Patna High Court
Hewitt Robine Incorporation vs State Of Bihar on 26 April, 1973
Equivalent citations: [1973]32STC146(PAT)
Author: N.L. Untwalia
Bench: N.L. Untwalia
JUDGMENT N.L. Untwalia, C.J.
1. This is a tax reference under Section 33(1) of the Bihar Sales Tax Act, 1959, hereinafter called the Act. The assessee which deals in fabricated steel, structures, bolts, nuts, etc., sold such articles worth Rs. 20,66,275 during the period 1st July, 1963, to 31st March, 1964, to the thermal power station of Damodar Valley Corporation situated at Chandrapura. The purchaser was registered under Section 6A(1)(b) of the Act. Thus it was entitled to purchase the goods for use in the generation or distribution of electricity at the concessional rate by furnishing declaration in the prescribed form. The assessee having sold the goods to the thermal power station claimed that the amount of Rs. 20,66,275 was taxable at the concessional rate of 1 per cent and not at the usual rate of sales tax. The prescribed authority for the purpose of assessment Under Section 6A(3) of the Act, as prescribed by Rule 12 of the Bihar Sales Tax Rules, 1959 (hereinafter called the Rules), is the Assistant Commissioner, the Superintendent and the Assistant Superintendent of Commercial Taxes. Under Section 6A(2) of the Act a declaration in the prescribed form duly filled up and signed by the assessee had to be furnished in the prescribed manner by the selling dealer, i. e., the assessee and the prescribed authority could require it to satisfy it that the sale was made to the purchaser holding a certificate granted under Sub-section (1) of Section 6A. The form prescribed under Rule 8A of the Rules is form No. IX, if the purchaser is one who has been granted a certificate under Clause (b) of Sub-section (1) of Section 6A and the form is IXB, if he is a purchaser of the kind mentioned in Clause (c). There is no doubt that the Damodar Valley Corporation's thermal power station had a certificate under Clause (b) of Section 6A(1). Instead of granting the declaration in form IX, it granted the declaration to the assessee in form IXB on 10th October, 1963. The assessee's books of account were examined in the head office at Calcutta between 9th December, 1964 and 11th December, 1964, as mentioned in the assessment order dated 21st December, 1964. It produced the declaration in form IXB before the assessing authority. The assessing authority found that the assessee had produced the declaration of the purchaser in a wrong form and, as mentioned in the assessment order, the Damodar Valley Corporation was extremely irregular in issuing the declaration in that form as it was not in possession of any certificate in accordance with Section 6A(1)(c) of the Act. This irregularity was pointed out to the assessee's chief representative and his chartered accountant but they failed to offer any satisfactory explanation on the point. The assessing officer did not act upon the wrong declaration and assessed the sales tax payable on the amount of Rs. 20 lacs and odd at the general rate and not at the concessional rate,
2. The assessee thereafter preferred an appeal before the Deputy Commissioner of Commercial Taxes. Shortly after the filing of the appeal, it seems, the assessee filed the correct declaration in the correct form IX, which was obtained on 22nd April, 1965, a copy of which is included in this paper book. The appeal was heard by the Additional Deputy Commissioner and he thought that he could not accept the declaration in form IX at the appellate stage, the two declarations were contradictory and he, therefore, could not give relief to the assessee by ordering assessment at the concessional rate.
3. The assessee went up in revision before the Commercial Taxes Tribunal, Bihar. The Tribonal took the view that the filing of the correct form before the assessing authority was mandatory; the assessee could not be assessed at the concessional rate on the turnover in question; it was incumbent upon the assessee to satisfy the prescribed authority, namely, the assessing officer, that there was a declaration in form IX furnished by the Damodar Valley Corporation and the filing of the correct form before the Deputy Commissioner could not be availed of; in that view of the matter the revision was dismissed.
4. The Commercial Taxes Tribunal, however, has felt persuaded to make a reference to this court Under Section 33(1) of the Act. The two questions referred are the following :
(1) Whether in the facts and circumstances of the case, the production of declarations in form IXB before the assessing officer or in form IX before the appellate authority can be held to be substantial compliance of the Act and the Rules for claiming assessment at the concessional rate of tax ?
(2) Whether provisions of Section 6A(2) of the Act was directory and not mandatory ?
5. In my opinion, on the facts and in the circumstances of this case, the questions of law referred to this court have got to be reframed as the questions as referred do not correctly bring out the points of law for our determination. The questions of law for our determination, which do arise on the revisional order of the Tribunal, should be refram-ed as follows:
(1) Whether the assessee could claim to be taxed at the concessional rate without complying with the provisions of Section 6A(2) of the Act ?
(2) Whether the Additional Deputy Commissioner, on the facts and in the circumstances of this case, could set aside the assessment in exercise of his power Under Section 30(5)(a)(ii) of the Act and direct the assessing authority which made the assessment to pass a fresh order after further enquiry ? If so, whether the Tribunal, in exercise of its revi-sional power, can give the same relief to the assessee Under Section 31 of the Act?
6. Without going to the intricacies of the question whether the provision contained in Section 6A(2) of the Act is directory or mandatory, suffice it to say that the liability of the dealer to be assessed at concessional rate is dependent upon the fulfilment of the conditions provided in Sub-sections (1) and (2) of Section 6A of the Act. The relevant clause of Sub-section (1) says that sales to a registered dealer of goods required by him directly for use in the manufacture or processing of any goods for sale, or for mining or in the generation or distribution of electricity shall be liable to tax at such rate as may be notified by the State Government (in this case 1 per cent) and in respect of which the purchaser has been granted a certificate by the prescribed authority in the prescribed manner and for the prescribed period. The first condition was undoubtedly fulfilled in this case. The second condition for claiming assessment at concessional rate prescribed in Sub-section (2) is that the declaration in the prescribed form duly filled up and signed by the purchaser shall be furnished in the prescribed manner by the selling dealer and if so required, the dealer shall have to satisfy the authority that the sale was made to the purchaser holding certificate granted under Sub-section (1). There is, therefore, no doubt, that in order to claim assessment on the turnover in question at concessional rate, the dealer had to fulfil its obligation under Sub-section (2) also. The first question, as reframed by me, must be answered in favour of the department and against the assessee.
7. I think there is not much difficulty in answering the second question in favour of the assessee. In Basta Colla Colliery Co. (P.) Ltd. v. The State of Bihar [1969] 23 S.T.C. 142 at 149, a Bench of this Court, of which I was a member, dealing with a similar situation under the Central Sales Tax Act, 1956, said:
If, however, the assessee is not able, for sufficient cause, to furnish the requisite declarations and the certificates in forms C and D before the passing of the assessment order before the assessing authority, he may prefer an appeal to the. appellate authority which exercising the powers under Section 30(5) of the Bihar Act (19 of 1959), will be competent to set aside the assessment and direct the assessing authority which made the assessment to pass a fresh order after further enquiry on giving a fresh opportunity to the assessee to furnish the declarations and the certificates. Similar will be the power of the revisional authority Under Section 31 of the Bihar Act. In our opinion, therefore, to the extent views have been expressed by the Deputy Commissioner or the Board against the ones we have taken, they are wrong.
On a review of several decisions of the various High Courts and the Supreme Court, it was pointed out at page 150:
On a careful consideration of the matter, therefore, we are of the opinion that the assessee, undoubtedly, could be and ought to have been given an opportunity to furnish to the assessing authority the declarations and certificates in the prescribed forms after the filing of the returns and before the passing of the assessment order. It could also be given an opportunity to furnish them even after the passing of the order if the appellate authority or the revisional authority could be satisfied that sufficient cause had been made out for giving such an opportunity. The difficulty, however, in the way of the assessee in this case is that whether in a particular state of facts and circumstances a case has been made out for the grant of such an opportunity by the appellate authority or the revisional authority is a question of fact. In a given circumstance, one authority may take one view and the other authority may record or take another view, yet the question remains, generally and ordinarily, a question of fact. It has been held in numerous decisions including a recent one by the Supreme Court that what is sufficient cause is a question of fact.
Section 30(5)(a)(ii) of the Act reads as follows:
(5) Subject to such rules as may be made by the State Government under this Act, the appellate authority in disposing of an appeal, may-
(a) in the case of an appeal other than an appeal against an order under Section 20A or Section 21....
ii) set aside the assessment or penalty or both and direct the authority which made the assessment or imposed the penalty to pass a fresh order after further enquiry, on specified points.
The appellate authority has, therefore, been given power to direct the assessing authority to make a fresh order after further enquiry. But in exercise of this power, obviously, the assessment order has got to be set aside. In other words, it is a power of open remand conferred on the appellate authority under the Act. If, therefore, in a given case the appellate authority is satisfied that due to a bona fide mistake or for sufficient cause the assessee could not produce, as in this case, a correct declaration form, then it could set aside the assessment and for satisfaction of the assessing authority as to whether the fresh declaration form filed before the appellate authority was correct or not, could ask it to make a further enquiry and pass a fresh assessment order. It seems the Additional Deputy Commissioner was, perhaps, oblivious of this power of his. The Tribunal also misdirected itself on a question of law when it said that the declaration in the correct form had to be filed before the prescribed authority and not before the Deputy Commissioner. A question of law does arise as to whether, on the facts and in the circumstances of this- case, the Deputy Commissioner could exercise his power Under Section 30(5)(a)(ii) and if he failed to do so, whether the Tribunal, in exercise of its power Under Section 31, could do the same thing either by sending back the case to the assessing authority itself or by directing the appellate authority to do so. In either view of the matter, it is plain that the Tribunal has not approached the case from a correct angle and law. I, therefore, answer the second question in favour of the assessee and hold that, on the facts and in the circumstances of this case, the Deputy Commissioner or, as a matter of fact, the Commercial Taxes Tribunal could set aside the assessment and direct the assessing authority to make further enquiry on the basis of the declaration filed in form IX before the appellate authority and pass a fresh assessment order. There will be no order as to costs in this reference.
S.K. Jha, J.
8. I agree.