Gauhati High Court
Purbanchal Development Corporation vs State Of Tripura And Ors. on 10 September, 2002
Equivalent citations: (2002)3GLR621
JUDGMENT B.B. Deb, J.
1. Since the facts in controversy and reliefs sought for in the aforesaid three cases are admittedly identical in nature and where the parties are also same, it is proposed to disposed of all the aforesaid three cases by this common judgement. However, for better appreciation, factual aspects of the aforesaid three cases are briefly narrated as under :~ I. CIVIL RULE No. 123 OF 1994 The petitioner being a registered dealer under the Tripura Sales Tax Act, 1976, submitted the quarterly returns for the assessment year 1983-84 in due time being accompanied by the treasury challan showing the payment of sales tax on the turnover shown by him in his return, but the assessing authority, respondent No. 4, made the assessment only on 30.5.1987 and that was also a 'best judgement assessment' passed by him. The petitioner furnished return showing the turn-over of Rs. 1,39,232'50P. being accompanied by treasury challan showing the payment of tax on the said turnover, but the assessing authority in 1987 took up the assessment and applying the principle of 'best judgement assessment' calculated the turnover of the petitioner at Rs. 2.19,628 and assessed the sales tax to the tune of Rs. 21.962'80P, and imposed penalty of Rs. 4.392'40P. The petitioner being aggrieved, preferred appeal which was dismissed and thereafter, revision which received the same treatment of refusal. Hence this petition.
The respondents filing counter-affidavit contended, inter alia, that it is a case of tax evasion. The assessee petitioner having concealed the actual turnover furnished under valued turnover which appeared to be not acceptable to the authority and as such the authority took up the assessment. Issued repeated notices allowing the opportunity of being heard to the petitioner and ultimately while the petitioner did not turn up and did not co-operate in the hearing, the authority being compelled adopted the 'best judgement assessment' and passed the impugned order followed by demand notice.
II. CIVIL RULE NO. 124 OF 1994 The petitioner being a registered dealer furnished his return in due time for the assessment year 1984-85 but the authority, respondent No. 4, took up the assessment after two years and vide order dated 30.5.1987 made the assessment calculating higher amount of turnover and imposed a tax to the tune of Rs. 28,886'20p and penalty of Rs. 5,777'24P. although the petitioner furnished his return showing the turnover of Rs. 1,24,871 and paid the sales tax on that amount accordingly. The assessing authority adopted the 'best judgement assessment' procedure. Being aggrieved, the petitioner preferred appeal and subsequently revision, but of no use. Hence he filed this case.
The respondents raised the same plea, identical to the first case (Civil Rule No. 123/94).
III. CIVIL RULE NO. 125 OF 1994 For the assessment year 1985-86 the petitioner furnished the return in due time showing the turnover of Rs. 1,05,000- and the return was accompanied by the treasury challan showing payment of sales tax on the said amount, but the assessing authority after one year took up the matter of assessment and vide impugned order dated 30.5.1987 assessed the turnover of the petitioner's business at Rs. 11,17,556 and assessed the tax at Rs. 1,11,755 and imposed a penalty of Rs. 22,351'12P. The petitioner preferred appeal followed by revision, but got no relief. Hence he filed this case.
The respondents took the plea identical to the first case (Civil Rule No. 123 of 1994).
2. Heard Mr. S.C. Saha, learned counsel appearing on behalf of the petitioner and Mr. U.B. Saha, learned Senior Govt. Advocate being assisted by Mr. A.Ghosh, learned counsel for the respondents.
3. After hearing the learned counsel for the parties and on perusal of the rival averments available in the respective pleadings of the parties, the following points have emerged for decision :-
(a) Whether in not assessing the tax on the turnover shown by the dealer assessee in his return at the close of the year, the assessing authority committed any illegality and if so is it curable illegality ?
(b) Whether adopting the procedure of'beat judgement assessment', the assessing authority committed any illegality and if so, whether it vitiated the entire assessment ?
(c) Whether a dealer assessee is responsible for payment of interest for any delayed assessment despite furnishing return in due time ?
4. Mr. Saha, learned counsel appearing on behalf of the petitioner referring the provision of Section 9 of the Tripura Sales Tax Act, 1976 submits that at the close of a year the authority ought to have completed the assessment on the return furnished by an assessee. In case the authority is not satisfied as to the correctness of the turnover shown by the assessee in his return, the authority ought to have issued notice requiring the assessee fixing the date, hour and venue for production of evidence and hearing thereafter and in case the dealer does not at all file any return or fail to comply with the notice issued by the assessing authority on the doubtful return, the authority shall pass an order assessing the turnover and tax thereof to the best of his judgement, but in the present case, since the assessing authority took up the exercise of assessment in the first case after three years, in the second case after two years and in the third case after one year of furnishing the returns by the dealer assessee, the entire order of assessment, passed by the assessing authority on 'best judgement assessment' stood vitiated.
5. To controvert, Mr. Saha, learned senior Govt. Advocate appearing on behalf of the respondents submits that though the language of Section 9 of the Tripura Sales Tax Act, 1976 postulates assessment to be done at the close of the year but it cannot be termed to be a 'mandatory direction', but is a 'directory instruction' to be followed as far as practicable and in no case, the delayed assessment would vitiate the entire process. The dealer assessee cannot be allowed to escape his statutory liability to deposit sales tax on the ground of 'delayed assessment'.
6. On perusal of Section 9 of the Tripura Sales Tax Act, 1976, it appears that "at the close of a year or at the closure of the business during that year", the taxing authority shall pass order assessing the tax payable by the dealer on examining his return of turnover. In case the taxing authority is not satisfied with the correctness of the return furnished by the dealer or the return is found to be incomplete, he shall serve a notice upon the dealer requiring him to attend on the date, time and place fixed in the notice and to produce evidence in support of his turnover. It is also there that in case the dealer neither submits turnover in due time nor complies with the requirement of notice served upon him as stated above, the taxing authority is to assess the tax "to the best of his judgement".
7. It is not in dispute that for the aforesaid three assessment years, the petitioner dealer submitted his returns in due time being accompanied by treasury challans showing payment of tax on his self-assessed turnover, but in the first case the authority took up the matter of assessment after three years, in the second case after two years and in the third case after one year though the provision of Section 9(1) of the Tripura Sales Tax Act, 1976 provides for making of assessment "at the close of a year or at the closure of the business during that year".
8. On examination of Section 9 of the Tripura Sales Tax Act. 1976, I am convinced to hold that delay in assessing the tax per se will not render the assessment vitiated, but what in my considered opinion, the correct interpretation, is that in any delayed assessment of tax on the basis of turnover submitted by a dealer, the dealer cannot be held responsible to pay interest on the enhanced amount of tax assessed by the authority unless delay is attributable to the dealer assessee.
9. From record it appears that the assessing authority was not satisfied as to the figure of amount of turnover shown by the petitioner in his return. Accordingly, successive notice had been issued, but the assessee did not participate and as such having regard to the "prevailing market rate of the bricks", the commodity which the petitioner has been dealing in the authority arrived at the conclusion applying the principle of "best judgement assessment" in passing the impugned assessment orders.
10. Mr. Saha, learned counsel for the petitioner relying upon a decision of this court in "Sankar Trading v. State of Tripura and Ors.", reported in (1991) 82 STC 22 (Gauhati) submits that the procedure to be applied in adopting "boat judgement assessment" has been settled by this court sitting in Division Bench in the case of Sankar Trading (supra) and in deciding the case in Sankar Trading (supra), the Division Bench of this Court relied upon the earlier decision of this court in "Dwijendra Kumar Bhattacharjee v. Superintendent of Taxes" reported in (1989) 2 GLR 461. In para 4 of the aforesaid decision, this court having followed the ratio of Dwijendra Kumar Bhattacharjee (supra) held that the assessing officer cannot rely upon any evidence or fact in arriving at his finding without pointing out the sane to the assessee by giving him a reasonable opportunity of controverting the same. The assessing authority is to allow the assessee dealer an opportunity of being heard on the materials proposed to be used by him. In the present case, the assessing authority having relied upon the "prevailing market rate" of bricks arrived to his own conclusion, but before doing it the authority has not Issued any notice asking the petitioner to show cause as to why the "prevailing market rate" with a definite figure should not be relied upon in exercising the 'best-judgement assessment'.
11. Mr. Saha, learned senior Govt. Advocate appearing for the respondents placed much emphasis on a decision of the Hon'ble Apex Court in "The Commissioner of Sales Tax. Madhya Pradesh appellant v. H.M. Esufali. H.M. Abdulali. Siyaganj, Main Road, Indore, respondent", reported in 1973 SCC (Tax) 484 and submits that on the basis of materials came to the notice of the assessing authority subsequent to the assessment, the matter could be reopened for the purpose of re-assessment.
The case in hand is not one of re-assessment. In M/s. H.M. Esufali (supra), the re-assessment was done on the basis of "admitted escaped turnover". In inter-preting the provision of Section 19 of the M.P. General Sales Tax Act, 1958, the Hon'ble Apex Court discussed the scope and area of applicability of the provision of'best judgement assessment' and held -
"In the case of 'best-judgement' assessments, the courts will have to first see whether the accounts maintained by the assessee were rightly rejected as unreliable, If they come to the conclusion that they were rightly rejected, the next question that arises for consideration is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made."
It is further held by the Hon'ble Apex Court -
"In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the 'best judgement' assessment no doubt should arrive at its conclusion without any bias and on rational basis. That authority should not be vindicative or capricious".
On careful perusal of the decision in M/s. H.M. Esufali (supra), it appears that the provision of 'best Judgement assessment' has been applied to that case on the basis of "admitted escaped turnover" of the assessee and as such, in my considered opinion, the ratio of the aforesaid case as has been sought to be relied upon by the learned senior Govt. Advocate has no application in the present case.
12. Under the aforesaid circumstances, I am constrained to hold that in case of delayed assessment done by the assessing authority despite the dealer furnished returns in time, the dealer assessee cannot be held liable for the payment of interest over the enhanced amount of tax assessed by the authority for the intervening period between the date of submission of return and the date of assessment.
I am further led to hold that in adopting the 'best judgement assessment' procedure, the assessing authority must issue notice upon the dealer narrating the materials or other evidence proposed to be used against him in arriving at the 'best judgement assessment1, but unfortunately in the present case, the petitioner dealer has not been afforded the said opportunity.
13. Under the aforesaid discussed legal aspects of the matter, these writ petitions are allowed. The impugned assessment orders and the subsequent appellate and revisional orders followed by the demand notice, etc., are hereby quashed. However, it is kept open for the assessing authority to re-assess the matter after allowing the petitioner reasonable opportunity of being heard in the manner indicated above.
14. All the three writ petitions stand disposed of accordingly. No costs.