Gujarat High Court
M/S Geetatex vs Deputy Commissioner Of Sales Tax on 8 March, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/SCA/12178/2009 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION No. 12178 of 2009
With
R/SPECIAL CIVIL APPLICATION No. 20977 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Mr. JUSTICE B.N. KARIA
===============================================================
1 Whether Reporters of Local Papers may be allowed to see the No
judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the judgment ? No
4 Whether this case involves a substantial question of law as to the No
interpretation of the Constitution of India or any order made
thereunder ?
===============================================================
M/S GEETATEX
Versus
DEPUTY COMMISSIONER OF SALES TAX
===============================================================
Appearance :
Mr KS NANANVATI, Sr Advocate with KUNAL NANAVATI & PRIYAL PARIKH,
Advocates for NANAVATI ASSOCIATES for the PETITIONER(s) No. 1
Mr CHETAN DAVE, AGP for the RESPONDENT(s) No. 1,2
RULE SERVED(64) for the RESPONDENT(s) No. 1,2
===============================================================
CORAM:Â HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Mr. JUSTICE B.N. KARIA
8th March 2018
ORAL JUDGMENT (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI)
These petitions are filed by the same assessee challenging judgment dated 31st August 2009 passed by the Gujarat Value Page 1 of 24 C/SCA/12178/2009 JUDGMENT Added Tax Tribunal, Ahmedabad [hereinafter referred to as, "the Tribunal"] confirming revisional order dated 31st December 2004 passed by the Deputy Commissioner of Sales Tax.
2. Brief facts are as under :
2.1 The petitioner is a partnership firm and is engaged in dealing in textile and other goods. The petitioner is also exporting such textile goods. In terms of the Government of India Import & Export Policy prevailing at the relevant time, the petitioner on such exports would receive benefits under the Duty Entitlement Passbook Scheme ["DEPB Scheme" for short]. Such accrued DEPB was freely transferable. The petitioner, depending on its business exigencies would often sale such DEPB to the importers of various goods. Between Department and the petitioner and other similarly situated exporters, there were long standing disputes about the nature of such DEPB benefits and in particular whether upon its transfer, the transaction would invite Sales-tax.
2.2 The petitioner had filed returns under the Sales Tax Act, 1969 ["the Act" for short] for assessment years 1994-95 to 1999-
2000. These assessments were pending before the Assessing authority, when the State Legislature inserted Section 41AA in the said Act. We would take note of the background leading to insertion of the said provision and the detailed scheme for Page 2 of 24 C/SCA/12178/2009 JUDGMENT settlement of tax disputes contained in the said section a little later. For the time being, we may record that under the said newly inserted Section 41AA by the Gujarat Sales Tax [Second Amendment] Act, 2001 with effect from 1st September 2001, an eligible assessee could apply for the benefit of the said provision. If he fulfilled the required conditions and paid the required additional tax, his declarations made in the return would be accepted without scrutiny.
2.3 The petitioner applied for benefit under Section 41AA of the Act for all the five assessment years viz., AYs 1994-95 to 1999- 2000 on or around 29th November 2001. Along with the application, the petitioner also produced proof of additional tax of Rs. 1,000/= for every year having been deposited in the Government revenue. After the petitioner filed such a declaration, the assessing authority did not pass any formal order either accepting or rejecting such a declaration. The fact, however, is that he also did not proceed further with the pending assessments of the petitioner for the said assessment years.
2.4 More than two years later, the Deputy Commissioner of Sales Tax issued a notice dated 17th December 2013 to the petitioner why for the assessment year 1994-95, on the petitioner's sale of DEPB at Rs. 90.94 lacs [rounded off] tax with interest and penalty Page 3 of 24 C/SCA/12178/2009 JUDGMENT not be levied. He issued similar such notices for the remaining assessment years also.
2.5 The petitioner replied to such notices under communication dated 7th December 2004 and mainly raised two contentions viz., [a] that there is a serious dispute whether transfer of DEPB would amount to sale of goods and [b] that the petitioner had already approached the High Court challenging notices issued by the revisional authority. We may record that such petitions were later on disposed off, allowing the petitioner to appear before the revisional authority.
2.6 The revisional authority passed an Order dated 13th December 2004 in exercise of powers under Section 67 of the Act. He noted that the petitioner's transactions of sale of DEPB had come to the notice of the Department. Despite this, when the petitioner made a declaration under Section 41AA of the Act, he had obtained an order by misguiding the Department. At the time of passing order under Section 41AA, the entire issue was very much within the notice of Department. He further noted that the assessment under Section 41AA of the Act of the petitioner was done on 28th February 2002. Later on, on 18th June 2002 during search operations at the premises of the petitioner, it was found that along side the business of selling clothes, the petitioner had also sold Page 4 of 24 C/SCA/12178/2009 JUDGMENT DEPB license on which no sales tax was paid. On account of this, the books of the assessee were seized. He, therefore, assessed the petitioner's liability arising out of such transactions and held that the petitioner was liable to pay Rs. 10,98,696/= by way of tax, interest and penalty. He passed separate orders of the same date for the remaining assessment years also, levying unpaid duty with interest and penalty; figures of course would change in each year. 2.7 The petitioner filed revision petitions before the Tribunal and challenged the very jurisdiction of the revisional authority to assess the petitioner's returns once the petitioner's declarations under Section 41AA were accepted. The Tribunal, by the impugned judgment dated 31st August 2009 dismissed such revision petitions. The Tribunal's two significant observations were as under :
"6. The learned revising authority has specifically noted in the order that account books and record of the applicant were seized by the officers of Sales Tax Department for the year 1994-95. The applicant/dealer did not disclose this fact at the time of hearing and filed application under Section 41 [AA]. Therefore, the applicant/dealer has misguided the officers of the Department and obtained order under Section 41[AA] by suppressing material facts.
7. The applicant has also not denied the fact that about the spot visit and spot inspection by the officers of the Department on 20.06.2000 and thereafter, Page 5 of 24 C/SCA/12178/2009 JUDGMENT proceedings started on the basis of the spot visit. This fact is not mentioned in the application under Section 41 [AA]."
2.7 Based on these factual observations, the Tribunal further observed as under :-
"Therefore, the applicant got finalized the assessment order for five years in the Central as well as State Act by misleading the officers of the Department by concealing the facts about the spot visit as well as seizure of account books. In fact, the applicant/ dealer did not disclose the sale of DEPB during all the five years in return and declaration.
9. Basic condition under section 41[AA](3) is violated. The benefit under Section 41[AA] cannot be given to the dealer whose book of accounts, registered documents have been seized or impounded or for tax exemption or tax deferment or any other incentive scheme of the Government.
10. Therefore, the dealer has obtained benefit by concealment of the material facts about the seizure of documents, not mentioning the DEPB Sale in turn and declaration. The dealer has misguided the officers of the Department by not producing all these aspects in his application. In those circumstances, basic condition to grant benefit for special provision for deemed assessment is violated. In that case, the learned Deputy Commissioner was perfectly justified in initiating suo motu revision proceedings."Page 6 of 24
C/SCA/12178/2009 JUDGMENT
3. Appearing for the petitioner, learned counsel Shri K.S Nanavati raised the following conditions :
The petitioner had made a declaration, as envisaged under Section 41AA of the Act. Such declaration was accepted by the competent authority. Once the declaration is accepted, there would thereafter be no scrutiny of the returns filed by the assessee. The action of the competent authority accepting such declaration was not open to revision and at any rate, was not reversible on the ground that subsequently certain facts came to the notice of the Department. As long as the petitioner fulfilled the eligible criteria for making such a declaration, the revisional authority could not have upset the order of competent authority. Counsel further submitted that even if the declaration of the petitioner under Section 41AA of the Act was to be rejected by the revisional authority, the proceedings thereafter had to commence for assessment under Section 41 of the Act. In any case, the revisional authority could not have carried out the assessment. Counsel also contended that the revisional authority could not have imposed penalty when no such proceedings were initiated by the competent authority. Counsel submitted that the Tribunal proceeded on completely erroneous facts. When the petitioner made a declaration, there was no impounding of the petitioner's Page 7 of 24 C/SCA/12178/2009 JUDGMENT documents nor the petitioner was subjected to any search.
3.1 In support of his contentions, counsel for the petitioner relied on the following decisions :
3.2 In case of A.St. Arunachalam Pillai v. M/s. Southern Roadways Limited & Anr., reported in AIR 1960 SC 1191 in which, in the context of the revisional powers of the Government, the Supreme Court observed that the Government had power only to do that which the Regional Transport Officer could have done, but had refused to do.
3.3 In the case of State of Bombay v. Pandurang Vinayak & Ors., reported in AIR 1953 SC 244, in which, in the context of deeming provision, the Supreme Court observed that, "..when a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purpose and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion."
3.4 In case of Bhavnagar Chemical Works Limited v.
Commissioner of Sales Tax, Ahmedabad, reported in 1992 [84] STC 432, in which the Division Bench of this Court was of the opinion that penalty proceedings being independent and distinct Page 8 of 24 C/SCA/12178/2009 JUDGMENT from the assessment proceedings, if the original authority expressly or impliedly had not exercised jurisdiction of penalty, the revisional authority could not resort to impose penalty for the first time.
4. On the other hand, learned AGP Shri Chintan Dave opposing the petition contended that the scheme under Section 41AA was meant for normal assessments which were pending and not in case of tax evaders. The petitioner had not paid tax on various transactions of sale of DEPB. The petitioner's premises were subjected to search and documents were impounded. This, of course, happened after the petitioner filed declaration under Section 41AA of the Act. Such subsequent development also, the Deputy Commissioner was authorized to take into account while exercising revisional powers. Counsel contended that the revisional powers under Section 67 of the Act are wide and would enable the revisional authority to take any order of the subordinate authority into suo motu revision and examine the legality thereof.
5. Chapter-V of the said Act pertains to declarations, returns, assessments, payments, penalty, recovery and refund of tax. This chapter thus concerns various stages of filing of returns, their assessment, raising of tax demand, imposition of penalty and recovery of unpaid tax. Section 40 pertains to "Declarations and Page 9 of 24 C/SCA/12178/2009 JUDGMENT Returns". Under sub-section [1] of Section 40, every registered dealer would be required to furnish declarations or returns within the prescribed time before the prescribed authority. Under sub- section [2] of Section 40, if the Commissioner had reason to believe that the turnover of a dealer exceeded certain threshold level, he may require such a dealer to furnish a declaration or return, as if he was a registered dealer. Section 41 of the Act pertains to assessment of taxes. Sub-section [1] of Section 41 provides that an amount of tax which is due from a registered dealer shall be assessed separately for each year. Sub-sections [2] and [3] of Section 41, which are relevant for our purpose read as under :-
"41. Assessment of taxes :
[1] xx xx xx
[2] If the Commissioner is satisfied that the declarations
or returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such declarations or returns. [3] If the Commissioner is not satisfied that the declarations or returns furnished in respect of any period are correct and complete and he thinks it necessary to require the presence of the dealer or the production of further evidence; he shall serve on such dealer in the prescribed manner a notice requiring him on a date and at a place specified therein, either to attend and produce or cause to be produced all evidence on which such dealer relies in support of his declarations or returns, or to produce such evidence as is specified in the notice.Page 10 of 24
C/SCA/12178/2009 JUDGMENT On the date specified in the notice, or as soon as may be thereafter, the Commissioner shall, after considering all the evidences which may be produced, assess the amount of tax due from the dealer."
5.1 Section 41AA was inserted to the said Act with effect from 1st September 2001. In his Budget Speech made before the State Legislative Assembly on 26th July 2001, the State Finance Minister had explained the reasons for insertion of the said Section 41AA. Relevant portion of his Budget Speech reads as under :-
"27. Under the Gujarat Sales Tax, necessary provisions have been made for simple assessment and regular assessment. Some administrative steps have been taken for speeding up the assessment work. In spite of these efforts, there are huge arrears of pending assessment.
In respect of pending assessments for the year 1999-2000 and earlier years, if a dealer has paid tax of Rs. 15,000 or less per year and if such a dealer makes further payment of Rs. 1000 for each such pending assessment year, his case will be disposed of by summary assessment by accepting his returns.
In respect of pending assessments for the year 1999-2000 and earlier years, if a dealer has paid tax in the range of Rs. 15,000 to Rs. 25,000 per year and if such a dealer makes further payment of Rs. 2000 for each such pending assessment year, his case will be disposed of by summary assessment by accepting his returns.Page 11 of 24
C/SCA/12178/2009 JUDGMENT The amount payable under this scheme will be required to be paid during 1st September to 30th November 2001. Those dealers who had not paid the tax as per their returns and those involved in tax evasions will not be allowed to avail of the benefit of this scheme. Units availing of tax exemption or sales tax department under incentive scheme will not be converted under this scheme."
5.2 With this background, Section 41AA was inserted in the said Act which read as under :-
"41AA. Special provision for deemed assessment for the period prior to 1st April, 2000. -(1) Notwithstanding anything contained in sub-sections (2) and (3) of section 41, where any dealer has furnished the declarations or returns in respect of any specified period by such dates as prescribed therefor and paid the amount of tax due according to such declaration or return within the time prescribed by or under the Act-
(a) in the case of a dealer whose tax payable for the specified period to which the declaration or return relates does not exceed fifteen thousand rupees, the amount of tax due from the dealer in respect of such declaration or return shall, irrespective of whether a notice of such declaration or return shall, irrespective of whether a notice under sub-section (3) of section 41 is issued or not, be deemed to have been assessed, if the dealer at his option makes payment of one thousand rupees for each specified period in the Government treasury on or before the 30th November, 2001;
(b) in the case of a dealer whose tax payable for the specified period to which the declaration or return relates does not exceed fifteen thousand rupees, but does not exceed twenty-five thousand rupees, the amount of tax due from such dealer in respect of such Page 12 of 24 C/SCA/12178/2009 JUDGMENT declaration or return shall, irrespective of whether a notice of such declaration or return shall, irrespective of whether a notice under sub-section (3) of section 41 is issued or not, be deemed to have been assessed, if the dealer at his option makes payment of one thousand rupees for each specified period in the Government treasury on or before the 30th November, 2001.
(2) The payment made by a dealer under 3[ ] of sub-section (l) shall be-
(a) as if the dealer had furnished revised declaration or revised return under sub-section (3) of section 40, and
(b) as payment made under sub-section (3) of section 47 towards the liability of the dealer to pay tax under such revised declaration or revised return.
(3) Nothing in this section shall apply to a dealer, -
(a) Whose books of accounts, registers, documents have been impounded or seized under section 59, or
(b) Who has availed of tax exemption or tax deferment under any of the incentive schemes of Government of Gujarat.
Explanation: For the purpose of this section, the words "specified period " means-
(a) in relation to a dealer who maintain regular books of accounts, any year or part of the year prior to 1st April, 2000, by reference to which the accounts are maintained by him, and
(b) in relation to any other dealer, any financial year or part of the financial year prior to the said date." 5.3 To complete taking note of the relevant statutory provisions, we may also reproduce Section 67 of the said Act, which pertains to revision.
Page 13 of 24
C/SCA/12178/2009 JUDGMENT 67. Revision :
[1] Subject to the provisions of section 66 and to any rules which may made in this behalf :-
(a) the Commissioner on his own motion within three years [or on application made to him within one year] from the date of any order passed by any officer appointed under section 27 to assist him, may call for and examine the record of any such order and pass such order thereon as he thinks just and proper 2 within twelve months from the date of service of notice for revision;
(b) the Tribunal, on application made to it against an order of the Commissioner [not being an order passed under sub-section (2) of section 65 in second appeal 3[or under clause (a) in revision on an application] within four months from the date of the communication of the Order may call for and examine the record of any such order, and pass such order thereon as it thinks just and proper.
(2) Where an appeal lies under section 65 and no appeal has been filed, no proceedings in revision under this section shall be entertained upon application.
[Provided that the proceeding in revision may be entertained upon an application where the applicant satisfies the Commissioner that he had sufficient cause for not preferring an appeal against the order in respect of which an application for revision is made.] (3) No order shall be passed under this section which adversely affects any person, unless such person has been given reasonable opportunity of being heard.
Page 14 of 24
C/SCA/12178/2009 JUDGMENT (4) Where the Commissioner or the Tribunal rejects any application for revision under this section, the Commissioner or, as the case may be, the Tribunal shall record the reasons for such rejection."
6. As noted, Section 41 of the Act pertains to assessment of taxes. Under sub-section [1] of Section 41, a registered dealer would be assessed separately for each year. Under sub-section [2] of Section 41, if the Commissioner was satisfied that the declarations or returns furnished by a dealer were correct and complete, he would assess the amount of tax due from the dealer on the basis of such declarations or returns. If the Commissioner therefore proceed under sub-section [2] of Section 41, he would merely compute the assessee's tax liability on the basis of declarations made by him in the returns. Under sub-section [3] of Section 41, on the other hand, if the Commissioner was not satisfied about the correctness or completeness of the declarations or returns furnished by the assessee, he could require presence of the dealer or direct him to produce further evidence by issuing a notice in this respect. On the date so specified for such purpose or soon thereafter, the Commissioner would, after considering the evidence on record, assess the amount of tax due from the dealer. Sub-section [3] of Section 41 of the Act thus envisages assessment of a return of a dealer by scrutiny.
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7. From the budget speech of the Finance Minister, we gather that despite efforts made to simplify the assessments there was huge arrear of pending assessments. To tackle such a situation, Section 41AA of the Act was enacted. Such a provision would cover all pending assessments of the year 1999-2000 and earlier years. If a dealer had paid tax of Rs. 15,000/= or less, he would have to make a further payment of Rs. 1,000/= for each year, his case would be disposed of by summary assessment by accepting his return. In case of a dealer who had paid tax in the range of Rs. 15,000/= to Rs. 25,000/= per year and if such a dealer made further payment of Rs. 2,000/= for each year, his case would be disposed of by summary assessment by accepting his returns. It was clarified that those who have not paid tax as per their returns and those involved in tax evasions would not be granted benefit of such scheme. The units availing tax exemption or sales tax deferment under incentive schemes will not be covered under such a scheme.
8. With such purpose in mind, Section 41AA was inserted in the said Act. If we analyze this provision, sub-section [1] thereof starts with a non obstinate clause providing that notwithstanding anything contained in sub-sections [2] and [3] of Section 41, where any dealer has furnished the declarations or returns in respect of any specified period by such dates as prescribed therefor and paid Page 16 of 24 C/SCA/12178/2009 JUDGMENT the amount of tax due according to such declaration or return within the time prescribed by or under the Act, then - [a] in case of a dealer whose tax payable does not exceed Rs. 15,000/= and if the dealer makes payment of Rs. 1,000/= for each specified period before the date specified, he would be deemed to have been assessed. This would be irrespective of the fact whether the notice under sub-section [3] of Section 41 of the Act has been issued or not; and [b] in case of a dealer whose tax payable is more than Rs. 15,000/= but less then Rs. 25,000/= similar relief would be granted, if he had made payment of Rs. 2,000/= before the specified date. Sub-section [2] of Section 41AA provides that additional payments to be made under sub-section [1] of Section 41 would be treated as if the dealer has furnished a revised declaration or return and the payment was towards liability of the dealer under such revised declaration or return. Sub-section [3] of Section 41AA laid down important conditions of eligibility for availing the scheme under Section 41AA. The provision is expressed in negative form, providing that nothing in this section shall apply to a dealer - [a] whose books of accounts, registers, documents have been impounded or seized under Section 59 of the Act, or [b] who has availed of tax exemption or tax deferment under any of the incentive schemes of Government of Gujarat. Page 17 of 24
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9. Analysis of this section would show that the provision was in the nature of a general amnesty. The State Legislature having noted that despite efforts made for simplification of assessments there are large number of pending disputes which had clogged the system, introduced a one-time amnesty scheme. The scheme was peculiar on two counts viz., unlike the settlement schemes under the Income-tax Act, 1961 or the Customs or Central Excise Act, it is not an ongoing scheme and covered only the assessments which were pending and which related to AY 1999-2000 and earlier years. Thus, this was a one-time scheme. Secondly, unlike in case of other settlement proceedings in the above referred Acts, there was little element of examination of the declaration made by an assessee desirous of availing benefit of the scheme. Once the assessee applying for such a scheme fulfilled the eligibility conditions and paid the additional taxes, his assessment would be deemed to have been completed. The competent authority thereafter had no jurisdiction to question the declaration made by the assessee which would be in the realm of scrutiny assessment envisaged under sub- section [3] of Section 41 of the Act. Quite apart from the plain language used in Section 41AA, for more emphasis, sub-section [1] of Section 41 was made notwithstanding anything contained in sub-sections [2] and [3] of Section 41AA. Further, even in the Page 18 of 24 C/SCA/12178/2009 JUDGMENT proviso granting benefit to one who availed the scheme, the Legislature has consciously provided that the same would be available irrespective of the fact whether notice under sub-section [3] of section 41 was issued or not. In other words, even if the scrutiny assessment under sub-section [3] of Section 41 had commenced, the dealer could make a declaration under Section 41AA and if fulfilled other conditions, the benefit flowing from such scheme would floss.
10. To be able to get the benefit of the said provision, a dealer had to satisfy two sets of conditions viz., [i] which is inbuilt in sub- section (1) of Section 41AA which requires that the dealer had paid taxes due on the basis of declaration made in the return before the specified date; that such tax did not exceed Rs. 25,000/= and lastly that he paid additional amount of Rs. 1,000/=; if the tax paid was less than Rs. 15,000/= or paid Rs. 2,000/=, if such tax was in the range of Rs. 15,000/= to 25,000/=. The second set of conditions flows from sub-section [3] of Section 41AA and these are in the nature of disqualifications. These disqualifications are : [a] dealers whose books of account, registers, documents have been impounded or seized under section 59 of the Act, or [b] dealers who had availed tax exemption or tax deferment under any of the incentive schemes of the Government of Gujarat. As soon as these Page 19 of 24 C/SCA/12178/2009 JUDGMENT conditions - positive as well as negative are fulfilled - a dealer would be entitled to the benefits flowing from the said section. In fact, the section does not envisage any formal acceptance of a declaration by the competent authority. The deeming fiction would automatically and immediately kick in. This is not to suggest that even if a declaration itself is found to be wrong, erroneous or as per the declaration, a dealer is found wanting in any of the conditions, he can still claim benefit of the scheme merely because he had made a declaration. To this extent, the role of the authority certainly is envisaged, but not beyond. To suggest that even when a dealer makes declaration; even if such a dealer is otherwise eligible fulfilling all conditions of Section 41AA of the Act, such a declaration could be rejected, would be wholly incorrect.
11. To suggest that in such a case a dealer may get away with tax evasion since his very initial declaration in the return may itself be incorrect, begs the question. If any such declaration still permitted a scrutiny at the hands of the assessing authority of the correctness of the declarations in the return, the very purpose of inserting Section 41AA would frustrate and the situation would be brought back to the stage of assessment under sub-section [3] of Section 41 of the Act - something which the Legislature intended to avoid. Page 20 of 24
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12. Section 67 of the Act undoubtedly gives wide powers to the revisional authority, who on his own motion or on an application made to him, can call for and examine the record of any order passed by an authority appointed under Section 27 and can pass such order, as he thinks just and proper. This would however not imply that the revisional authority could do what the original authority could not. Whatsoever wide his powers may be, the same would be co-terminus with that of the original authority. Even otherwise, the revisional authority could not have travelled beyond the statutory mandate of Section 41AA of the Act and denied the benefit of the amnesty scheme flowing from the said provision on the grounds which were impermissible. We may recall, his grounds were - [a] that the petitioner's dealings in DEPB scrips were already noticed by the Department; and [b] that the petitioner was subjected to search operation on 18th June 2002 in which it was found that the petitioner had large number of sales of DEPB scrips. Both these grounds were inadequate to take the petitioner's case under revision. The ground on which a dealer's declaration under Section 41AA could be rejected were that in his case, the books of account, registers or documents have been impounded or seized. When the petitioner made such a declaration, these grounds did not exist. From the record of the revisional authority, search Page 21 of 24 C/SCA/12178/2009 JUDGMENT and seizure operations took place on 18th June 2012 while the petitioner's declaration under sub-section [1] of Section 41AA of the Act was accepted on 28th February 2002. This latter development cannot be utilized to reopen the petitioner's closed declaration since the declaration was accepted and statute gave rise to a deeming fiction that the petitioner's deemed assessment is completed on the basis of declaration made in the returns filed. In our opinion, the revisional authority has committed a serious error in exercising revisional powers. We also agree with the counsel for the petitioner that even if the petitioner's declarations under Section 41AA of the Act were to be rejected in exercise of such revisional powers, the revisional authority could not have assessed the petitioner's tax liability. Either at the hands of the original authority or the revisional authority, if any such declaration is treated as invalid or in any other manner rejected, the natural consequence would be that the petitioner's pending assessment would be completed in terms of Section 41 of the Act. Mere rejection of the declaration under Section 41AA of the Act would not result into automatic tax liability being confirmed against the petitioner. In fact, the revisional authority proceeded in a summary manner and completed assessment at its own level by allowing a brief time and intervention to the petitioner. The Tribunal, in our Page 22 of 24 C/SCA/12178/2009 JUDGMENT opinion, proceeded on erroneous facts, and therefore, committed a legal error. We have reproduced the Tribunal's factual conclusions which suggests that the Tribunal was under impression that the petitioner's documents and books of account were seized prior to making declaration under Section 41AA of the Act - something even the Department had not contended. Had the Tribunal been correct in such factual conclusion, the legal conclusion of the Tribunal would be unexceptionable. It is brought to our notice that the very Tribunal in another case [M/s. Devkrupa Industries v. State of Gujarat : Decided on 30th July 2008] where it is found that the disqualifications flowing from of Section 41AA [3] did not arise, held that the Department could not reject a dealer's declaration.
13. We do not dispute that the revisional authority under section 67 of the Act would have power to test the legality and correctness of the action or order of the competent authority in accepting a declaration made under Section 41AA of the Act. If the order is contrary to the requirements of Section 41AA of the Act, the revisional authority could certainly correct the same, nevertheless in the present case; as observed, the revisional authority exceeded its jurisdiction and rejected the declarations on the grounds which were otherwise not permissible.
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14. In view of the discussion above, impugned judgment of the Tribunal is set-aside. Revisional orders also stand quashed. We have not given our final expression on the petitioner's contention that it is not open for the revisional authority to impose penalty for the firs time. In view of our conclusion on other aspects of the matter, we do not find necessary to decide this issue. Petitions stand disposed of.
[Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 24 of 24