State Taxation Tribunal - West Bengal
Savitri Rawat vs State Of West Bengal And Ors. on 19 July, 1996
Equivalent citations: [1998]111STC684(TRIBUNAL)
JUDGMENT
L.N. Ray, Chairman
1. The applicant being a partner of a firm called Rajat International has challenged the impugned orders of the Assistant Commissioner, Commercial Taxes, and the Deputy Commissioner, Commercial Taxes dated January 12, 1995 and September 22, 1995, respectively. This is an application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, in the nature of a writ application. The question for decision is whether the condition for obtaining renewal of eligibility certificate for deferment of tax under Section 10F of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the 1941 Act") and the rules framed under Section 10F regarding issuing serially numbered bills or cash memos for sales of manufactured goods should be construed as requiring issuance of serially numbered bills or cash memos over the continuous period of the accounting year of the dealer who claims the advantage under Section 10F, or the claimant has the liberty to issue serially numbered bills or cash memos separately for each month.
2. The case of applicant is that the firm is a registered dealer under the 1941 Act as a reseller of iron and steel items, hardwares, etc., and as a manufacturer of items like steel chips, brackets, etc. The manufacturing unit is located at 1, Height Road, Liluah, Howrah, which is registered as a small-scale unit under the Cottage and Small Scale Industries Department of the State Government. Its application for eligibility certificate for deferment of tax under Section 10F of the 1941 Act was granted and the eligibility certificate was issued for the period from January 30, 1992 till January 29, 1993 for the first time. It is claimed that at the time of issuing that certificate, there was a thorough and detailed enquiry, inspection and examination of all necessary books of account and records by the concerned authority. The advantage of deferment of tax can be availed of under Section 10F for seven years from January 30, 1992. According to statutory provisions, the eligibility certificate is required to be renewed on expiry of its validity which cannot extend beyond a period of twelve months in the maximum. Hence, the firm applied for renewal thereof on November 26, 1993 to the Assistant Commissioner, respondent No. 2. This application was for renewal for the period of twelve months with effect from January 29, 1993. Respondent No. 2 by his order dated January 12, 1995 rejected the prayer for renewal on the ground that Rule 48K(2) of the Bengal Sales Tax Rules, 1941 (hereinafter mentioned as "the 1941 Rules") had been violated, because the firm had issued sale bills serially numbered for every month. In other words, the serial number of the sale bills started afresh at the beginning of every month. In paragraph 10 of the application it is stated that "the petitioner's firm had earlier complied with all the necessary conditions and obligations of the statute in obtaining the certificate of eligibility............. and has also again complied with such conditions and obligations for obtaining the renewal". As such, the applicant claims that she is legally entitled to get the eligibility certificate (E.C.) renewed by respondent No. 4, the Assistant Commissioner. She preferred a revision against the order of the Assistant Commissioner before respondent No. 3, the Deputy Commissioner, Commercial Taxes. In paragraph 11 of the application, it is stated that it was argued before respondent No. 3 as well as respondent No. 4 that applicant was maintaining serial numbers according to calendar months for "purely official and administrative convenience to cope with the requirements of computer accounting system". It was also submitted before them that Rule 48K did not mandatorily require that seriality of bills should be maintained for the whole of the year, and the word "year" was not mentioned in Rule 48K(2). The respondent No. 4, it is alleged, could not appreciate the method in the system followed by the applicant from the inception of the business. It was also contended that since there was substantial compliance of Section 10F and Rules 48C to 48K, the provisions being an incentive scheme should be liberally construed. But the revision application was rejected by respondent No. 3 by the impugned order dated September 22, 1995. It is contended by the applicant that once the original E.C. was issued with effect from January 30, 1992, applicant was entitled to the same for seven years from that date, and hence neither respondent No. 4 should have rejected the prayer for renewal, nor respondent No. 3 should have confirmed such rejection. The Assistant Commissioner who decided the prayer for renewal of the E.C. had no jurisdiction to review the findings of the earlier Assistant Commissioner who had issued the E.C. for the first time. The applicant has distinguished Rule 3(66a) of the 1941 Rules from Rule 48K(2), pointing out that in Rule 48K(2) it is not stated that the purpose of issuing serially numbered cash memos and bills is to show proof of sales of goods which are claimed to be exempt. Rule 48K(2), it is contended, does not specifically mention that bills should be issued serially during a year or an accounting year. The word "year" cannot be incorporated in Rule 48K(2). The distinction between exemption under Rule 3(66a) and the deferment of tax under Rule 48K(2) is emphasised by arguing that one is a provision for exemption from tax and the other is only for deferment of tax.
3. The case of respondents in their affidavit-in-opposition is that the applicant had actually violated one of the vital conditions for renewal of B.C. under Rule 48K(2) by not issuing serially numbered bills/cash memos for sales of goods manufactured in the unit throughout the year, i.e., accounting year followed by her. The applicant must strictly comply with the provisions of Section 10F and the rules framed thereunder for obtaining deferment of tax throughout the admissible period. For obtaining renewal of E.C. in respect of every year, the applicant is obliged to strictly comply with all the pre-conditions. As she had violated one of the conditions, the prayer for renewal of E.C. was rejected. At the time of renewal, it is necessary to determine that the applicant has complied with all the conditions. Reference is made to the decisions of the Supreme Court in the cases of Mangalore Chemicals & Fertilizers Limited v. Deputy Commissioner of Commercial Taxes [1991] 83 STC 234 and Union of India v. Wood Papers Ltd. [1991] 83 STC 251 respectively. In those cases it was held, according to respondents, that the rules for exemption should be interpreted to ensure strict compliance with provisions of exemption so that incidence of extra burden on other sections of tax payers is avoided. It is the further case of the respondents that under the provisions of the 1941 Act and the 1941 Rules, a "year" is the unit of time and that cannot be broken into smaller fractions. The applicant is liable to tax on the basis of her annual turnover and her assessment of tax is on annual basis. The declared accounting year of the applicant is April to March, and hence she was required under Rule 48K(2) to issue serially numbered cash memos with a running serial over the said accounting year. She could not issue cash memos with fresh monthly serials at her own sweet will.
4. An affidavit-in-reply was filed by the applicant reiterating her case in the main application and denying those in the affidavit-in-opposition. In paragraph 10 thereof, the applicant has stated that the "validity of the system of maintenance of seriality" was earlier accepted by the Assistant Commissioner who issued the B.C. with effect from January 30, 1992, Hence, the next Assistant Commissioner dealing with the renewal cannot review the said proceeding.
5. It is not disputed that under the scheme of deferment of payment of tax under Section 10F, the applicant's firm is entitled to the benefit for a period of seven years commencing from January 30, 1992 subject to fulfilment of certain conditions and restrictions. Section 10F is clear that the benefit is conditional. The conditions and restrictions are prescribed in Rules 48C to 48K of 1941 Rules. There is also no dispute about that. Mr. S. Dasgupta, learned advocate for the applicant himself referred to Rule 48C(4) and (5). According to him, Rule 48C(5) does not indicate under what circumstances an application may be rejected. But the applicant has not challenged the validity of Rule 48C(5). According to Rule 48C(5), grant of the initial E.C. can be validly made for a period not exceeding twelve months at a time, "subject to renewal of such certificate for every period of twelve months thereafter on an application made in form XXXVIB within thirty days before the expiry of the validity of such certificate and, in the event of rejection of the application, shall record reasons therefor and intimate the applicant". It is, thus, clear that renewal of E.C. is not automatic. There should be an application in the prescribed manner within the prescribed period and it is also liable to rejection for recorded reasons. This will be further evident from Rule 48E. Under Rule 48E, in case of contravention of provisions of the 1941 Act or the Rules thereunder, deferment of tax under Section 10F may be discontinued even before expiry of the eligible period under Section 10F(2), after giving a reasonable opportunity to the dealer of being heard. Rule 48K(1) lays down the condition and restriction of maintaining vouchers and documents relating to gross value of fixed capital assets for the purpose of obtaining E.C. Rule 48K(2) lays down the condition and restriction that a registered dealer claiming deferment of payment of tax under Section 10F shall keep separate account in respect of a newly set-up industrial unit, issue serially numbered bills or cash memos for sales of goods manufactured in such unit and keep purchase bills or cash memos for purchase of goods used directly in the manufacture of goods therein.
6. It is true that Rule 48K does not expressly specify continuous period over which serially numbered bills or cash memos should be issued. But it cannot be, therefore, contended that dealers are free to choose their own continuous periods for issuing serially numbered bills or cash memos for the purpose of Rule 48K. Even Mr. Dasgupta, learned advocate for the applicant, submitted that bills or cash memos should be issued for the purpose over a reasonably continuous period. According to him, however, a calendar month is a reasonably continuous period. Mr. J.K. Goswami, learned State Representative appearing for respondents submitted that no liberty can be given to the dealers so as to follow the system of issuing bills or cash memos for sales of their manufactured products for the purpose of Rule 48K over varying continuous periods, which they themselves consider to be reasonable. According to him, every dealer's own declared accounting year should be the continuous period over which such bills or cash memos should be issued for the purpose of availing of the advantage of Section 10F. In this connection, he referred to the judgments of this Tribunal in the cases of Nanda Technisch (P) Ltd., RN-114 of 1993 and Air Tech India v. A.C.C.T., Special Cell, RN-26 of 1995 (reported in [1996] 103 STC 309), dated October 8, 1993 and June 14, 1995 respectively. Mr. Dasgupta, appearing for the applicant, relied on the judgment in the case of State Level Committee v. Morgardshammar India Ltd. reported in [1996] 101 STC 1 (SC) at 10 ; (1996) 29 STA 103 at 112 (SC) and contended that the judiciary should not import anything into the legal provision in question so that the dealer loses the benefit. On the strength of the said decision he also argued that Rule 48K(2) should be liberally construed. Rule 48K(2) is reproduced below for the sake of proper appreciation :
"48K(2). A registered dealer claiming deferment of payment of tax under Section 10F or remission of tax under Section 10G, shall keep separate account in respect of a newly set up industrial unit, issue serially numbered bills or cash memos for sales of goods manufactured in such unit and keep purchase bills or cash memos for purchase of goods used directly in the manufacture of goods therein."
The requirement of this provision is clear that the newly set up industrial unit should have separate account and should issue serially numbered bills or cash memos for sales of its manufactured goods and also shall keep purchase bills or purchase cash memos of goods directly used in the manufacture of goods in that unit. The object is to ensure that the dealer who claims the benefit does not mix up his any other business with the newly set up industrial unit for which the benefit is claimed. The requirement of issuing serially numbered bills or cash memos for sales is also aimed at ensuring that sales of any goods which is not manufactured in the newly set up industrial unit are not mixed up with the sales of goods manufactured in the unit. In the case of State Level Committee [1996] 101 STC 1 at 10 (SC) ; (1996) 29 STA 103 at 112, the Supreme Court quoted from an earlier decision of that court in Novopan India Ltd. (1994) Supp 3 SCC 606. There, it was held :
"The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee--assuming that the said principle is good and sound--does not apply to the construction of an exception or an exemption provision ; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals [1991] 83 STC 234 (SC) and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it."
It was also held in Hansraj Gordhandas v. H.H. Dave [1969] 2 SCR 253, which is also quoted in the case of State Level Committee [1996] 101 STC 1 at 10 (SC) ; (1996) 29 STA 103 at 112 that an exemption notification should be interpreted in the light of the words employed by it and not on any other basis. It was observed by the Supreme Court that this view was taken on the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and the matter should be governed wholly by the language of the notification concerned. Mr. Dasgupta, applicant's counsel also referred to a decision of this Tribunal in the case of J.K. Bansal & Co. v. State of West Bengal [1995] 96 STC 553. It was held in that case that under Rule 3(66a) of the Bengal Sales Tax Rules, 1941 the words "serially numbered" appearing in the proviso thereto indicate that the sales of the manufactured product should be in a serial order or in a series and there should be numbers of cash memos one after another in succession, relating only to or confined to the sales of the manufactured product of the unit. The intention of the provision is to distinguish the dealer's manufacturing business in question from any other business he may have.
7. Mr. Dasgupta argued that the decisions of this Tribunal relied on by Mr. Goswami, appearing for the respondents, cannot be applied to the present case which is under Section 10F and Rule 48K(2), because Rule 3(66) and Rule 3(66a) of the 1941 Rules were for exemption from tax, whereas Section 10F and Rule 48K(2) were for deferment of payment of certain percentage of tax for several years. But Rule 3(66a) also required that the industrial unit should issue serially numbered cash/credit memos for sales of goods manufactured in such industry. Thus, the provisions in Rule 48K(2) and that in Rule 3(66a) relating to issuance of serially numbered bills or cash memos or credit memos for sales of goods manufactured in the unit, are in pan materia, or identical. In spite of the fact that Rule 3(66a) was for exemption from tax, while Section 10F and Rule 48K(2) were for deferment of payment of tax, the provisions are identical in language and intention and they appear in the same Act and the same Rules. We do not see any reason to take a different view for the purpose of Rule 48K(2). As held by the Supreme Court in the case of State Level Committee [1996] 101 STC 1 ; (1996) 29 STA 103, already referred to, the applicant must establish clearly that she is covered by the provision, in order to get the benefit which she is claiming. In the present case, the applicant must establish that she is covered by Rule 48K(2) and she has complied therewith. It is true that in a taxing statute there is no room for any intendment and effect should be given to the clear meaning of the words. In the present case, however, the words of rale 48K(2) are clear that cash memos or bills for sales must be issued serially numbered. True, the provision does not say for what continuous period the serial number should be continued. But that can be no ground for thinking that dealers were free to choose any length of continuous period for this purpose. In this respect, the decisions of this Tribunal referred to by Mr. J.K. Goswami, appearing for the respondents, are wholly applicable. Here also, as held in the case of Nanda Technisch (P) Ltd. (RN-114 of 1993 decided on October 8, 1993) Rule 48K(2) should be interpreted in the context of the over-all scheme and the provisions of the 1941 Act and the 1941 Rules. As held in that case :
"It is not consistent with logical thinking that 'serially numbered' may mean anything to any dealer, without any set principle. The provision for issuing such cash memos is nothing new. Under Section 13(1) of the 1941 Act, a registered dealer is obliged to keep accounts ; under Section 14(2), he is required to keep the accounts open for inspection ; under Section 13(2), he is obliged to issue serially numbered cash memos if the goods sold in one transaction is of the value of more than twenty rupees. Under Section 7(3), a registration certificate is to be issued in the prescribed form."
In the present case also, the applicant is a registered dealer who obtained the registration certificate under the 1941 Act in prescribed form No. IIA, in which it is clearly stated that the "dealer's" year" runs from 1st April to 31st March. This certificate is issued on the basis of his application under Rule 5(1). Clause (iii) of Rule 5(1) requires the applicant to state in his application "the year by reference to which the accounts are maintained in his books". Under Rule 5(2), the dealer cannot change his accounting year without permission of the assessing authority. Various other provisions of the 1941 Act like Sections 4, 6B, 6D(1), 8, 11 and Rule 18 (about annual returns) contemplate "year" as a unit of time or period. Section 2(j) defines "year" in relation to any dealer, as the year by reference to which, according to his declaration, the accounts are ordinarily maintained in his books, and where no such declaration is made, "year" means a British calendar year. It was held by this Tribunal in Nanda Technisch (P) Ltd. (RN-114 of 1993 decided on October 8, 1993), that cash memos are an integral part of a dealer's account and these are documents relating to accounts. Hence, it was held that without any doubt, "year" is the unit of period of time in relation to issuance of cash memos and under Rule 3(66a), serially numbered cash memos with a running serial must be issued during the dealer's declared accounting year, namely, from 1st April or any other day which was the date of first sale of the manufactured product, till the 31st March of the following year. This decision is entirely applicable to the present case. In this connection reference should be made to the case of Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax [1963] 14 STC 976 (SC) in which it was held, although in the context of escaped assessment, that the question of escaped assessment has to be considered on the basis that each quarter is a separate period for the assessment under Section 11-A of the C.P. and Berar Sales Tax Act, 1947. As the unit of assessment was a quarter under the said Act, that period could not be further split up into months, weeks and days. Mr. J.K. Goswami also submitted that Rule 48K(2) should not be read in isolation from the over-all scheme of the Act. We agree with his contention that under Rule 48K(2), a dealer claiming the benefit of Section 10F is required to issue cash memos for sales of his unit's manufactured product over the continuous period of his own declared accounting year. Mr. Dasgupta appearing for the applicant, submitted that in the previous year for which the initial E.C. was issued, the same type of account was maintained with monthly serial number of cash memos. The contention in that respect made in the main application does not appear to be very clear. Be that as it may, it has not been shown that actually during the previous year cash memos had been issued with only month-long serial number. Moreover, even if that was so, that was not binding on the Assistant Commissioner who was considering the renewal of the E.C. Although the applicant was otherwise eligible for deferment of payment of tax for seven years, this eligibility was subject to compliance of conditions and restrictions. Without compliance of the conditions and restrictions, the applicant cannot claim to be covered by Section 1 OF for the purpose of renewal for the second year. Every year's renewal is treated in terms of Section 10F and the rules framed thereunder as a fresh period for deferment of payment of tax and that should be so. Otherwise, by merely complying with conditions in the first year there would have been an automatic extension of eligibility for the entire period of seven years. The provisions do not envisage such a situation. Rather the provisions contemplate that renewal should be obtained on application and upon fulfilment of conditions and restrictions. Mr. Goswami appearing for respondents, referred to Section 10F(8) in this connection. However, Rule 48C(5) is quite clear in this respect. According to that rule, an application is to be filed for renewal in the same form XXXVIB in which initial B.C. is to be applied for under Rule 48C(4), and the initial E.C. cannot be issued for more than twelve months and every renewal should also be for only twelve months. That being so, the Assistant Commissioner who rejected the prayer for renewal of E.C. was not bound by the findings of his predecessor who had issued the E.C. for the initial period of twelve months. The second Assistant Commissioner dealing with the renewal application was obliged to consider all aspects of the matter to conclude whether the applicant had fulfilled the conditions and restrictions during the period for which renewal was applied. By not issuing year-long serially numbered cash memos for sales of manufactured products of the unit, the applicant did not fulfil all the conditions and restrictions to entitle her to renewal of the E.C. At one stage Mr. Dasgupta submitted on behalf of the applicant that cash memos were issued according to month-wise serial numbers, as the applicant was keeping computerised accounts. But Mr. Dasgupta could not say for certain that keeping of computerised accounts required that cash memos should be issued only according to month-wise serial numbers. Nor could he say that computerised accounts were not possible to be maintained for a running period of one year according to the applicant's own declared accounting year from 1st April to 31st March. It is necessary to repeat that, according to the applicant's registration certificate under the 1941 Act, her accounting year runs as per her own declaration, from 1st April to 31st March, and that accounting year has not yet been altered.
8. The initial E.C. was issued for twelve months from January 30, 1992 to January 29, 1993. The impugned application for renewal was made for the period of twelve months from January 30, 1993 to January 29, 1994. Since the applicant issued cash memos according to monthwise serial numbers, in the month of commencement (January, 1993) the serial number was valid for only two days, i.e., January 30, 1993 and January 31, 1993. But in the last month of the period of twelve months, the serial number was valid and continuous for twenty-nine days from January 1, 1994 to January 29, 1994. This Tribunal has, in some cases under Rules 3(66) and 3(66a), allowed issuance of B.C. or renewal thereof, upon compliance of the conditions, for a part of the period. For example, where the conditions were fulfilled only for a part of the accounting year of the dealer, but those were contravened for the other part, this Tribunal directed issuance or renewal of B.C. only for that part of the period during which the conditions were fulfilled. Since issuance of serially numbered cash memos is one of the conditions, similar view was taken by this Tribunal with regard to that also. Following the same principle, we are directing respondent No. 4 to renew the E.C. under Section 10F in favour of the applicant for the brief period from January 1, 1994 to January 29, 1994. This will also make it possible for the applicant to prefer a claim for renewal of E.C. under Section 10F for the next period/periods of twelve months subject to fulfilment of the conditions and restrictions including issuance of serially numbered cash memos over the continuous period of her accounting year and subject to satisfaction of the appropriate authority. The impugned aforesaid orders of respondents 4 and 3 respectively, are, therefore, modified to that extent. In this view of the matter, we hold that there is no reason to interfere with the main finding contained in the impugned order dated January 12, 1995 passed by the Assistant Commissioner, Commercial Taxes, respondent No. 4, and the order dated September 22, 1995 passed by the Deputy Commissioner of Commercial Taxes, respondent No. 3, respectively.
9. In the result, the application is allowed only in part. Respondent No. 4 is directed to renew the E.C. under Section 10F in applicant's favour only for the period from January 1, 1994 to January 29, 1994. The impugned orders of respondents Nos. 4 and 3 respectively are modified only to that extent. The interim order stands vacated. No order is made for costs.
S.N. Mukherjee, Judicial Member
10. I agree.
M.K. Kar Gupta, Technical Member
11. I agree.