Gauhati High Court
Kishanlal Ram Prasad And Sons And Anr. vs Superintendent Of Taxes And Ors. on 26 June, 2003
Equivalent citations: (2003)3GLR196, [2005]138STC655(GAUHATI)
Author: I.A. Ansari
Bench: I.A. Ansari
JUDGMENT I.A. Ansari, J.
1. In a narrow compass, the case of the petitioner may be put as follows :
The petitioner firm carried on the business kerosene oil, petroleum products, cement, salt sugar and was also acting as a transporter for transporting tea from tea gardens to other destinations as per the directions of the consignors. The petitioner firm was never engaged in the business of purchase and sale of tea. The assessment for the period ending on 31.3.1986 was completed under the Assam Sales Tax Act, 1947 (hereinafter referred to as "the Act of 1947") by the respondent No. 1, namely, Superintendent of Taxes, Tezpur, summarily, vide order of assessment, dated 9.3.1987. However, without giving any opportunity of hearing, the said assessment was re-opened, in the purported exercise of powers under Section 19A of the Act of 1947 and vide order or reassessment, dated 16.5.1989, the turnover of the petitioner firm was reassessed. In the said order of re-assessment, the respondent No. 1 held that the petitioner firm had purchased tea from Kacharigaon Tea Estate, Rangapara, and had apparently sold the tea so purchased, but not sales tax was paid thereon. The respondent No. 1 assessed the turnover estimating the same to be 12,16,103 by adding 10% profit and 8% chargeable tax. The petitioner firm wrote a letter to the respondent No. 1 on 21.2.1990, informing him that the petitioner had come to know that the assessment for the period ending on 31-3.1986 has been revised, but neither the revised assessment order was served on the petitioner nor was any opportunity given to the petitioner firm in this regard. The petitioner firm informed the respondent No. 1 that it acted as a transporter of the consignments, in question, and the tea was despatched by Kacharigaon Tea Estate, Rangapara, to places outside the State of Assam and the petitioner was, therefore, not liable to pay any sales tax. The petitioner firm also enclosed with the letter, dated 21.2.1990, aforementioned a copy of the letter, dated 7.12.1989, issued by the Monabari Tea Company Ltd. to Makhanlal Motilal Jhawar, Jodhpur, whereby Monabari Tea Company Ltd. had informed that party concerned that the consignments of the tea were sent for sale through the transporter, namely the petitioner firm and requested the said party to send the 'F' from in support of the transactions. The petitioner firm requested the respondent No. 1 to cancel the reassessment order and withdraw the demand notice raised against the petitioner. However, in the meantime, the case was referred to the Bakijai Officer and a notice was received by the petitioner firm from Bakijai Officer on 14.5.1990. The petitioner firm, on 14.4.1991, wrote a letter to the respondent No. 1 requesting him to rectify the mistake since there was no sale by the petitioner firm and the petitioner firm simply acted as transporter, which was apparent from the letter, dated 7.12.1989 issued by Monabari Tea Company Ltd. The respondent No. 1, however, vide letter, dated 13.5.1991 informed the petitioner that sufficient opportunity and time were given to the petitioner firm before making the reassessment and hence, the petition could not be entertained. The petitioner, vide letter, dated 11,6.1991, denied that they were afforded reasonable opportunity of hearing before passing of the reassessment order. The petitioner also informed the respondent No. 1 that no order of reassessment whatsoever was served on the petitioner firm. The petitioner reiterated that since the petitioner simply acted as a transporter, the question of levy to tax on the petitioner did not arise and requested the respondent No. 1 to rectify the mistake and delete the demand. The petitioner was, however, informed by the respondent No. 1 that the order of reassessment was passed as per the provisions of the Act of 1947 and in case the petitioner felt aggrieved, he could file appeal before the appropriate authority. The petitioner was also informed that the petition for rectification could be entertained in future also. Finding no other alternative, the petitioner wrote a letter to Deputy Commissioner of Taxes. Assam, vide letter, dated 11th July, 1991, bringing to his notice the facts aforementioned and requesting him to cancel the reassessment order. From the letter of the respondent No. 1, it appears that the order of reassessment under Section 19A of the Act of 1947 took note of the escaped turnover of Rs. 12,16,103 out of which alleged purchase of tea amounting to Rs. 10,73,347 were covered by 5 gate passes of the tea garden, namely, Monabari Tea Company Ltd. Moreover, the Deputy Commissioner found that as per the records, the said amount of tea was not purchased by the petitioner firm and that the petitioner firm was transporter of the said tea to its destination outside Assam as evident from the letter, dated 7.12.1989, issued by Monabari Tea Company Ltd. to the party concerned. Furthermore, the respondent No. 1 was informed by the Deputy Commissioner of Taxes that the condition precedent to take recourse to Section 19A is not fulfiled and directed the respondent No. 1 to take action under Section 20 of the Assam General Sales Tax Act, 1993, after giving opportunity to the dealer to place the relevant papers before him. The said letter, dated 31.7.1991 of the Deputy Commissioner of Taxes was forwarded to the respondent No. 1 by the petitioner firm with a request to rectify the order of reassessment, but the respondent No. 1, vide letter, dated 1.4.1992 rejected the prayer of the rectification. Feeling aggrieved by this rejection order, the petitioner firm filed a revision application before the respondent No. 3, namely Commissioner of Taxes, Assam. The respondent No. 2, namely, Additional Commissioner of Taxes, Assam, vide order, dated 2.6.1997, dismissed the revision application filed by the petitioner firm. According to the respondent No. 3, the letter, written by the tea estate concerned for furnishing of the 'F' form was nothing, but a manipulation born out of after-thought by the garden officials at behest of the petitioner firm to save the situation. The revisional authority also observed that sample apportunity was given to the petitioner firm before the passing of the order of reassessment. The petitioner firm has, now, approached this Court with the help of the present application made under Article 226 of the Constitution of India.
2. Though the respondents have contested the case, they have not filed any affidavit-in-opposition.
3. I have perused the materials on record. I have heard Dr. A K Saraf, learned Senior counsel for the petitioner firm, and Mr. B J Talukdar, learned Govt. Advocate appearing on behalf of the respondents.
4. There is no dispute before me that it is Section 19A of the Act of 1947, which empowers the assessing authority to make reassessment for escaped turnover.
Section 19A read as under :
"19A. Turnover Escaping Assessment. - If upon information which has come into his possession, the Commissioner is satisfied that any turnover in respect of sales of any goods chargeable to tax under this Act has escaped assessment during any return period or has been under assessed or assessed at a lower rate or any deduction has been wrongly made therefrom, he may at any time within eight years of the end of the aforesaid period, serve on the dealer liable to pay the tax in respect of such turnover a notice containing all or any of the requirement which may be included in a notice under Sub-section (2) of Section 16 or Sub-section (2) of Section 17 and may proceed to assess or reassess the dealer in respect of such period and the provisions of this Act shall apply accordingly as if the notice were a notice served under the aforesaid sub-section :-
Provided that the tax shall be charged at the rate at which it would have been ordinarily chargeable.
(2) The Commissioner may authorise any person appointed under Section 8 to assist him in investigating any case or points in a case at any stage and the make a report thereon to the Commissioner ,or any prescribed authority in respect of all or any of the assessment made in relation to the case in order to prevent to evasion of tax. After considering the report of the investigating officer the Commissioner may proceed to take action under Sub-section (1) besides initiating any other action under this Act against the dealer concerned."
5. From a plaint reading of Section 19A of the Act 1947, it clearly transpires that for initiation action under this section, the following conditions must be satisfied :
(i) The officer concerned must be satisfied that any turnover in respect of any sale of goods chargeable to tax under the Act of 1947 has escaped assessment or has been under-assessed at a lower rate or any deduction has been made wrongly therefrom ;
(ii) Such satisfaction should be derived from information received after the original assessment has already been made.
6. The conditions laid down in Section 19A are conditions precedent, which must be satisfied before the authority concerned can exercise jurisdiction to issue notice under Section 19A for reassessment.
7. In Calcutta Discount Company Ltd. v. ITO (1961) 41 ITR 191, the Apex Court, while dealing with similar provisions under the Income Tax Act, held that if any one of the conditions precedent is not satisfied, the action taken would be without jurisdiction. It needs to be emphasized that service of a valid notice under Section 19A is, as correctly pointed out by Dr. Saraf, a condition precedent for exercise of jurisdiction of the authority concerned to reassess a dealer. In other words, if the notice does not comply with the requirements of Section 19A, not only the notice but even the subsequent proceedings shall be without jurisdiction and nullity in the eyes of law.
8. From the undisputed facts discernible from the materials on record, it is abundantly clear that the petitioner firm simply acted as a transporters for transporting the tea, in question, entrusted to the petitioner firm by Manaklal Motilal Jhawar, Jodhpur. In this regard, there is, admittedly, no material showing to the contrary. In the complete absence of materials indicating sale and purchase of tea and/or that the petitioner firm had purchased tea from Monabari Tea Company Ltd. within the State of Assam and, then, carried the same outside the Assam to its destination at Jodhpur, the findings arrived at by the respondents concerned to the effect that the petitioner firm was engaged in sale and purchase of tea within the State of Assam was wholly perverse and cannot be allowed to stand good on record. In fact, materials having been made available by the petitioner firm to the respondent No. 1 to show that the petitioner firm had merely acted as a transporter in the matter, the respondent No. I could have rejected the pleas so raised by the petitioner firm without bringing any materials on record showing to the contrary. Since no sale tea was proved to have taken place within the State of Assam, provisions of the Act of 1947 were not attracted at all.
9. It is has already been pointed out above that one of the conditions precedents for exercise of powers under Section 19A is that the authority must be satisfied that any turnover under the Act of 1947 has escaped assessment. In the case at hand, however, since there is nothing on record to positively show that the turnover, in question, had escaped assessment, the very initiation of the proceeding under Section 19A was illegal and without jurisdiction and in consequence thereof, the impugned order of reassessment and the order passed, on revision, by the respondent No. 2 confirming the said order of reassessment are illegal, without jurisdiction and liable to be set aside and quashed. This apart, the petitioner firm having denied that no notice whatsoever was served on the petitioner firm and no opportunity of hearing was accorded to the petitioner firm before taking recourse to the provisions of Section 19A, it is difficult to hold, particularly when no affidavit-in-opposition has been filed by the respondents concerned controverting the averments made, in this regard, by the petitioner firm, in their writ petition, that notice was given to the petitioner firm before making the order of reassessment. This Court has, therefore, no option but to hold that the very initiation of the proceedings under Section 19A, without issuance of notice, as contemplated in Section 19A, was wholly illegal, without jurisdiction and void ab-initio.
10. In the result and for the reasons discussed above, this writ petition succeeds. The impugned order or reassessment and also the impugned order passed by the respondent No. 2 in revision are hereby set aside and quashed.
11. The party shall bear their own costs.