State Taxation Tribunal - Tamil Nadu
Anna Transport Corporation Limited vs State Of Tamil Nadu on 3 April, 2000
Equivalent citations: [2001]124STC273(TRIBUNAL)
JUDGMENT
L. Palamalai, Administrative Member.
1. These tax revision cases have been filed against the orders of the Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, in C.T.A. Nos. 34 of 1990 and 35 of 1990 dated November 22, 1990. These revisions relate to the assessment years 1983-84 and 1984-85. In respect of the assessment year 1983-84, the Commercial Tax Officer, Salem Town, North, assessed the petitioner by his order dated November 27, 1984, among others, by allowing exemption on second sales of buses. While allowing the exemption, the assessing authority observed that the chassis were purchased from Ashok Leyland, Sundaram Agencies and Vee Yes Tee Motors and T.T.C. and the bus bodies were built by L.G. Balakrishna and Brothers, Sundaram Agencies and S.I., Madurai, and as the purchases have suffered tax, the claim is that sales of bus bodies are only second sales. On that basis, exemption was granted. Subsequently, the Deputy Commercial Tax Officer, Salem Town, North, issued a notice on February 19, 1986 proposing to assess the turnover of buses on the ground that in entry 3 of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, buses, chassis and body on a chassis have been enumerated as separate items, as the buses sold by the petitioner on which exemption allowed as second sales is different from the chassis and body built on chassis separately, the sales of buses have to be assessed to tax at 15 per cent single point on a turnover of Rs. 20,87,724.88. After considering the objections, the proposals were confirmed by overruling the objections.
2. In respect of the assessment year 1984-85, the Deputy Commercial Tax Officer, Salem Town, North, in the original assessment brought the turnover of old buses sold to tax at 15 per cent on a turnover of Rs. 13,36,625 by holding that sales of buses are different from chassis and bus bodies on which tax has been paid by the petitioners and no exemption could be granted merely on the ground that chassis and bus bodies have suffered tax locally. The assessee preferred first appeal and the Appellate Assistant Commissioner by his order dated October 5, 1989 in respect of both the years confirmed the orders of the assessing authority. In the second appeal also, the Appellate Tribunal observed as follows :
"Admittedly, what is sold by the appellant as buses is different from chassis and body built thereon and therefore the commodity sold by the appellant as buses is different and separate commodity from chassis and body built thereon and therefore it cannot be contended by the appellants that the sale of buses is exempted as second sales, when there is no evidence to prove that the appellants have paid tax for the purchase of buses. Bus cannot be equated to chassis or body alone and as such the goods sold by the appellant is a different goods and therefore the assessing authority levied tax on the sale of buses as first sale rejecting the claim of exemption made by the appellants."
Thus, the Appellate Tribunal upheld the levy of tax on sale of old buses as first sale of buses by affirming the order of the assessing authority and that of the first appellate authority and held that on the basis of payment of tax on the purchase value of chassis and bodies built thereon, no exemption could be allowed when the assessee sold buses which is commercially a different product.
3. Mr. T. Ramesh, the learned counsel for the petitioner vehemently contended that in respect of the assessment year 1983-84, the original assessment was made by the Commercial Tax Officer and the revision of assessment was made by the Deputy Commercial Tax Officer who is an officer inferior in rank in the hierarchy of the officers. Therefore, the revision of assessment made by the Deputy Commercial Tax Officer for the assessment year 1983-84 is bad in law in terms of the judgment of the Madras High Court in the case of Muthu Metals v. State of Tamil Nadu reported in (1993) 3 MTCR 300. In this connection, he relied on the following observations of the Madras High Court at pages 314-315.
"Yet another grievance sought to be made out on account of the authorisation of the officers of the wing is that in certain cases where the initial or original assessment for the year in question was made by a particular assessing authority of a higher status and rank in the hierarchy, an officer of the Intelligence/Enforcement Wing belonging to an inferior or lower rank than that of the original assessing authority seeks to exercise powers under Sections 16 and 16-A of the Act. The further grievance is that in some such cases when the regular assessing authority of a higher rank allowed exemption of a particular turnover or assessed the turnover at a concessional rate, the very same issue was taken up by an inferior authority merely because he happens to be an officer in the Wing concerned, empowered under the impugned notifications to scrutinise and disallow the very claim allowed earlier by a higher officer of the department. We are not at this stage and in these cases concerned with the extent, scope and purport of the powers under Section 16 or 16-A of the Act. It is by now well-settled that subject to the period of limitation specified the powers under Sections 16 and 16-A of the Act have been held to extend to the extent of reopening an assessment earlier made, if there is any reason which satisfied the test of objectivity. On a careful consideration of the submission in the light of the governing position of law, we are of the view that there is nothing in the provisions of the Act or the Rules or the scheme underlying assessment and levy of tax which disables a particular authority in the hierarchy who is otherwise entitled to and empowered to exercise powers under Sections 16 and 16-A of the Act from exercising such powers merely because the original assessment under Section 12 came to be made by an officer of a higher rank or status in the administrative hierarchy. The exercise of powers under Sections 16 and 16-A of the Act is equally an independent one on distinct and separate material or for reasons and the validity or otherwise of such exercise has to be adjudicated on the basis of any infirmity of its own and not with reference to the exercise of powers said to have been made under Section 12 of the Act. But, we are also of the view that the same may not be the position when a particular claim of the assessee has been considered and allowed for exemption or concessional levy by the assessing authority under Section 12, and the same turnover is sought to be subjected to tax though for any reason falling within the ambit of powers under Section 16 or 16-A of the Act. In such cases, at any rate, principle of propriety as well as administrative discipline and observance of official decorum requires that an officer of equal or superior rank alone should undertake such an exercise and not an officer of an inferior rank otherwise it would lead to absurd results and a mockery of the grades of officers in the hierarchy. Except clarifying and declaring this position, we do not consider it necessary to interfere with the impugned notifications and any such imprudent or arbitrary exercise of power in an individual case can always be challenged and the rights of an assessee vindicated. We do not see any justification to strike down the impugned notifications on this account."
4. Regarding the merits of the case, it was contended that by mere change of opinion, the revision made is bad in law and in this connection reliance was placed on the observations in the head note in the decision reported in [1974] 33 STC 320 (Mad.) (Brilliant Match Works v. Deputy Commercial Tax Officer) and [1987] 64 STC FRSC page 7 (item 21) [Commissioner of Sales Tax v. Sadhu Ram Jugal Kishore--S.L.P. (Civil) No. 8792 of 1985 dated 5-1-1987]. In [1994] 92 STC 159 (Mad.) (Cholan Roadways Corporation v. State of' Tamil Nadu), the finding of the High Court was that bus bodies were built by the Corporation and therefore the bodies had not suffered tax earlier and therefore the bus bodies were taxable at 15 per cent. Similarly in the decision reported in [1993] 91 STC 572 (Ear) in the case of State of Karnataka v. M. Madhvaraj, the body built on the chassis did not suffer tax. Even in the decision of the Special Tribunal in T.C.A. No. 1223 of 1997 dated February 7, 2000, in the case of Kanakasabhapathy and Sons, the bodies built on the chassis did not suffer tax. However, in the present cases both the chassis and bodies built thereon have already suffered tax in Tamil Nadu. In such circumstances, there is no justification to levy tax under entry 3 of the First Schedule to the Act by treating the sale as buses. In fact, no new commercial commodity has emerged apart from buses from bodies built on chassis and in such circumstances, the order of the Appellate Tribunal in confirming the levy of tax on the sale of old buses is not in order.
5. Mr. R. Mahadevan, the learned Government Advocate, contended that the sales of buses have rightly been assessed to tax. The ratio of the decision of the Special Tribunal in T.C.A. No. 1223 of 1997 dated February 7, 2000 (Kanakasabhapathy and Sons) squarely applies to this case. In respect of the assessment year 1983-84, the assessment was revised only by the assessing authority who at the time of revision happens to be a Deputy Commercial Tax Officer and therefore the revision made under Section 16(1) of the Act is quite in order.
6. We have considered the contentions carefully and perused the records. In Muthu Metals' case reported in (1993) 3 MTCR 300 (Mad.), the issue before the High Court was the notifications issued by the Government empowering the officers in the Enforcement/ Intelligence Wing to assess the escaped turnover of dealers under Sections 16 and 16-A of the Act provided the final assessment under Section 12 for the relevant year or years has been completed by the assessing authority. Incidentally, the powers of inspections conferred under Sections 41 and 41-A of the Act to the Enforcement Wing Officers were also considered. Basically, the judgment in Muthu Metals case (1993) 3 MTCR 300 (Mad.) was confined to the challenge made to the various notifications issued by the Government empowering the Enforcement Wing Officers and especially to assess the escaped turnover under Section 16 or 16-A of the Act. The passage in the judgment relied on by the learned counsel for the petitioner was in the context of the issue that while the initial assessing authority is of a higher rank in the administration hierarchy, the officers inferior or lower in rank in the hierarchy, but belonging to the Enforcement Wing have arrogated to themselves the powers of reassessment or revision of assessment under Section 16 of the Act. In this connection, it is relevant to refer to the following observations of the Madras High Court after upholding the validity of the notifications challenged :
"The above writ petitions, therefore, fail and shall stand dismissed, except for the declaration and clarification we make (a) that in cases where the reassessment under Section 16 or 16-A of the Act involves the withdrawal of an exemption or concession earlier allowed or granted it should always be ensured that the authority exercising power under Section 16 or 16-A of the Act in the Intelligence/ Enforcement Wing is not inferior in rank and status to those who have passed the original orders of assessment under Section 12 of the Act ; and (b) that the regular assessing officer cannot initiate or pursue action under Sections 16 and 16-A on the same subject-matter after notice has been issued by the officers of Inspection/Enforcement Wing ; and (c) that any proceedings already issued in contravention of such declaration of us, shall not be pursued by the authorities."
Thus, the principles that flow from the above declarations of the High Court could be stated as follows :
"(1) On the basis of detections made, the Enforcement Wing officers can make assessment under Section 16 or 16-A of the Act, provided the original assessment for the relevant year has been completed by the assessing officer. However, if the dealer has not filed any return and no assessment has been made, then with reference to detection of records by the Enforcement Wing officers, the assessment to be made on the dealer under Section 16 or 16-A of the Act by treating it as escaped assessment could be made by the assessing authority only and not by any officers of the Enforcement Wing.
(2) However, where the detection of materials by the Enforcement Wing relates to a turnover considered by the assessee in original assessment and exemption was granted by not levying any tax or assessment made by levying lower or concessional rate of tax, then in such cases, the officer in Enforcement Wing who makes the assessment of escaped turnover should not be inferior in rank and status to the officer who passed the original assessment.
However, the Madras High Court has not expressed any opinion on the issue whether the revision of assessment could be made by the assessing authority under Section 16 or 16-A of the Act by assessing any escaped turnover by revoking the exemption though such an exemption has been granted originally by the assessing authority who at the time of making the original assessment happened to be an officer higher in rank in the hierarchy of administration.
(3) However, if the detection relates to a turnover not found in the regular books produced before the assessing officer but from slips or anamath records recovered from the place of business or from the third party accounts then irrespective of the status and rank any officer of Enforcement Wing not below the rank of D.C.T.O. can make the assessment under Section 16 or 16-A of the Act.
(4) Where a competent officer in rank and status in the Enforcement Wing has initiated action to assess the escaped turnover under Section 16 or 16-A of the Act then the regular assessing officer cannot initiate or pursue action to assess the escaped turnover under Section 16 or 16-A of the Act.
(5) Where no action has been initiated by the Enforcement Wing Officer to assess the escaped turnover on the basis of materials detected during inspection and even if the materials were from anamath records, the assessing authority is competent to assess the escaped turnover under Section 16 or 16-A of the Act.
(6) Any proceedings already issued in contravention of the above declarations should not be pursued by the authorities."
In the light of the above position, if we analyse the present case, it is clear that at the time of making original assessment for the assessment year 1983-84, though the assessing authority was Commercial Tax Officer for Salem Town, North, subsequently for the assessment year 1984-85, the assessing authority was Deputy Commercial Tax Officer, Salem Town, North, and he made the assessment for the year 1984-85 on January 31, 1986. A revision notice was issued on February 19, 1986 proposing to revoke the exemption granted on second sales of buses by the assessing authority for the year 1983-84. Section 16(1) of the Act which speaks of escaped turnover reads as follows :
"16. Assessment of escaped turnover.--(1)(a) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of Sub-section (2), at any time within a period of five years from the expiry of the year to which the tax relates, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment.
(b) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the rate at which it is assessable, the assessing authority may, at any time within a period of five years from the expiry of the year to which the tax relates, reassess the tax due after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such reassessment."
7. Thus, according to Section 16 of the Act, the assessing authority who has jurisdiction over the assesses is competent to assess the escaped turnover within a period of five years from the expiry of the year to which the tax relates. In assessment wing, the Deputy Commercial Tax Officer as well as the Commercial Tax Officer is equally competent to assess an assessee within the jurisdiction without any turnover limit. In administrative wing, it may so happen that an assessee who was under the control of a Commercial Tax Officer could be transferred to the control of the Deputy Commercial Tax Officer in a subsequent year for administrative convenience. It may so happen that an office of Commercial Tax Officer might be down graded as that of a Deputy Commercial Tax Officer in a subsequent year. Therefore, the relevant point for consideration in respect of an assessee is whether he was an assessee under the control of the Commercial Tax Officer or Deputy Commercial Tax Officer at a particular point of time. In this case, when the revision of assessment was made, the assessee was under the control of the Deputy Commercial Tax Officer and he was competent to assess the assessee by revoking exemption even if the exemption has been granted originally by the Commercial Tax Officer. Thus, the revision of assessment made for the year 1983-84 by the Deputy Commercial Tax Officer is quite in order and it is in accordance with the powers conferred on him by Section 16 of the Act. As already stated, the decision in Muthu Metals case (1993) 3 MTCR 300 (Mad.) considered the powers of officers in Enforcement Wing vis-a-vis assessing officers so as to assess under Section 16 or 16-A of the Act. That judgment did not considered the competency of officers in the assessment wing especially in the light of the position indicated above. Therefore, in the present case, the revision of assessment by the Deputy Commercial Tax Officer for the assessment year 1983-84 is in accordance with Section 16(1) of the Act.
8. In the decision of the Madras High Court in Brilliant Match Works v. Deputy Commercial Tax Officer [1974] 33 STC 320, it was stated that there should be some reason to reopen an assessment and such reason should not be drawn barely from the subjective satisfaction of the authority concerned but should also satisfy the test of objectivity. However, in the present case before us, the revising authority has given clear reasons as to why second sales claim of buses has to be revoked. The Kerala High Court in [1993] 90 STC 25 in the case of Deputy Commissioner of Sales Tax v. T.P. Elias has held that a mere change of opinion on the same material will be sufficient to reopen the assessment. In this connection, the Kerala High Court has followed the decision of the Supreme Court in Maharajadhiraj Sir Kameshwar Singh v. State of Bihar [1959] 37 ITR 388, wherein a statute in pari materia was considered by Supreme Court. In this connection, it is also relevant to refer to the decision of the Andhra Pradesh High Court reported in State of Andhra Pradesh v. Ratna Sree Box Makers [1989] 75 STC 82 wherein it was held that the opinion of the audit party cannot be treated as material de hors the assessment record so as to reopen an assessment. It was further held that the reopening of assessment cannot be made on change of opinion and must be based on material de hors, the assessment record. While disposing of the Special Leave Petition No. 10324 of 1991 in regard to this case reported in [1996] 101 STC FRSC 3, the Supreme Court observed as follows :
"In view of the fact that the proprietor of the respondent has since died, we do not think we can interfere in the matter. However, the view expressed by the learned Judge of the High Court is clearly illegal and it is not good law. The special leave petition is accordingly disposed of."
9. Thus, on a mere change of opinion also, an assessment can be reopened. However, in the present case, the assessing authority has given clear reasoning for reopening the assessment. Entry 3 of the First Schedule to the Act reads as follows :
"Motor vehicles including motor cars, motor taxi-cabs, motor cycles and cycle combinations, cycles (including bicycles, tricycles, cycle-rickshaws, tandem cycles, cycle combinations and perambulators) fitted with motor engines, motor scooters, motorettes, motor omni-buses, motor vans and motor lorries, chassis of motor vehicles, bodies built on chassis of motor vehicles belonging to others (on the turnover relating to bodies), component parts of motor vehicles, all varieties of trailers, by whatever name known, tyres (including pneumatic tyres) and tubes ordinarily used for motor vehicles and trailers (whether or not such tyres and tubes are also used for other vehicles), and articles (excluding batteries) adapted for use generally as parts and accessories of motor vehicles and trailers and motor engines used for being fitted to cycles (including bicycles, tri-cycles, cycle-rickshaws, tandem cycles, cycle combinations and perambulators)."
10. The argument of the learned counsel for the petitioner is that chassis and bus bodies have suffered tax locally and therefore the sale of motor vehicle or bus cannot be treated as a separate commercial commodity. In the decision reported in [1994] 92 STC 159, in the case of Cholan Roadways Corporation, the assessee claimed exemption in respect of sale of old buses on the ground that the sale is to be treated as scrap sales. This contention was negatived by the Tribunal and it was found that the buses had been sold as a single unit and that the levy of 15 per cent tax on the sale was found to be in order. This view of the Tribunal was confirmed by the Madras High Court. The assessee took another plea that the bus bodies also suffer tax. This contention was factually found incorrect and only in that context the Tribunal observed that the bus bodies was built by the Corporation and therefore the bus body did not suffered any tax. Only this finding was confirmed by the Madras High Court. However, the Madras High Court clearly held that the bus sold as a single unit is liable to tax at 15 per cent single point.
11. There is also the judgment of the Karnataka High Court reported in [1993] 91 STC 572 (State of Karnataka v. M. Madhvaraj) and it was observed in the said case :
"We are of the view that in the face of the language employed by the Act, there is no scope to apply the above principle. The assessees purchased TPC frames and built bodies on them ; used the vehicles for their own purposes. The vehicles sold by the assessees were, all old vehicles. In the very nature of these vehicles, their different parts may not have distinct, usable, independent identities. The theoretical possibility that the vehicle could have been dismantled into (i) TPC frame' and (ii) 'the body' before selling them ignores the commercial realities. A purchaser very rarely purchases a vehicle treating it as a federation of two articles ; the purchaser purchases the vehicle, as a single, integrated, identifiable article."
12. In the decision reported in [1995] 98 STC 330, in the case of Tata Engineering and Locomotive Company Ltd. v. State of Maharashtra the Bombay High Court considered the levy of purchase tax in the context of purchasing bus bodies free of tax against declaration for resale, fitting bus bodies and supplying complete bus, by holding that it was not a case of resale of bus bodies and therefore there was violation of declaration and. in such circumstances, purchase tax was leviable on purchase turnover of bus bodies. In that case, it was held that the appellant did not sell bus bodies which it had purchased free of tax by furnishing declaration but what was sold as bus was a different commodity altogether and therefore there was non-compliance of conditions of form 14. Thus, the levy of purchase tax on bus bodies for violations of conditions was held justified. In this connection, the following observations of Bombay High Court are relevant :
"What was sold by it was complete bus of which the bus body formed one of the components. The customer did not purchase the bus bodies nor the assessee sold the bus bodies. The customer intended to purchase complete bus for the agreed consideration and the assessee sold the same. This is evident from the order placed by the customer and the invoice issued by the assessee.
14. In that view of the matter, in our opinion, the Tribunal was right in holding that there was contravention of the condition of declaration in form 14 and hence the assessee was liable to pay purchase tax under Section 14 of the Act."
13. Thus, in the present cases also what was sold by the petitioner was complete bus of which the chassis and bus body formed the components. Therefore, the Appellate Tribunal was right in upholding that the sale of bus is a separate assessable commodity under entry 3 of the First Schedule to the Act different from chassis and bus body which suffered tax locally though included as separate items under the same entry 3 of the First Schedule to the Act.
14. In fine, we find that the levy of tax on sale of old bus at 15 per cent single point for the assessment years 1983-84 and 1984-85 is quite in order and there is no case to interfere with the orders of the Appellate Tribunal. Accordingly, the tax revision cases are dismissed.
And this Tribunal doth further order that order on being produced be punctually be observed and carried into execution by all concerned.