Gujarat High Court
Atlas Radio & Electronic Industry P. ... vs State Of Gujarat on 2 July, 1991
JUDGMENT A.P. Ravani, J.
1. Under section 69 of the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act") the Gujarat Sales Tax Tribunal has referred two questions to this Court - one at the instance of the Revenue and another at the instance of the dealer. Applicant-dealer is a private limited company. It is manufacturing and selling radio and its spare parts and also television and its spare parts. For the assessment year commencing from April 1, 1975 to March 31, 1976, the Sales Tax Officer held that there was breach of declaration given in form 19 against which the dealer had purchased certain goods. Section 13(1)(B) of the Act, inter alia, provides for deduction of tax in certain cases. For availing of such deduction declaration in form 19 stating that the goods purchased shall be used in manufacture of taxable goods and that the taxable goods shall be sold within the State should be filed. The Sales Tax Officer found that the taxable goods were not sold within the State and thus there was breach of declaration. Therefore, the Sales Tax Officer levied purchase tax and also imposed penalty of Rs. 7,500 under section 45(1) of the Act. The Sales Tax Officer also imposed penalty of Rs. 64,500 by invoking the provisions of section 45(5) of the Act which provides for penalty in cases where the dealer did not pay the amount of tax, without reasonable cause, within the time prescribed for payment.
2. The dealer preferred appeal against the said order. The Assistant Commissioner of Sales Tax removed the penalty under section 45(5) of the Act. However, the Assistant Commissioner found that the amount of tax paid was less than 80 per cent of the tax assessed. Therefore there was deemed failure to pay tax as per the legal fiction created under section 45(6) of the Act. Hence he exercised his suo motu powers under section 67 of the Act and ordered to issue notice in prescribed form No. 49 and which also contained a gist of the order proposed to be passed. It was proposed to levy a penalty of Rs. 27,263.10 under section 45(6) of the Act. The representative of the assessee who received the notice made an endorsement on it and consented to the proposed order. The endorsement which is in Gujarati reads as follows :
* * * It means order as per the above details is acceptable.
3. The Assistant Commissioner partially allowed the appeal as per order dated August 2, 1981 and he removed the penalty under section 45(5) of the Act. However, as proposed by him in the notice, he ordered to levy penalty of Rs. 27,263.10 under section 45(6) of the Act. The levy of purchase tax under section 16 of the Act and also the penalty imposed under section 45(1) were confirmed by him.
4. The dealer preferred second appeal in so far as it related to penalty under section 45(1) and 45(6) of the Act. The Tribunal in its judgment and order dated May 7, 1983, held that the consent given by the representative of the assessee was on legal aspect only and was not on facts. Therefore, according to the Tribunal it was open to it to examine the question as regards the quantum of penalty imposed under section 45(6) of the Act. The Tribunal directed that the penalty under section 45(6) of the Act be reduced to Rs. 9,100 only from Rs. 27,263.10. As regards penalty under section 45(1) of the Act, the Tribunal reduced the same from Rs. 7,500 to Rs. 1,500 only.
5. Both, the Revenue and the dealer felt aggrieved by the decision of the Tribunal and requested it to refer questions suggested to this Court. The questions referred and our answers to the questions are as follows :
1. Question at the instance of the Revenue. Answer Whether, on the facts and in the circumstances of In negative. In the case, the Tribunal was right in proceeding to favour of the consider the question of penalty under section Revenue and 45(6) of the Gujarat Sales Tax Act, 1969 and in against the reducing the quantum of the penalty from assessee.
Rs. 27,263.10 to Rs. 9,100 inspite of the fact that consent was given by the assessee's authorised representative to the levy of penalty, by holding that consent given by the assessee before the learned Assistant Commissioner was only as to the legal aspect of the penalty as proposed to be levied by the sales tax authorities by notice in form 49 and whether the Tribunal acted without jurisdiction in doing so ?
2. Question at the instance of the dealer. Answer Whether, on the facts and in the circumstances of In affirmative.
the case, the Tribunal was justified in not In favour of removing the entire penalties under section 45(1) the Revenue and and 45(6) of the Gujarat Sales Tax Act, 1969, against the by applying the principle laid down by the Gujarat assessee. High Court in the case of Hemchandbhai & Co. v. State of Gujarat [1982] 50 STC 274 ?
6. The fact that there was breach of declaration contained in form 19 was not in dispute. Therefore the provisions as regards penalty were attracted. The Sales Tax Officer had invoked the provisions of section 45(5) (failure to pay amount of tax, without reasonable cause, within time prescribed) of the Act and had imposed penalty of Rs. 64,500. While hearing the appeal, the Assistant Commissioner of Sales Tax found that the penalty under section 45(5) of the Act could not have been levied. However, he found that the dealer had failed to pay 80 per cent of the amount of tax and therefore there was deemed failure to pay the tax along with return. In other words more than 20 per cent of the amount of tax was not paid by the dealer and therefore the provisions of section 45(6) were attracted. However, this power of suo motu revision could be exercised by the Assistant Commissioner of Sales Tax under the provisions of section 67 of the Act after issuing notice in prescribed form No. 49 under rule 67 of the Gujarat Sales Tax Rules, 1970. Notice in form No. 49 reads as under :
"Whereas it is proposed to pass an order to the effect mentioned below, you are hereby informed that if you wish to prefer any objection against such order you shall attend at the office of the undersigned at .......
Gist of the order proposed to be passed : ............."
7. It is an undisputed position that in the gist of the order proposed to be passed, it was specifically mentioned that a levy of penalty of Rs. 27,263.10 under section 45(6) of the Act was proposed. The assessee was called upon to show cause as to whether it had any objections to the proposed order being passed. The representative of the assessee who is a taxation consultant wrote on the same notice to the effect that the proposed order was acceptable.
8. In view of the aforesaid factual position, the question arises, could the consent given by the representative of the assessee be said to be a consent on legal aspect only and is not a consent on facts ? On this aspect, the reasoning given by the Tribunal is halting. Even the Tribunal observed that the interpretation suggested by the learned Government agent "appears to be substantial". The Tribunal stated that the consent could have been on the legal aspect regarding proposed levy under section 45(6) of the Act and not to the exact amount mentioned in the order. It is observed by the Tribunal that under the provisions of section 45(6) of the Act, the exact amount is required to be worked out since the second proviso to section 45(6) of the Act enables the Commissioner of Sales Tax to remit partial or whole of the penalty that can be imposed under section 45(6) of the Act. To say the least, these are no reasons at all. It was because the Assistant Commissioner of Sales Tax had power under section 45(6) of the Act, he had proposed to remit the penalty. The exact amount of penalty was also worked out even to the precision of paise. The amount of penalty proposed was Rs. 27,263.10. Therefore, the reason, that the aspect as regards the amount of penalty was required to be worked out and that the Assistant Commissioner had power to remit partial or whole of the penalty "may not have been taken into consideration by the assessee" while writing endorsement of consent through the authorised representative is imaginary. It is based on facts non-existing. It is also contrary to facts. Whether the assessee had challenged the levy of purchase tax is not at all a relevant circumstance for determining the nature of consent.
9. It is true that the Assistant Commissioner of Sales Tax has not in his order expressly referred to the consent having been given by the authorised representative of the assessee. But while passing the order, the Assistant Commissioner of Sales Tax is conscious about the notice having been given to the assessee and an opportunity of being heard having been afforded to the assessee. The very fact that while passing the discretionary order, the Assistant Commissioner has assigned no reason except the circumstance that notice under form No. 49 has been issued and thereafter the decision to remit penalty has been taken, indicates that it is consent and only the consent given by the assessee which has weighed with the Assistant Commissioner. Otherwise it would have been incumbent upon the Assistant Commissioner of Sales Tax to give reasons for reducing the penalty. He has just referred to the notice and the fact that opportunity of being heard has been given. This, by necessary implication shows that the consent given by the authorised representative of the assessee alone has weighed with the Assistant Commissioner. Had it not been so, he would have given reasons for remitting the penalty. Not only that, he ought to have and could have given reasons for remitting the penalty. The fact that he has not done so means that the consent and the consent alone is the basis for remission of the penalty. Therefore, the involved reasoning of the Tribunal that the Assistant Commissioner has not taken into consideration the consent given by the representative and has passed order in his discretion has no merits.
10. It may be noted that had the consent given by the assessee been only on the legal aspect, the representative of the assessee would have sought hearing as regards the quantum of penalty. The fact that bearing is not sought even with regard to quantum of penalty leads one to an irresistible inference that the consent was as regards quantum of penalty also. Again it may be noted that if there was no consent as regards the quantum of penalty and the order is passed only by taking into consideration the consent on law point, the order would be bad on account of the fact that an opportunity of being heard was not afforded. It is not even the case of the assessee that it has not been afforded an opportunity of being heard as regards quantum of penalty. Therefore such a case could not have been invented and sustained.
11. The learned counsel for the assessee submitted that the question referred by the Tribunal at the instance of the Revenue is a question of fact and not a question of law. Therefore he has raised a preliminary objection that the question should not be decided at all. In support of this contention, he has relied upon a decision of the Supreme Court in the case of Hooghly Trust (P) Ltd. v. Commissioner of Income-tax reported in [1969] 73 ITR 685 and a decision of this High Court in the case of Nanji Kalubhai Oil Mill v. State of Gujarat reported in [1979] 44 STC 271. It is true that when there is a finding of fact by the Tribunal it would not be open to the High Court to substitute such finding of fact in place of the finding arrived at by the Tribunal unless it is shown that the finding arrived at by the Tribunal is perverse. For this purpose a definite question is required to be sought and raised either by the Revenue or by the assessee, as the case may be. However, this would not be necessary where the finding is as regards the jurisdictional facts.
12. In the instant case, the finding arrived at by the Tribunal is that the consent given is only as regards the legal aspect and not on facts of the order. The Tribunal could have exercised the jurisdiction only if the consent was limited or confined to the legal aspect. This question relates to jurisdictional facts. Determination of jurisdictional facts is a question of law. Unless question relating to jurisdictional facts are decided, the Tribunal cannot exercise its jurisdiction. This is the reason why the Tribunal has also negatived this contention while drawing the statements of facts. In our opinion, in this case, a question of law did arise as the exercise of jurisdiction depended upon the finding of facts. In view of this position, the contention that no question of law arises or that the finding of fact arrived at by the Tribunal cannot be disturbed has no merits and has got to be rejected.
13. We have already indicated that the finding of fact arrived at by the Tribunal is based on facts non-existing. Therefore, in simple words, it has got to he labelled as perverse. However, since the findings of facts pertain to the determination of jurisdictional facts, this exercise is not necessary. Therefore we do not elaborately assign our reasons as to how and why the finding of fact is perverse.
14. For the aforesaid reasons, the Tribunal could not have exercised its jurisdiction when the consent given by the assessee was on facts also. Therefore this question is answered as stated in para 5 hereinabove.
15. Question No. 2 at the instance of the assessee :
The Tribunal has taken into consideration the increase in the volume of branch transfers. This circumstance has weighed with the Tribunal for reducing the penalty from Rs. 7,500 to Rs. 1,500. The contention that the Tribunal should have waived the penalty wholly cannot be accepted. The decision relied upon by the learned counsel for the assessee in the case of Hemchandbhai & Co. v. State of Gujarat reported in [1982] 50 STC 274 (Guj) is of no help to the assessee. It was a case under the provisions of section 36(3) of the Bombay Sales Tax Act, 1959, wherein the provision itself contains the phrase "reasonable cause".' No such expression is there in section 45(1) of the Act. However, it is true that as laid down by this Court in the case of Nowroji N. Vakil & Co. v. State of Gujarat reported in [1979] 43 STC 238 (Guj), an authority conferred with a power to impose penalty is required to act judicially. It was not even contended before the Tribunal that there was no deliberate and contumacious evasion. Therefore the Tribunal was not required to consider as to whether there was deliberate or contumacious evasion of tax or not. All that was argued before the Tribunal was that look at the figures of branch transfers in the previous order and look at the decision rendered by the Tribunal in the case of the assessee in relation to such transaction of the previous year. On this basis it was submitted that the penalty be reduced entirely. The Tribunal has, in our opinion, exercised its discretion justly by reducing the penalty from Rs. 7,500 to Rs. 1,500. It cannot he said that while refusing to reduce the penalty wholly, the Tribunal has omitted to take into consideration any relevant circumstance or that it has taken into consideration any irrelevant circumstance. Hence answer to second question is as indicated in para 5 hereinabove.
16. In the result both the questions are answered accordingly with no order as to costs.
17. Reference answered accordingly.