m) cover cases where turnover of a dealer need not change. There only the taxability of the commodity is increased, that is to say; his net turnover is increased. Thus it would have been superfluous to retain those words "as returned by such dealer" in the amended section. In clauses (1) and (m) the turnover of a dealer may still be accepted as correct, but liability would be increased on account of the false declarations or false submission of the relevant forms referred to in these two sub-clauses. Similar is the position in respect of Clause (d).
10. The "turnover" is defined under Section 2(1). It only refers to the gross turnover and not to the net turnover. So whenever the word "turnover" is used it refers to the gross turnover. In unamended section the words "if the turnover, as returned by such dealer had been accepted" were deliberately used. It clearly speaks about the concealment and deliberately furnishing of inaccurate particulars of the turnover. Thus in cases falling under Clause (b) of the unamended section, the gross turnover is bound to be increased and so it was used there. Now after the amendment as I have said earlier, in sub-clauses referred to in Clause (r)(ii) there are cases where gross turnover need not be changed. Therefore, elimination of the words was for a deliberate purpose.
11. Now examining from another angle I find that there is no significant change between the unamended and amended section so far as Clause (c) is concerned. The words in Sub-clause (c) is now identical with the words used in Sub-clause (b) earlier. In Clause (r)(ii) except dropping of the words "if the turnover as required by the dealer has been accepted", for which I have already given reasons above and also now prescribing for the minimum penalty which was not there earlier, the rest of the provisions are the same. The word "avoided" was there even in the earlier Sub-clauses. Avoided will apply to various sub-clauses. In the cases falling under Sub-clause (c) now the concealment of turnover could only be the difference between the turnover as disclosed and the turnover as assessed. While in clauses (d), (1) and (m) could be the cases where tax was avoided on account of false accounts, registers or documents or other conditions referred to therein. In such a case also it could be the difference between the tax he really paid and the tax which became payable on account of detections of irregularity, etc., referred to therein. I have no hesitation in rejecting the argument that in case of concealment, penalty could only be to the extent of the actual concealment found. Such an interpretation would be da hors from the normal meaning of the words used therein. Learned counsel for the applicant could not give any satisfactory answer when he Was confronted that if such interpretation was to be made, how could this be applied to Sub-clause (d). His argument, which cannot be accepted, was that even if it was not applicable to Sub-clause (d) it will be applicable to three out of four Sub-clauses and thus it should be accepted. When the legislature used the words for all the clauses then only such meaning should be given which applies to all.
12. I am of the opinion that the word "avoided" used there would not be confined to tax evaded but to the tax escaped. In the cases falling in Sub-clauses (1) and (m) it may be case of tax evaded on account of false declaration. But where the concealment in the turnover is found, the dealer always escapes his tax. In the cases of concealment the best judgment assessments are made and then the tax avoided would be difference between the tax returned and the tax as assessed. When a dealer is not fairly keeping his accounts and is deliberately concealing the particulars and thus avoiding the tax and when such concealments are detected and the best judgment assessments are passed then the tax assessed is really the tax under the law, which should have been declared by a dealer. In not doing so, he has avoided that tax. Thus in the case of concealment no other interpretation is possible to be given.
13. In this context, it is relevant to refer to the case of Mansukhlal & Brothers v. Commissioner of Income-tax [1969] 73 ITR 546 (SC). In this case, the Supreme Court while interpreting the word "avoided" used in the Income-tax Act of 1922 held that the word "avoided" would not mean evaded but escaped. The relevant portion is quoted hereunder :
...In our opinion the High Court was right in holding that the word 'avoided' does not mean 'evaded' and it has been used in the sense of escapement.
14. Learned standing counsel relied on the cases, Narain Das Suraj Bhan v. Commissioner of Sales Tax, U.P., Lucknow [1968] 21 STC 104 (SC), Commissioner of Sales Tax, U.P. v. Diwari Lal Ganga Prasad 1977 UPTC 596 and Commissioner of Sales Tax, U.P., Lucknow v. Paras Ram & Sons, Lucknow 1980 UPTC 969. In these cases also it was held that in relation to concealment of the turnover it would be between the tax assessed and the tax returned. Learned counsel for the applicant urged that these are cases of either prior to the amendment or are cases under the Indian Income-tax Act, 1922 and this principle would not be applicable to the amended law. I have already held above that there is no significant change between the earlier law and the amended law except the regrouping the various sub-clauses or adding to sub-clauses under the purview of penalty with prescription of minimum penalty. Except this, there is no other significant change brought about by the amendment. Thus principle laid down in the aforesaid cases equally apply to the amended law.
15. Learned counsel for the applicant also referred to the language used in Hindi from the U.P. Extraordinary Gazette dated 22nd January, 1973. He referred to the language used therein in Hindi in Section 15-A(1)(r)(ii): "jo is prakar bacha lee gai hoti". His argument was that the Hindi version makes it clear, according to him, that it is the turnover which has been avoided on account of the concealment found. Even the word used in Hindi does not help the applicant. It uses the word "jo is prakar bacha lee gai hoti". This only means for the concealment, the difference between the return as filed and the tax as assessed.
16. Emphasis was made on behalf of the applicant to the use of the word "thereby" used therein. According to him, this "thereby" only means the actual concealment detected by the authorities. This argument is unsustainable. It is relevant to refer here to the meaning of the word "thereby" given in the New Webster's Dictionary:
...in consequence of that, connected with that, with reference to....
17. Similarly, meaning for the same word in New English Dictionary is given:
...because of that, through that....
18. By looking to the meaning of "thereby" it is clear that it means in consequence of that, also with reference to that, which is very wide enough to include the best judgment assessment which are nothing but has been passed in consequence of the concealment or because of that concealment. Thus by even applying this word "thereby" will include, in the cases of concealment, avoidance of tax which would be the difference between the tax as returned and the tax as assessed.
19. In view of the aforesaid findings, I am of the view that in the cases of concealment of turnover the liability to pay the penalty on a dealer would be even after the amendment the difference between the tax as returned and the tax as assessed. In view of this, it cannot be said that the Sales Tax Tribunal committed any error in recording a finding thereon. The question of law raised by the applicant is answered against the applicant and in favour of the department.
20. In the result, the revision is dismissed.