Uttarakhand High Court
Ms Gayatri Iron And Steel vs State Of Uttarakhand And Others on 14 December, 2017
Bench: K.M. Joseph, V.K. Bist
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Special Appeal No. 904 of 2017
M/s Gayatri Iron & Steel ............ Appellant
Versus
The State of Uttarakhand and others ............. Respondents
Mr. N.K. Arora, Advocate with Mr. Jitendra Chaudhary, Mr. B.R. Garg and Mr.
Gayatri, Advocates for the appellant.
Mr. Mohit Maulekhi, Brief Holder for the State of Uttarakhand/respondents.
Dated: 14th December, 2017
Coram: Hon'ble K.M. Joseph, C.J.
Hon'ble V.K. Bist, J.
K.M. JOSEPH, C.J. (Oral) Appellant is the writ petitioner. The writ petition was filed seeking the following reliefs:
"(a) Issue a writ, order or direction in the nature of certiorari, calling for the original record and pleased to quash the impugned order dated 15-02-2016 (ANNEXURE- 7) passed by the respondent no. 3 i.e. The Additional Commissioner, Commercial Tax Haridwar Zone, Haridwar District Haridwar.
(b) Issue a writ order or direction in the nature of mandamus that the assessing authority i.e. the respondent no.4 shall not initiate re-assessment proceedings under section 29 of Uttarakhand VAT Act 2005 on the strength of impugned order dated 15-02-2016."
2. The case, in brief, of the appellant/writ petitioner is as follows:
Appellant/writ petitioner is registered under the Uttarakhand VAT Act, 2005 (hereinafter referred to as the "Act"). Appellant/writ petitioner is also registered under the Central Sales Tax Act, 1956. The appellant/writ petitioner was assessed under the Central Sales Tax Act, 1956 in respect of its Inter-State transactions, and the assessment order was passed vide Annexure No. 2. Assessment was completed under the Central Sales Tax Act, 1956. The appellant/writ petitioner was taxed at the rate of 1 per cent. This was done, apparently, on the 2 basis that the appellant/writ petitioner produced 'C' Forms from its buyers, and it is on the said basis that the assessment was completed. Annexure No. 3 to the writ petition is a notice purported to be issued under Section 29 of the Act; it is dated 20.11.2015 (though it may be noted that it is seen dated in the month of October, 2015). The appellant/writ petitioner submitted its reply. Thereafter, the appellant/writ petitioner received Annexure No. 5 notice issued by the Commissioner, apparently, purporting to invoke the powers available to him under Section 29 (4) of the Act. The said annexure is dated 11.01.2016. The appellant/writ petitioner gave its response vide Annexure No. 6. Thereafter, the Commissioner proceeded to pass Annexure No. 7 dated 15.02.2016. It is the said order, which came to be questioned before the learned Single Judge. This was besides seeking other relief, which we have already noted.
3. The learned Single Judge did not find it fit to interfere with the matter. The learned Single Judge dealt with the arguments of the appellant/writ petitioner that he was only a seller and that the 'C' Forms were furnished to it by the buyers and if there is any irregularity or illegality in the same, it is the buyers, who must be held responsible. The arguments of the appellant/writ petitioner failed and the writ petition came to be dismissed. Hence, the appeal.
4. We heard Mr. N.K. Arora, learned counsel for the appellant/writ petitioner and Mr. Mohit Maulekhi, learned Brief Holder for the State of Uttarakhand/Revenue.
5. Mr. N.K. Arora, learned counsel for the appellant/writ petitioner would submit that the learned Single Judge has purported to observe that the appellant/writ petitioner had obtained the 'C' Forms fraudulently; this is not correct and cannot be sustained. He would further submit that Section 29 of the Act is a code by itself. He would next submit that the learned Single Judge has even erroneously 3 doubted whether the transactions in question are Inter-State or Intra- State. He would submit that the assessment was completed invoking the power available to the authorities in the State by virtue of Section 9(2) of the Central Sales Tax Act, 1956, the transactions were, in fact, Inter-State transactions and not Intra-State transactions. He would next submit that the decision in the case of The Commissioner of Sales-tax, U.P. Vs. M/s Bhagwan Industries (P) Ltd., Lucknow reported in AIR 1973 SC 370 is not applicable. He would further rely on the judgments of the Hon'ble Apex Court in the case of Unique Butyle Tube Industries (P) Ltd. Vs. U.P. Financial Corporation and others reported in (2003) 2 SCC 455, as also, in the case of Prakash Nath Khanna and another Vs. Commissioner of Income Tax and another reported in (2004) 9 SCC 686. We will refer to it in due course. Next, he would submit that at the time when Annexure No. 7 was issued, there was no power with the Commissioner to reassess the transaction of this nature on the ground, on which, it is purported to be done. Expatiating, he would submit that the Commissioner has purported to invoke the power under Section 29 (4) of the Act on the score that this is a case, which involved assessing the appellant/writ petitioner at the rate of tax, which was vouchsafed for the appellant/writ petitioner on the wings of the 'C' Forms, which were made available to the appellant/writ petitioner by its buyers. The ground, which apparently weighed with the authorities, is that 'C' Forms, relied on by the appellant/writ petitioner, were found to be not verifiable or rather not issued by the competent authorities. It also appears that the authorities noted that the buyers had not included the transactions in their returns before their competent authorities. If that be so, he would point out that the Taxing Authorities were not remediless as they could always proceed against the buyers. This is besides again pointing out that in such a case, that is to say where the 'C' Forms were found to be non-existent or false, there was no power with the Commissioner under Section 29 of the Act as it stood prior to the amendment, which took place on 4 31.03.2016. After the amendment, he points out that Section 29 of the Act has undergone a change. In Section 29, in Sub-Section (1), the legislature has added Clause (dd). It reads as follows:
"29(1)(dd). During Assessment rebate or concession has been allowed on the basis of submitted declaration form or certificate but such submitted declaration form or certificate is found to be false or wrong, afterwards; or."
6. Learned counsel for the appellant/writ petitioner would submit that the object behind insertion of Section 29(1)(dd) was as follows:
"In light of non verification of form in past including the matters which due to time barred can not come under section 29(4) resulting the revenue loss due to no proceeding is possible. So on account of finding the forms not verified, no clear provision under section 29 to re-assess, the amendment in heading and sub-section (1) is proposed. Similarly, in sub-section (4) the time limit for re-assessment within 6 years from assessment year and 4 years from the date of passing order."
7. It is also pointed out by the learned counsel for the appellant/ writ petitioner that Annexure No. 3 is a jurisdictional notice purported to be issued under Section 29(1) of the Act. He would submit that in Annexure No. 3, conspicuous by its absence is any reference to Section 9(2) of the Central Sales Tax Act, 1956. He would, therefore, point out that on the said score alone, not only the jurisdictional notice, being afflicted with a fatal blemish, namely, absence of reference to Section 9 of the Central Sales Tax Act, 1956, is without jurisdiction but the entire proceedings, which followed it, must fall to the ground. In this regard, he drew our attention to the judgment of the Allahabad High Court in the case of Krishna Kumar & Jai Prakash Vs. State of U.P. & others reported in 2007 NTN (Vol. 32)
282. He would also rely on the judgment of the Allahabad High Court in the case of Manaktala Chemicals Pvt. Limited Vs. State of U.P. and others reported in 2007 NTN (Vol. 32) 299. He would remind us that the assessment year in question is 2010-11. Under the Act, the period of limitation would run out, under Section 29(2) of the Act, on 5 31.03.2014. Therefore, the jurisdictional notice was issued after the expiry of the period of limitation and, what is more, at the time when it was issued, there was no reference to Section 9(2) of the Central Sales Tax Act, 1956, and still further, it was unsupported by any order under Section 29(4) of the Act. He would draw our attention to Section 32 of the Act. He would submit that under Section 32 of the Act, though assessment and re-assessment are contemplated and approved of under Section 29, the provision, contained in Section 32(7) which provides for excluding the periods when there was a stay obtained from a Court, could not be available to the department in the facts of this case, having regard to the wording used in Section 32(7), which also we will deal with.
8. Per contra, Mr. Mohit Maulekhi, learned Brief Holder for the State of Uttarakhand/Revenue would point out that after the issuance of Annexure No. 7 impugned order, Annexure No. 8 was issued, which is dated 23.02.2016 purporting to be under Section 29 of the Act and, therein, there is reference to Section 9(2) of the Central Sales Tax Act, 1956 also. As far as the contention based on absence of power with the Commissioner to issue Annexure No. 7, at the time he issued it, is concerned, having regard to the later development in the law by virtue of amendment, he would submit that it only represents the case of the Legislature being more cautious, namely, invoking the principle of abundans cautela non nocet. In other words, he would submit that even without Section 29(1)(dd), there was power available with the Commissioner under the provisions of Section 29 of the Act, as it existed to deal with a case like the present. In other words, the appellant/writ petitioner came to be assessed at the rate of 1 per cent tax. The rate of tax, which the appellant/writ petitioner would have been called upon to pay, but for the concessional rate available under Section 8 (1) read with Sections 8(3) and 8(4) of the Central Sales Tax Act, 1956, would be the higher rate of 4 per cent. Therefore, the provision of Section 29 of the Act, as it stood prior to the amendment, 6 was sufficient to clothe the Commissioner with the power to extend the period of limitation, which is what he has done by Annexure No.7.
9. Mr. N.K. Arora, learned counsel for the appellant/writ petitioner would also submit that the power under Section 29(1) of the Act would not be available in this case for the reason that Section 29 presupposes an order, which is passed under Section 25 or Section 26 of the Act, and it may be noted in this case that this is not an assessment under the Act but it is an assessment, which is carried out in respect of a transaction, which is covered by the Central Sales Tax Act, 1956. In this regard, he sought to draw support from the judgment of the Hon'ble Apex Court in the case of M/s Khemka and Co. (Agencies) Pvt. Ltd. Vs. State of Maharashtra reported in AIR 1975 SC 1549. His case is that it is after the amendment, which is carried out w.e.f. 31.03.2016, that this power is specifically given to deal with a situation like this. In fact, in response to a query from the Court that if that argument is accepted what would happen in a case where there is an escaped turnover in an assessment under the Central Sales Tax Act, 1956, he would submit that in such a case the power under Section 29 of the Act would not be available to reassess the matter. He would submit that the Court may note that the assessment in such a case would be treated as having been done under Section 9(2) of the Act and not under Sections 25 and 26 of the Act. The assessment order Annexure No. 2 must be treated as under Section 9(2) of the Act and not under Section 25 of the Act.
10. The Appeal arises from the judgment of the learned Single Judge refusing to interfere with the order passed under Section 29(4) of the Act. Since the consideration of the arguments of the parties in this case revolves around the provision of Section 29, we deem it appropriate to refer to the same. Section 29 of the Act reads as under:
"Section 29 : Assessment of Escaped Turnover-
(1) Where after a dealer is assessed under Section 25 or Section 26 for any year or part thereof, the Assessing 7 Authority has reason to believe that the whole or any part of turnover of the dealer in respect of any tax period has-
(a) escaped assessment; or
(b) been under assessed; or
(c) been assessed at a rate lower than the rate at which it is assessable; or
(d) been wrongly allowed any exemption or deduction therefrom; or
(e) been wrongly allowed any tax credit therein, the Assessing Authority shall, after recording the reasons in writing, serve a notice on the dealer and after giving the dealer a reasonable opportunity of being heard and making such enquiries as he considers necessary, he shall assess or reassess the turnover of the dealer and tax according to law and the provisions of this Act shall as far as may be, apply accordingly:
Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment or full assessment as the case may be.
Explanation (1).- Nothing in this sub-section shall be deemed to prevent the Assessing Authority from making an assessment to the best of its judgment.
Explanation (2).- For the purposes of this Section and of Section 30,"Assessing Authority" means the officer who passed the earlier assessment order, if any, and includes the officer having jurisdiction for the time being to assess the dealer.
Explanation (3).- Notwithstanding the issuance of notice under this sub-Section, where an order of assessment or reassessment is in existence from before the issuance of such notice it shall continue to be effective as such, until varied by an order of assessment or reassessment made under this Section in pursuance of such notice.
(2) Except as otherwise provided in Section 28 or under this Section, no order of assessment or reassessment shall be made under sub-section (1) after the expiry of three years form the end of the year in respect of which or part of which the tax is assessable.8
(3) Assessment or reassessment in respect of turnover escaped from assessment may be passed at any time within three years and nine months ending on 31st December after the expiry of assessment year for which assessment is to be made, provided that notice under this Section has been served within a period of three years and six months ending on 30th September after the expiry of the assessment year for which assessment is to be made.
(4) If the commissioner on his own or on the basis of reasons recorded by the Assessing Authority is satisfied that it is just and expedient so to do, he may authorise the Assessing Authority in that behalf, and then such assessment or reassessment may be made after the expiration of the period aforesaid but not after the expiration of six years from the end of such assessment year, notwithstanding that such assessment or reassessment may involve a change of opinion."
11. The above were the provisions of the Act till 31.03.2016. With effect from 31.03.2016, they underwent an amendment, which we have already extracted. We may also advert to relevant provisions of Section 32 of the Act, which reads as follows:
"Section 32 : Period of Limitation for making Assessment or Reassessment (1) No order of assessment under Section 24 for any tax period of an assessment year shall be made after the dealer has submitted annul return for such assessment year and where annual return has not been submitted by the dealer, assessment shall not be made after the expiry of the period prescribed or time allowed, if extended, for submission of annual return for such period.
(2) Except as otherwise provided in Section 28 no order of assessment or reassessment under any provisions of this Act for any assessment year shall be made after expiration of 3 years from the end of such assessment year.
(3) Assessment or reassessment order under the provisions of Section 29 may be made within the time prescribed therein.
(7) Where the proceedings for assessment or reassessment for any assessment year remain stayed under the orders 9 of any Court or authority, the period commencing from the date of stay order and ending with the date of receipt by the Assessing Authority concerned of the order vacating the stay, shall be excluded in computing the period of limitation provided in this Section:
Provided that if in so computing, the period of limitation comes to less than one year, such assessment or reassessment may be made within one year from the date of receipt by the Assessing Authority of the order vacating the stay.
12. Admittedly, Annexure No. 2 order of assessment was passed in this case. It is here that we must clear the ground by dealing with the argument of Mr. N.K. Arora, learned counsel for the appellant/writ petitioner that there is no power with the authorities to reassess, in the facts and circumstances of this case, for the reason that there is no order passed under Sections 25 and 26 of the Act. In this regard, it becomes apposite that we advert to Section 9 of the Central Sales Tax Act, 1956. It reads as follows:
"9. Levy and collection of tax and penalties.--
(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provision of sub-
section (2), in the State from which the movement of the goods commenced:
Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub- section (2) of section 6, the tax shall be levied and collected--
(a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of 4 [sub-section (4) of section 8] in connection with the purchase of such goods; and
(b) where such subsequent sale has been effected by an unregistered dealer in the 10 State from which such subsequent sale has been effected.
(2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under general sales tax law of the appropriate State shall, on behalf of the Government of India, assess re-assess, collect and enforce payment of tax, including any interest or penalty, payable by a dealer under this Act as if the tax or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties, charging or payment of interest, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly:
Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, be rules made in this behalf make necessary provision for all or any of the matter specified in this sub- section.
(2A) All the provisions relating to offences, interest and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in section 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law.
(2B) If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of 11 interest for delayed payment of tax, of the general sales tax law of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law.
(3) The proceeds in any financial year of any tax, including any interest or penalty levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government of India shall be assigned to the State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India.
13. It is now ripe to refer to the Constitution Bench judgment of the Hon'ble Apex Court in the case of M/s Khemka and Co. (Agencies) Pvt. Ltd. Vs. State of Maharashtra reported in AIR 1975 SC 1549. The issue, which arose in the said case, was whether the assessees under the Central Sales Tax Act, 1956 could be made liable for penalty under the provisions of the State Sales Tax Act. The Hon'ble Apex Court, speaking through a majority, took note of the contention of behalf of the assessee that there is no provision in the Central Sales Tax Act, 1956 for imposition of penalty for delay or default in payment of tax, and, therefore, imposition of penalty under the provisions of the State Sales Tax Act for delay or default in payment of tax is illegal. The Court proceeded to hold, inter alia, as follows:
"12. Section 9(2) of the Central Act first provides that the authorities empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, re-assess and enforce payment of tax including any penalty payable by a dealer under the Central Act. The State Sales Tax authorities are thus created agents of the Government of India. The second important part in Section 9(2) of the Central Act is that the State authorities shall assess, re-assess, collect and enforce payment of tax including any penalty payable by the dealer under the Central Act as if the tax or penalty payable by such a dealer under the Central Act is a tax or penalty payable under the general sales tax law of the State. This part of the section sets out the scope of work of the State agencies. The words "assess, 12 re-assess, collect and enforce payment of tax including any penalty payable by dealer under this Act" mean that the tax as well as penalty is payable only under the Central Act.
15. The words "and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State" in Section 9(2) of the Central Act are important. The words "and for this purpose" relate to "assess, re-assess, collect and enforce payment of tax including any penalty payable by dealer under this Act."
In that context, the last limb of Section 9(2) of the Central Act viz. "and the provisions of such law...shall apply accordingly" mean that the provisions of the State Act are applicable for the purpose of assessment, re- assessment, collection and enforcement of payment of tax including penalty payable under the Central Act. The words of the last part of Section 9(2) viz. "shall apply accordingly" relate clearly to the words "and for this purpose'' with the result that the provisions of the State Act shall apply only for the purpose of assessment, reassessment, collection and enforcement. The doctrine of ejusdem generis shows that the genus in Section 9(2) of the Central Act is "for this purpose". In other words, the genus is assessment, re-assessment, collection and enforcement of payment. The genus is applicable in regard to the procedure for assessment, re-assessment, collection and enforcement of payment. The genus is from whom to collect and against whom to enforce. It is apparent that the extent of liability for tax as well as penalty is not attracted by the doctrine of ejusdem generis in the application of the provisions of the State Act in regard to assessment, reassessment, collection and enforcement of payment of tax including any penalty payable under the Central Act.
16. The deeming provision in the Central Act that the tax as well as penalty levied under the Central Act will be deemed as if payable under the general sales tax law of the State cannot possibly mean that tax or penalty imposed under any State Act will be deemed to be tax or penalty payable under the Central Act. The entire authority of the State machinery is that "for this purpose"
meaning thereby the purpose of assessing, re-assessing, collecting and enforcing payment of tax including any penalty payable under the Central Act, they, meaning the State agencies, may exercise powers under the general sales tax law of the State. The words "for this purpose"
cannot have the effect of enlarging the content of tax and the content of penalty payable under the Central Act.
13Liability to pay tax as well as liability to pay penalty is created by the Central Act. One of the reasons why tax as well as penalty is the substantive provision in the Central Act and is not incorporated by reference to the State Act is illustrated by the history of Section 9(2) of the Central Act. The present Section 9(2) of the Central Act was formerly Section 9(3) of the Central Act. The Madras High Court in D.H. Shah & Co.'s (1967) 20 STC 146 (Mad) case pointed out that the imposition of penalty under Section 12(3) of the Madras Act, 1959 could not be attracted for levy of penalty. The Madras High Court gave the reason that the then Section 9(3) of the Central Act only adopted the procedure of the State Act for assessment, re-assessment, collection and enforcement of tax as well as penalty payable under the Central Act.
24. Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Reference may be made to Section 28 of the Indian Income-tax Act, 1922 where penalty is provided for concealment of income. Penalty is in addition to the amount of income-tax. This Court in Jain Brothers and Ors. v. Union of India 77 I.T.R. 107 said that penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax.
25. The Federal Court in Chatturam and Ors. v.
Commissioner of Income-tax, Bihar 15 I.T.R. 302 said that liability does not depend on assessment. There must be a charging section to create liability. There must be first a liability created by the Act. Second, the Act must provide for assessment. Third, the Act must provide for enforcement of the taxing provisions. The mere fact that there is machinery for assessment, collection and enforcement of tax and penalty in the State Act does not mean that the provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be enlarged by the provisions of machinery of the State Act incorporated for working out the Central Act.
27. For the foregoing reasons we are of opinion that the provision in the State Act imposing penalty for non- payment of income-tax (sic) (Sales-tax?) within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax and penalty payable under the Central Act. There is no lack of sanction for payment of tax. Any dealer who would 14 not comply with the provisions for payment of tax, would be subjected to recovery proceedings under the Public Demands Recovery Act. A penalty is a statutory liability. The Central Act contains specific provisions for penalty. Those are the only provisions for penalty available against the dealers under the Central Act. Each State Sales Tax Act contains provisions for penalties. These provisions in some cases are also for failure to submit return or failure to register. It is rightly said that those provisions cannot apply to dealers under the Central Act because the Central Act makes similar provisions. The Central Act is a self contained code which by charging section creates liability for tax and which by other sections creates a liability for penalty and imposes penalty. Section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, reassessment, collection and enforcement of tax and penalty payable by a dealer under the Act."
14. In the case of Unique Butyle Tube Industries (P) Ltd. Vs. U.P. Financial Corporation and others reported in (2003) 2 SCC 455, the Hon'ble Apex Court, inter alia, held as follows:
"11. It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the Legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said, "Statutes should be construed, not as theorems of Euclid", Judge Learned Hand said, "but words must be construed with some imagination of the purposes which lie behind them". (See Lenigh Valley Coal Co. v. Yensavage). The view was reiterated in Union of India and Ors. v. Filip Tiago De Gama of Vedem Vasco De Gama (SCC p. 284, para 16).
13. While interpreting a provision the Court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. (See Rishabh Agro Industries Ltd. vs. P.N.B. Capital Services Ltd.) The legislative casus omissus cannot be supplied by judicial interpretative process. Language of Section 6(1) is plain and unambiguous. There is no scope for reading something into it, as was done in N. Narasimhaiah v. State of 15 Karnataka. In State of Karnataka v. D.C. Nanjudaiah the period was further stretched to have the time period run from date of service of the High Court's order. Such a view cannot be reconciled with the language of Section 6(1). If the view is accepted it would mean that a case can be covered by not only clauses (i) and/or (ii) of the proviso to Section 6(1), but also by a non-prescribed period. The same can never be the legislative intent."
15. In similar vein are the observations in the judgment of the Hon'ble Apex Court in the case of Prakash Nath Khanna and another Vs. Commissioner of Income Tax and another reported in (2004) 9 SCC 686.
16. We must notice that this is not a case, where there is imposition of penalty. This is instead a case of reassessment. The provisions of Section 9(2) of the Central Sales Tax Act, 1956, undoubtedly, empower the authorities in the State to assess, reassess, collect and enforce payment of tax including any interest or penalty, and for the said purpose, the State authorities are entitled to exercise all or any of the powers they have under the general sales tax law of the State. This would include all the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, inter alia, apart from various other provisions. In short, it means that by provision of Section 9(2) while the charge is imposed under the Central Sales Tax Act, 1956 by the law made by the Parliament, for the purpose of carrying out the assessment or reassessment, inter alia, the same is to be done through the machinery of the State Act relating to the Sales Tax. The power to assess or rather the power to do regular assessment is contained in Sections 25 and 26 of the Act with respect to registered dealers and unregistered dealers, respectively. We need not be detained by the other provisions like Section 28 of the Act, which deals with certain specific contingencies. Therefore, the power available under the Act to carry out regular assessment is contained in Sections 25 and 26 of the Act. Section 29 of the Act 16 contemplates, undoubtedly, the existence of an assessment under Sections 25 and 26 of the Act. It is thereafter that power is given to assess or reassess as provided in Section 29 of the Act. In fact, Section 29 of the Act contemplates the power of reassessment and assessment when the Assessing Authority has reason to believe that the whole or any part of the turnover in respect of any tax period has escaped assessment. It further contemplates the use of the power when there has been an underassessment in the course of the original assessment under Section 25 or 26 of the Act. Far more importantly, for the purpose of our case, it also empowers assessment when there has been an original assessment at the rate lower than the rate at which it is assessable. It also refers to cases of erroneous grant of any exemption or deduction. Clause (e) finally contemplates allowing any tax credit therein erroneously. It is, thereafter, that the amendment was brought about in the year 2016 w.e.f. 31.03.2016, by which Clause (dd) was added in Section 29(1) of the Act. It is true that it provides for the words "during assessment rebate or concession has been allowed on the basis of submitted declaration form but such submitted declaration form is found to be false or wrong, afterwards." It is, undoubtedly, true that this may not assist the department in this case as it has been inserted only w.e.f. 31.03.2016.
17. We must, however, refer back and deal more specifically with the argument of Mr. N.K. Arora, learned counsel for the appellant/writ petitioner that the Assessment-Annexure No. 2, by which the appellant/writ petitioner was assessed at the rate of 1 per cent (the concessional rate with the aid of the 'C' Forms), cannot be treated as an assessment under Section 25 of the Act. We would think that the said argument does not appeal to us. As already noted, the power to assess or reassess a transaction, which is exigible to the Central Sales Tax Act, 1956 is vested with the authorities in the State. The power to carry out the assessment and the reassessment is also traceable to the provisions of the enactment of the State. The enactment of the State is 17 the Act. We were not shown any provision in the Central Sales Tax Act, 1956, which deals with the power to make assessment except Section 9(2). Section 9(2), in turn, in fact, vests the power to make assessment and reassessment with the State authorities employing the machinery under the State Act. Therefore, we must, necessarily, fall back on the provisions of the Act in a search for the power, under which the regular assessment was carried out. Our search, in our view, would end with Section 25 of the Act in regard to registered dealers. No doubt, the power would be exercised under Section 25 of the Act read with Section 9(2) of the Central Sales Tax Act, 1956. If the argument of Mr. N.K. Arora, learned counsel for the appellant/writ petitioner is accepted that the assessment must be treated as made under Section 9(2) of the Central Sales Tax Act, 1956, without reference to Section 25 of the Act as such, it would result in denuding the authority of the power available otherwise under Section 29 of the Act, which, in turn, is premised on an assessment under Section 25 of the Act. Cases, for instance, of escaped assessment or of underassessment also would, if the argument of learned counsel for the appellant/writ petitioner is accepted, be unremedied. Equally, the power where an exemption or deduction has been wrongly granted, there would be no remedy available to the authorities to undo the wrong assessment. We would think that this argument, which is based on the decision in the case of M/s Khemka and Co. (Agencies) Pvt. Ltd. Vs. State of Maharashtra reported in AIR 1975 SC 1549, does not appeal to us and we, therefore, reject it.
18. The fact that in the U.P. Act, there is no reference to Sections 25 and 26 in Section 29 may not, in our view, take away the power of the authorities to carry out the reassessment in the circumstances involved in this case.
19. Having dealt with the argument that this cannot be treated as having anything to do with Section 25 of the Act and must be treated 18 as having been passed exclusively under Section 9(2) of the Central Sales Tax Act, we must deal with the argument that there is no power to invoke Section 29 of the Act, in the facts and circumstances of this case, as it involves the case of 'C' Forms being suspect on the ground that they are not verifiable and they are not issued by the authorities. The argument runs that till 31.03.2016, the Court may take it that there was no power under Section 29 of the Act to deal with such a contingency and it could not be brought under Clause (c), as is the attempt of the Commissioner, namely, that it cannot be treated as a case where the assessment is at a rate lower than the rate at which it is assessable. On the other hand, the argument of Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue is that there is indeed power even de hors the amendment to deal with the contingency at hand. The argument of Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue is that it is a case of abundans cautela non nocet. In this regard, we may notice the decision of the Hon'ble Apex Court in the case of Gokaraju Rangaraju Vs. State of Andhra Pradesh reported in (1981) 3 SCC 132. Therein, we notice that the Hon'ble Apex Court held as follows:
"As a general rule the Parliament may be presumed not to make superfluous legislation. But the presumption is not a strong presumption and statutes are full of provisions introduced because abundans cautela non nocet (there is no harm in being cautious).
20. Therefore, the power was already available. We must also, in this regard, notice, no doubt, the objects and reasons for enacting this provision. Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue, would, in fact, emphasize what is stated is that there is no clear provision for dealing with such a situation. But we notice that the provision relating to Section 29(1)(c), which has, in fact, been adverted to in the order of the Commissioner, which is the basis for permitting reassessment would, in our view, endow the authorities to deal with the case at hand. Undoubtedly, the appellant/writ petitioner has been assessed at the rate of 1 per cent. If the appellant/writ 19 petitioner was not entitled to the concessional rate available to the assessees fulfilling the requirements under Section 8 of the Central Sales Tax Act, 1956, the assessees would have been assessed at the rate of 4 per cent, which is the rate, which is higher than the rate at which the appellant/writ petitioner has been assessed. Therefore, we cannot say that there was no power even prior to the amendment to deal with a case like the present case. Therefore, we do not agree with the argument of the learned counsel for the appellant/writ petitioner that the impugned order is bad for the reason that it was beyond his powers.
21. As far as the argument of Mr. N.K. Arora, learned counsel for the appellant/writ petitioner that in Annexure No. 3 jurisdictional notice, which was issued on 20.11.2015, is concerned, there is no reference to Section 9(2) of the Central Sales Tax Act, 1956 and, therefore, it is bad and without jurisdiction, and, also for the reason that at that time, there was no order passed under Section 29(4) of the Act, we are afraid that we cannot agree with the learned counsel for the appellant/writ petitioner. It may be true that on the day when Annexure No. 3 was issued, namely, 20.11.2015, the period of limitation, which is provided in Section 29(2) was over. In fact, there was much argument by Mr. N.K. Arora, learned counsel for the appellant/writ petitioner with reference to Section 29(2) and Section 29(3) of the Act. Section 29(2) of the Act, it may be noted, provides for the period of three years from the end of the year in question, whereas Section 29(3) of the Act provides for the period of three years and nine months, provided the notice is issued within a period of three years and six months, as we have already noticed. There is also support sought and drawn from the judgment of the Allahabad High Court in the case of M/s Kishan Chand Agarwal, Agra Vs. Commissioner of Sales Tax, U. P. Lucknow reported in 2003 NTN (Vol. 22) 454. The learned Single Judge, as His Lordship then was, was dealing with a case, which involved the following facts:
20"2. For the assessment year 1978-79, a notice under Section 21 of the Act, was issued on the basis of information received from STO (SIB) that the dealer had supplied Gutti for Rs. 1,80,146.65 paise which was not shown in the books of account. During the assessment proceeding, it was submitted by the dealer that the supply was made from Faridabad to Tuglakabagh within the State of Haryana and neither any transaction under the U. P. Trade Tax Act nor under the Central Sales Tax Act was made. Assessing Authority treated the supply from the State of U. P. to Haryana in the course of interstate sales and assessed tax under Section 21 read with Section 9(2) of Central Sales Tax Act on the supply at Rs. 1,80,146.65 paise. Dealer filed appeal before the Assistant Commissioner (J), Sales Tax, Agra which was allowed and the matter was remanded to Assessing Officer. Before the First Appellate Authority, dealer contended that the original assessment was made only under the U. P. Sales Tax Act and not under the Central Sales Tax Act and a notice under Section 21 was issued under the U. P. Sales Tax Act, in which, it was stated that some tax was escaped to assessment and therefore, order passed under Central Sales Tax Act was not justified and there was no material that the supply was made within the State of U. P. in the course of interstate sale while as per dealer, supply was made from Faridabad itself and hence, the entire proceedings initiated under Section 21 was illegal. First Appellate Authority had accepted that since the supply was made at Faridabad, therefore, it could not be treated as the supply within the State of U.P. However, he further observed that whether the supply was interstate sales or not, the dealer had not been given proper opportunity of hearing and therefore, the matter was remanded back to the Assessing Officer with the direction to issue fresh notice under Section 21 under the Central Sales Tax Act and after making the enquiry, orders, may be passed. Being aggrieved by the order passed by the First Appellate Authority, dealer filed Second Appeal before the Tribunal which was rejected. Tribunal held that merely on the technical defect the Central Sales Tax Act was not mentioned on the notice, proceedings under Section 21, can not be quashed. Tribunal further observed that the dealer had sold Gutti to Faridabad (Haryana) which was alleged to have been supplied in Faridabad. Since the disputed supply was made to Faridabad, undoubtedly this supply shall not come under the ambit of U. P. Sales Tax Act but for the determination of question whether the disputed supply was interstate sale or not, Appellate Authority had not committed any error in remanding the case back to the 21 Assessing Authority for an enquiry to this fact after giving a notice under Section 21 under the Central Sales Tax Act.
Thereafter, the Court proceeded to hold, inter alia, as follows:
"3. I have heard Sri R.R. Agarwal, learned counsel for the applicant and Sri U. K. Pandey, learned Standing Counsel. The learned Counsel for the applicant contended that the notice under Section 21 is a jurisdictional notice and unless it is properly issued. Assessing Authority could not assume jurisdiction to proceed and in support of his submission, he relied upon the full Bench Judgment of this Court in the Case of Laxmi Narain Anand Prakssh vs. CST 1980 UPTC 125. He further contended that the notice was issued under the U. P. Trade Tax Act while the order was passed under the Central Sales Tax Act and hence, the order was patently without jurisdiction and the First Appellate Authority and the Tribunal ought to have quashed the order instead of remanding back the case. He further submitted that there was absolutely no material that there was any interstate sale even the Appellate Authority was not sure that the transaction was interstate sale and hence a direction to issue notice under Section 21 under the Central Sales Tax Act after making enquiry whether the transaction was interstate sale or not was wholly unjustified. I find force in the argument of Counsel for the applicant.
9. Where the notice issued to an assessee is vague, it would not be possible to rely upon it to sustain an assessment made under Section 147 of the Income Tax Act.
13. In view of the above decisions, it is clear that the notice under Section 21 is a jurisdictional notice and it's defect can not be cured in a subsequent proceedings and if the notice is invalid, the entire proceedings stand invalid and liable to be quashed. In the present case, notice was issued under U. P. Trade Tax Act while the assessment was made under the Central Sales Tax Act, therefore, the assessment order passed under Section 21 under the Central Sales Tax Act was in pursuance of without any notice under Section 21 under the Central Sales Tax Act and therefore, the order was illegal and without jurisdiction. The Appellate Authority and the Tribunal ought to have quashed the order passed under Section 21 read with Section 9(2) under the Central Sales Tax Act instead of remanding back the case to the Assessing Authority."22
22. We may also notice the judgment of a Bench of the Allahabad High Court in the case of Krishna Kumar & Jai Prakash Vs. State of U.P. & others reported in 2007 NTN (Vol. 32) 282. That was a case, where notice was issued under Section 21(4-A) of the U.P. Trade Tax Act, 1948. Therein, the Court proceeded to deal with the difference between assessment and reassessment in paragraph 11 of the judgment, which reads as follows:
"11. The scheme of the Act is that every dealer who is liable to pay tax under the Act is required to submit return or returns of his turnover at such intervals (monthly returns) to the Assessing Authority and the Assessing Authority, after close of the assessment year and after making such enquiry as he considers necessary, shall determine the correctness and completeness of the returns filed by a dealer and shall assess the tax on the basis thereof, as provided under section - 7 of the Act. The power to assess the turnover is vested in the Assessing Authority irrespective of the fact whether the dealer has submitted the requisite return within time or the said return is correct or complete. The Assessing Authority is required to frame the assessment order after making such enquiries as he may consider necessary and for the purpose of making enquiry a notice is given under Rule 41 (8) of the Rules framed under the Act. The exercise to complete the assessment is to be completed within the prescribed period of limitation as per section 21 (2) of the Act. Such assessments are popularly known as ''regular assessment'. Under Section 21 of the Act like, other fiscal statutes, power has been given to the Assessing Authority to assess or reassess the dealer or tax if he has reason to believe that whole or any part of the turnover of the dealer for any assessment year or part thereof has escaped assessment to tax. Assessment orders passed in exercise of such powers are called ''reassessment orders' and the proceedings are popularly known as ''reassessment proceedings' for the simple reason that after the assessment has been made, the finality to an order is attached. But in fiscal Statutes, to protect the interest of Revenue, limited power to reopen final assessment orders is conferred on Assessing Authorities generally circumscribed by two limitations no.(1), the Assessing Authority has reason to believe that the turnover of dealer has escaped assessment or there is underassessment and (2) notice to initiate the reassessment proceeding (which has been held by catena 23 of decisions as jurisdictional notice) has been validly served on such dealer.
The Court, finally, took the view that it is a case of regular assessment.
23. We may also notice the judgment of the Allahabad High Court in the case of Manaktala Chemicals Pvt. Limited Vs. State of U.P. and others reported in 2007 NTN (Vol. 32) 299. This was a case, which involved the challenge to a notice issued under Section 21 of the U.P. Trade Tax Act. Regular assessment was completed. Thereafter, the Commissioner acting under the provisions of the U.P. Trade Tax Act, which provided for extension of time, which was akin to Section 29(4) of the Act, granted extension. As on the relevant date, namely, the date on which the notice was issued, the limitation period of four years had expired. The Assessing Authority had issued a notice without any authority, as the approval of the Commissioner had not been obtained, as on the date when he issued the notice. The notice was issued by the Assessing Officer in the said case, in fact, on 22.03.1993. The approval came from the Commissioner only on 29.03.1993, which is after the issuance of the notice. Hurriedly, the assessment was completed ex parte on 30.03.1993. It be noted also that the Court had before it a case, where the Commissioner, before granting sanction, did not give any opportunity of hearing to the petitioner and no reasons for being satisfied were also recorded. The Court, inter alia, took the following view:
"17. It may be that in a case when limitation is to expire, the assessing authority has to complete the assessment before expiry of the limitation but where a notice under Section 21(1) has been issued without authority, such assessment made shall be wholly without jurisdiction and absolutely illegal and without authority."
24. Per contra, Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue would refer to the judgment of the Allahabad High Court in the case of M/s Jagan Nath Dudadher Shah Kamal Road 24 Aligarh Vs. State of U.P. and others reported in 2009 SCC OnLine All. 942. This was a case, where, on the basis of the 'C' Forms, assessment was completed and, thereafter, it was found that the 'C' Forms were unverified. In this case, the Commissioner passed an order extending the period of limitation. The Court was dealing with the question as to whether it should interfere with the order, having regard to the requirement in the statute about existence of reason to believe whether any turnover has escaped assessment. It did not specifically deal with the issue as such in this case and therefore, we need not advert to it more.
25. Mr. N.K. Arora, learned counsel for the appellant/writ petitioner, in fact, would discount the significance of Annexure No. 8. Annexure No. 8, it be reminded, is a notice, which was issued after the permission granted by the Commissioner by his order dated 15.02.2016. In Annexure No. 2, undoubtedly, reference is made to the order passed by the Commissioner. Section 29 of the Act and Section 9(2) of the Central Sales Tax Act, 1956 are specifically invoked. Therefore, may be, after issuing an earlier notice on 20.11.2015, without obtaining the approval of the Commissioner, but apparently on realizing that it would be unauthorized, that the permission was sought by the Assessing Officer from the Commissioner and the Commissioner has proceeded to grant the permission by Annexure No.7-impugned order. It is, thereafter, that a new notice is issued as Annexure No. 8 on 23.02.2016. Learned Counsel for the appellant/writ petitioner would, in fact, submit that Annexure No. 3 is the jurisdictional notice and it is afflicted with the vices, which he has reiterated earlier, namely, it is issued beyond the period unsupported by the sanction under Section 29(4) of the Act. We may, in this regard, refer to the notice, which has been issued to the appellant/writ petitioner by the Commissioner under Section 29(4) of the Act. The translated version of the same reads as follows:
25"Letter no. 193/add.commi.vani.ka.hari.Zone/2015-16/vidhi-
anu./haridwar.
Office-: Additional Commissioner Commercial Tax Haridwar Zone, Haridwar.
Dated:11-01-2016 M/s Gayatri Iron and Steel, K.I.E. Industrial Estate Mundyaki, Roorkee TIN-05009383902 Year 2010-11 (Kendriya) "Notice Under Section-29(4) of Value Added Tax Act, Uttarakhand."
In your said case a request has been sent by the Deputy Commissioner (Ka. Ni.), Fourth Commercial Tax, Roorkee to authorize him under section-29(4) of the Vat Act for the purpose of reassessment of tax on the basis of the following "reasons":-
"The work of manufacturing and marketing of S.S. Ingot, S.S. channel and M.S. Flat is done by the dealer. On the verification getting done of Form-C having issued by the taxpayer and presented at the time of assessment from the Deputy Commissioner and Taxation Commissioner (S.T.) Gurgaon (West), Deputy Commissioner and Taxation Commissioner (S.T.) Ambala and Assistant Excise and Taxation Commissioner Mansa, Punjab by the Joi. Commi. (karya), the information was given by them that the said Form-C were not issued by their offices. It is clear from aforesaid that the benefit of concessional rate at the rate of 1 percent of the sales covered by these forms was taken in the wrongful manner by them. Hence the on sales covered by such forms the tax at the rate of 4 percent is remained to be levied.
In this reference you having presented before the undersigned on date 22-01-2016 at 11:30 am, must present your case in writing or orally and tell the reasons why on the basis of the "reasons and facts" submitted by the tax assessment officer they should not be authorized for the reassessment of tax under section-29(4). In the event of your absence at the fixed date it will be deemed 26 that you are agreed to the reasons given by the tax assessment officer and on the basis of the same you also agree with him being authorized to reassess the tax under Section 29(4) and accordingly tax assessment officer will be given permission to reassess the tax under section- 29(4).
Sign dated 11-01-2016 (B.B. Mathpal) Additional Commissioner, Commerial Tax Haridwar Zone, Haridwar.
26. The appellant/writ petitioner, in fact, has been given an opportunity and the appellant/writ petitioner making use of the same has given reply to the same. Be it noted that this is not a case where the order passed under Section 29(4) of the Act is bad for the reason that it was passed without giving any opportunity or there being no reason. In the notice, the Commissioner would state that a request has been sent by the Deputy Commissioner to authorize him under Section 29(4) of the Act and the reasons are as have been stated. In fact, there is no reference in this notice, to the notice, which he has already issued acting under Section 29(1) of the Act, namely, Annexure No. 3, dated 20.11.2015. Thereafter, we may notice the actual order, which has been passed under Section 29(4) of the Act. The English translation of the same is reads as follows:
"Letter no. 278/add.commi.vani.ka.hari.zone/2015- 16/dhara-29(4)-patal/haridwar Office-: Additional Commissioner Commercial Tax Haridwar Zone, Haridwar.
Dated: 15-2-2016 M/s Gayatri Iron and Steel, K. I. E. Industrial Estate, Mundyaki Roorkee. TIN - 05009383902 Year 2010-11 (Kendriya) "Order Under Section - 29(4) of Value Added Tax Act, Uttarakhand."27
01- In the taxpayer's central case of the year 2009-10 it was requested/proposed by the Deputy Commissioner (Ka. NI), Fourth Commercial Tax Roorkee to authorize him for reassessment of tax under Section - 29(4) of the Value Added Tax Act.
02- before granting of permission for the reassessment of tax under Section - 29(4) of the Value Added Tax Act on the basis of following mark of the proposal sent By the tax assessment officer, a notice was served to the trader conveying facts with the objective to give an opportunity of hearing ::
"Reason"::-
"The work of manufacturing and marketing of S. S. Ingot, S. S. Channel and M. S. Flat is done by the dealer. On the verification getting done of Form-C having issued by the taxpayer and presented at the time of assessment from the Deputy Commissioner and Taxation Commissioner (S. T.) Gurgaon (West), Deputy Commissioner and Taxation Commissioner (S.T.) Ambala and Assistant Excise and Taxation Commissioner Mansa, Punjab by the Joi Commi. (Karya.), the information was given by them that said Form - C were not issued by their offices. It is clear from aforesaid that the benefit of concessional rate at the rate of 1 percent of the sales covered by these forms was taken in the wrongful manner by them. Hence the on sales covered by such forms the tax at the rate of 4 percent is remained to be levied.
03- Notice for hearing on the date 22-01-2016 under section -
29(4) was sent to the trader for service which was duly served to the Clerk of the firm Shri Jitendra ji on dated 14-01-2016. On 22-01-2016 the counsel for the firm Shri S. P. Batla was present. Further time was requested by him. Hearing was fixed for the date 03-02-2016. On 03- 02-2016 the counsel for the firm Shri S. P. Batla and the counsel Shri N. K. Arora were present. While submitting written answers, the following objection in respect of the notice issued were raised by them and it has been mentioned that........
1- On 25-05-2014 the order was passed under Section 9(2) of the Central Act of the year 2010-11. In which the sale covered by the Form - C of Rs. 491842414.00 was accepted under Section - 3 of the Central Sales Tax Act.
2- Notice No. 37 under section 29(4) was issued on 20-11-2015 in which the particulars of 17 Form - C along with the name of purchasers were mentioned.28
3- It was wrongly mentioned in the notice served that Form - C filed at the time of hearing was not verified by the Tax Assessment Officer of the Purchasers. Hence these have not been verified by the concerned officer. Therefore the basis of issuing notice under section - 29 is wrong and illegal.
4- On the basis of the letter of Joint Commissioner in which the sale of aforementioned forms was mentioned, notice was issued under section 29(4) whereas no turnover was escaped from tax assessment on whose basis notice was being given under Section - 29. If purchaser is not declaring his turnover in his state, the appellant is not responsible for the faults of the purchaser. There is no turnover which escaped tax assessment. Section 29(l) was quoted by the counsel and it was mentioned that in case of any turnover no getting assessed, it can be reassessed under this provision and it has been written under this provision, "been assessed at a rate lower than the rate at which it is assessable". In the case of assessee on presentation of Form - C under interstate sale on sales to the registered traders the tax lavied is at the rate of 1 %. The sale was done to the aforesaid registered traders by the assessee against form - C therefore rate of tax is applicable at the rate of 1 % and tax assessment is also done at the same rate. No turnover has escaped assessment.
5- The provisions of Section 29 are wrongly applied in this matter. By the reason of assessment of tax on zero turnover by the tax assessing authority to the purchaser and by not declaring the purchase sales in his state by the purchaser, the tax assessment officer of the seller does not get the authority to proceed under section 29. Therefore the proceeding for tax reassessment is basically invalid.
6- The reassessment of the central turnover is proposed by the tax assessment officer under section 29. Tax reassessment can only be done under section 9(2). Therefore the proposal for reassessment of tax is impossible.
Hence in has been requested to cancel the notice given."
27. It refers to the notice of hearing and the contentions of the appellant/writ petitioner and, thereafter, the aspect relating to the 'C' 29 Forms and, finally, the order to do a reassessment under Section 29 of the Act being found justified and appropriate. It is here that we must notice the argument of the learned counsel for the appellant/writ petitioner that there is no reference to Section 9(2) of the Central Sales Tax Act, 1956 as such. The extended period of limitation under Section 29(4) of the Act is six years. We are of the clear view that though it may be true that Annexure No. 3 notice was issued under Section 29(1) of the Act, and it was issued beyond the period of limitation under Section 29(2) of the Act; but on the request for sanction under Section 29(4) of the Act, after giving an opportunity of hearing to the appellant/writ petitioner, a reasoned order came to be passed under Section 29(4) of the Act and on the strength of the same, a notice has been issued as Annexure No.8 on 23.02.2016 adverting also to Section 9(2) of the Central Sales Tax Act, 1956. The complaint of the appellant/writ petitioner about the vices that afflict Annexure No. 3 described as the jurisdictional notice cannot pose any insuperable obstacle for the Revenue. After getting sanction under Section 29(4) of the Act, a fresh notice has been issued as Annexure No. 8 on 23.02.2016.
28. Two features may be noted. In the writ petition, there is no challenge to Annexure No. 8, though the learned counsel for the appellant/writ petitioner does draw our attention to prayer no. 2 that mandamus is sought seeking to restrain the reassessment proceedings; but the restraining could have been done only if there is an illegality in Annexure No. 7 order. If Annexure No. 7 order passes muster then there is no independent challenge to Annexure 8. In Annexure No. 8, all the details have been given in regard to 'C' Forms. The second aspect, we may notice, is that there is no reference in Annexure No. 8 to Annexure No. 3 notice. We may also notice that unlike the decision in the case of Krishna Kumar & Jai Prakash Vs. State of U.P. & others reported in 2007 NTN (Vol. 32) 282, the facts in this case also may not justify the contention of the appellant/writ petitioner 30 based on absence of reference to Section 9(2) of the Central Sales Tax Act, 1956. In this case, admittedly, the assessment was completed under Section 9(2) of the Central Sales Tax Act, 1956. Admittedly, assessment was in respect of an Inter-State transaction. The only question was in relation to the rate of tax in the sense whether the appellant was entitled to the concessional rate or not, having regard to the condition of the 'C' Forms. Therefore, we would also think that the case based on absence of reference to Section 9(2) as such may not afflict the original notice, which is given by the Authority. At any rate, as we have noticed, Annexure No. 8 notice has been issued under Section 29 read with Section 9 of the Central Sales Tax Act, 1956. Therefore, the argument of the appellant/writ petitioner does not appeal to us.
29. There is a case based on Section 32 of the Act. The contention appears to be that under Section 32 of the Act, the legislature has permitted reassessment, as contemplated under Section 32(3) and, thereafter, Section 32(7) of the Act deals with a situation where assessee obtained stay of the proceedings. We would think that that we need not go into the said aspect. This is for the reason that what was before the learned Single Judge and before us is the validity of the order passed under Section 29(4) of the Act. Whether the consequential order, which is passed, would be barred and whether the department would be entitled to take the benefit of Section 32(7) of the Act is, in our view, beyond the scope of the petition. In fact, we must note and record the stand of Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue, namely, that there are nine days left for passing an order of assessment. We do not think that we should pronounce on this issue, as we feel that this is a matter, which is beyond the scope of the case. We also make it clear that we have not pronounced on the arguments of the appellant/writ petitioner based on Section 32(7) of the Act not being available to the respondents. In fact, learned counsel for the appellant/writ petitioner did bring to our 31 notice the dates, on which the interim orders were passed; but, in view of the nature of the order we are passing, we do not think that we should go into those aspects.
30. Finally, we must, no doubt, refer to the argument based on the contention that the appellant/writ petitioner being the seller, it is the buyers, who are responsible and the rights of the appellant/writ petitioner cannot be interfered with. The learned Single Judge, we notice, has in its judgment referred to the decision of the Hon'ble Apex Court in the case of State of Madras Vs. Radio & Electricals Ltd. reported in AIR 1967 (SC) 234. No doubt, the learned Single Judge has entered the finding in paragraph no. 8 of its judgment while distinguishing the aforesaid judgment of the Hon'ble Apex Court.
31. We notice that in the case of State of Madras Vs. Radio & Electricals Ltd. reported in AIR 1967 (SC) 234, the Court, inter alia, held as follows:
"10. Now in certain certificates in Form 'C' furnished by the purchasing dealer in this group of appeals all the alternatives in the printed form were retained, and in others one or more but not all the alternatives were retained. Counsel for the State of Madras urged that a certificate in Form 'C' is defective unless it specifies, only one purpose for which the goods purchased are intended to be used. But that contention is not borne out by the Act and the Rules. Goods may be sold to a purchasing dealer under a, single order, bill, cash memo or chalan, one part to be used for resale, another to be used in the execution of contracts, and the rest ill manufacture of goods for sale, but it is not enacted that separate certificates should be issued each relating to the quantity intended to be used for a specified purpose. A purchasing dealer may again be carrying on business as a, manufacturer, as a building, installation or repair contractor, and as a dealer in goods, and if he purchases goods specified in his certificate, but without making up his mind about the precise purpose for which the goods will be used, provided it is one of the purposes, he will still be complying with the statutory requirements if he declared in Form 'C' that the goods are purchased for more than one purpose. The Act and the Rules do not impose an obligation upon the purchasing 32 dealer to declare that goods purchased by him are intended to be used for one purpose only, even though under his certificate of registration he is entitled to purchase goods of the classes mentioned in S. 8(3)(b) for more purposes than one. When the purchasing dealer furnishes a certificate in Form 'C' without striking out any of the four alternatives, it is a representation that the goods purchased are intended to be used for all or any of the purposes, and the certificate complies with the requirements of the Act and the Rules. The Sales Tax authority is, of course, competent to scrutinise the certificate to find out whether the certificate is genuine. He may also, in appropriate cases, when he has reasonable grounds to believe that the goods purchased are not covered by the registration certificate of the purchasing dealer, make an enquiry about the contents of the certificate of registration of the purchasing dealer. But it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration of the purchaser can be used by him for any of the purposes mentioned by him in Form 'C', or that the goods purchased have in fact not been used for the purpose declared in the certificate."
32. We may notice, in fact, that the Court, therefore, inter alia, took the view that it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration can be used by him for any of the purposes mentioned in Form 'C', or that the goods purchased have, in fact, not been used. We may, at the same time, notice that the Hon'ble Apex Court has held that it is the Sales Tax Authority, who is competent to scrutinize the certificate to find out whether the certificate is genuine.
33. It is, thereafter, that, no doubt, after referring to the said judgment of the Hon'ble Apex Court, the learned Single Judge has proceeded to hold as follows:
"In our case, however, this very sale is in doubt as the documents submitted by the selling dealer for this purpose have been found to be fraudulently obtained. Therefore, no benefit can be given to the petitioner of the judgment cited by him."33
34. In regard to this, we only make it clear that the Assessing Officer will necessarily apply his mind to the various contentions raised by the appellant/writ petitioner in regard to the 'C' Forms and will also decide the matter untrammeled by what is stated above in the judgment of the learned Single Judge, which we have extracted. We also make it clear that we have left open all the contentions of the appellant/writ petitioner other than what we have dealt with.
35. Subject to the same, the Appeal will stand dismissed. No order as to cost.
(V.K. Bist, J.) (K.M. Joseph, C.J.)
14.12.2017 14.12.2017
Rahul
34