Bombay High Court
Commissioner Of Sales Tax, Maharashtra ... vs Vidarbha Automobiles And Another on 24 August, 1992
JUDGMENT V.A. MOHTA, J.
1. The Sales Tax Officer, Unit II, having his office in Civil Lines, Nagpur had initiated proceedings for assessment under section 33 of the Bombay Sales Tax Act ("the ST Act") by a notice dated 2nd April, 1992, to the first respondent, M/s. Vidarbha Automobiles, Nagpur. The Deputy Commissioner of Sales Tax transferred this case to the Sales Tax Officer (Enforcement), Unit I, having his office in Ramdaspeth, Nagpur. The first respondent appeared and participated in the assessment proceedings before the Sales Tax Officer (Enforcement), Unit I without raising any objection pertaining to his jurisdiction to proceed with the assessment. Assessment order was passed. It was unsuccessfully challenged on merits in first appeal before the Commissioner. The assessee preferred second appeal again on merits before the Sales Tax Tribunal. Therefore, for the first time, a preliminary objection was raised to the original order of assessment on the ground that it was void because the transfer of the from Sales Tax Officer, Unit II to Sales Tax Officer (Enforcement), Unit I by the Deputy Commissioner was without granting any hearing to the assessee as required under section 70 of the ST Act. The Tribunal upholding the preliminary objection quashed the original order of assessment on that jurisdictional ground only without going into the merits. Aggrieved thereby, this petition has been filed by the Commissioner of Sales Tax under authority from the State Government.
2. Having heard the parties and looked at the matter from all possible angles, we find it impossible to sustain the impugned order of the Tribunal for the reasons that follow.
3. First we reproduce section 70 of the ST Act for ready reference :
"70. Power to transfer proceedings. - the Commissioner may, after giving the parties a reasonable opportunity of being in the matter, wherever it is possible to do so, and after recording his reasons for doing so, by order in writing transfer any proceedings or class of proceedings under any provision of this Act, from himself to any other officer and he may likewise transfer any such proceedings (including a proceeding pending with any officer or already transferred under this section) from any officer to any other officer or to himself :
Provided that, nothing in this section shall be deemed to require any such opportunity to be given where the transfer is from any officer to any other officer and the offices of both officers are situated in the same city, locality or place."
4. According to the Tribunal, Civil Lines and Ramdaspeth were two different localities of the city of Nagpur and hence proviso to section 70 was not attracted. Having regard to the context in which the phraseology "in the same city, locality or place" appears and placement of different of different words used therein, it seems to us that the words "city", "locality" or "place" will have to be read disjunctively and not adjunctively. The use of comma between the words "city" and "locality" a and the use of the word "or" between the words "locality" and "place" are significant. If legislative intent was to grant hearing even when the case is to be transferred from one place to the other place in the same locality or city, the words "locality" and "city" were redundant. Similarly, if legislative intent was to grant hearing even when the case is to be transferred from one locality to the other locality in the same city, the word "city" was redundant. Such exercise in redundancy cannot be easily inferred in interpreting statutes. In our view, the word "locality" or "place" do not mean locality or place within the limits of the city and therefore as per proviso to section 70 no hearing is necessary before transferring the case from one Sales Tax Officer to the other even if the two officers are not situated in the same ward or locality within the city.
5. Since the terms "locality" or "place" have not been defined under the ST Act, resort to their ordinary dictionary meaning is inevitable. We reproduce the material part of the meaning given to those words in Webster's New Words Dictionary at pages 439 and 570, respectively :
"locality" - a place, district.
"place" - a region or locality,
a city, town or village.
It would thus be seen that according to the ordinary meaning, the word "locality" may mean even a district or place and the word "place" may mean even a locality or city. It is well-known that Legislature sometimes uses more than one interchangeable words for conveying the same concept. The twin well-known principles of construction of statutes - noscitur a sociis and ejusdem generis - have also to be borne in mind. Meaning of the word will have to be judged by the company they keep. It seems to us that the words "locality or place" have been added ex abundanti cautela keeping in view expanding horizons of localities even beyond the city boundaries. Situations often arise where one locality may cover area within the city as well as area on the outskirts of the city and the two offices may not be situated in the city boundaries though they may be situated in the same locality.
6. The expression "in the city, locality or place" is not appearing in section 70 of the ST Act for the first time. It has been bodily lifted by a scissor and paste operation from section 127 of the Income-tax Act, 1961 (the IT Act). The said expression in the context of the IT Act has legislative background which cannot be ignored in appreciating its true meaning. Section 5(7A) of the Income-tax Act, 1922, permitted transfer of a from one Income-Tax Officer to the other despite provisions of section 64(1) (2) of the said Act which provides for assessments being made at places where assessees reside or carry on business. The validity of section 5(7A) was challenged on the several grounds including about causing great inconvenience to the assessee. Considering the exigencies of tax collection, the validity of the provisions was upheld by the Supreme Court in the case of Pannalal Binjraj v. Union of India [1957] 31 ITR 565 by reading down the provision to the effect that affording to the assessee a reasonable opportunity of representing his view before passing order of transfer and recording brief reasons for the transfer wherever circumstances warrant, was a must. Section 5(7A) provided no limitation in the matter of transfer of a case from one officer to the other and keeping the ratio of the above decision in view, section 127 was introduced in the new IT Act providing for hearing only where prejudice was likely to be caused to the assessee due to transfer of file. It was assumed that if the transfer is within the same city, there was no likelihood of any prejudice.
7. The two High Court had occasion to interpret this expression in the context of the IT Act, (1) the High Court of Calcutta in the case of Vyapar Mandal Ltd. v. Commissioner of Income-tax [1965] 58 ITR 426 and (2) the High Court of Andhra Pradesh in the case of M. A. E. K. K. Varma v. Central Board of Direct Taxes 1979 Tax LR 409. Both have taken a view that where the transfer of a case is from one Income-tax Officer to the other in the same city, hearing by the Commissioner before the transfer is not necessary, though he is bound to record the reasons for the transfer.
8. Whether the requirement of hearing contemplated under section 70 is mandatory in character is the next question. Considering the object of the section 70 and the use of the expression "wherever it is possible to do so" in the said provision, it seems to us that the requirement of hearing before granting transfer is not mandatory. The requirement is only directory in character and in appropriate cases it can dispensed with by the Commissioner. Thus, the assessment order does not become void ab initio, in the absence of prejudice.
9. There is yet another angle to the controversy. The assessee did not raise any such objection before the Sales Tax Officer (Enforcement), Unit I, contested the case only on merit and took the chance of an order favourable to it. Even when the order was adverse, it was challenged in first appeal on merit. It was during the pendency of the second appeal only, that for the first time this objection has been raised. Quite clearly, this is a case of acquiescence in the jurisdiction of the sales Tax Officer (Enforcement), Unit I and of waiver of objection to his territorial Jurisdiction to make the assessment. The assessment pertained to the period from 1st July, 1979 to 30th July, 1980. The objection was raised for the first time in July, 1988, which was upheld by an order dated 29th November, 1990, by which time the Sales Tax Department held lost even the opportunity of fresh assessment. In this background, the entire conduct of the assessee disentitled him to get any relief on the basis of those objections. The principle of estoppel can also be pressed into service against the assessee. It is unfortunate that there is not even a whisper about this facet of the controversy in the long order of the Tribunal.
10. No prejudice in the matter of determination of the sales tax dues have been demonstrated. The distance between the office of the Sales Tax Officer, Unit II and Unit I is reported to be approximately 3 kms. Even the grievance pertaining to hardship and inconvenience, under the circumstances, appears to be altruistic.
11. The learned counsel for the respondents is right in canvassing that the theory of waiver, acquiescence or estoppel does not apply to cases of inherent lack of jurisdiction. Distinction between inherent lack of jurisdiction and irregularity in exercise of jurisdiction is well-known and has been noticed by a catena of Supreme Court decisions. One such decision is Central Potteries Ltd. v. State of Maharashtra [1962] 13 STC 472 (SC); AIR 1966 SC 931 from which we reproduce the following material observations :
"In this connection it should be remembered that there is a fundamental distinction between want of jurisdiction and irregular assumption of jurisdiction, and that whereas an order passed by an authority with respect to a matter over which it has no jurisdiction is a nullity and is open to collateral attack, an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity."
12. It is equally well-settled that generally objection pertaining to territorial jurisdiction does not go to the root of the matter. In this connection, the cases of Hira Lal Patni v. Sri Kali Nath may be noticed. It has been laid down there that the objection as to lack of territorial jurisdiction High Court does not stand on the same footing as an objection to the competence of the court to try a case.
13. In this background, the ratio of the following two decisions will have no application to the matter at hand :
(i) Commissioner of Sales Tax v. Shrimal Sakharchand [1984] 57 STC 224 (Bom.);
(ii) Usha Sales (Pvt.) Limited v. State of Bihar [1985] 58 STC 217 (Pat).
Both these decisions pertain to waiver of objection to non-compliance with the condition precedent attached to the very jurisdiction to initiate reassessment proceedings under the sales laws and consequently to inherent lack of jurisdiction.
14. All that remains to be considered is the preliminary objection raised on behalf of the respondents at the very commencement of hearing before us, to the maintainability of this petition the ground of existence of alternate remedy of applying for reference under section 61 of the ST Act to the High Court for which the petitioner has already moved the Tribunal. The petitioner has explained the reason why this petition has been filed. On the basis of the view taken in this matter, Tribunals as well as the sales tax authorities have started quashing such assessment orders resulting into irreparable loss to the department. Number of such cases is reported to be approximately 5,000 involving substantial revenue. No question of law is involved. Having regard to the totality of all these factors, we are not inclined to throw the petition out the ground existence of alternate remedy and hence we overrule the preliminary objection.
15. To conclude, this writ petition is allowed. The impugned order of the Tribunal is quashed and set aside. The matter is now remitted back to the Tribunal for disposal of the second appeal on merits, in accordance with law. Needless mention that since the matter is old, it would be disposed of on priority basis. Rule made absolute accordingly. No order as to costs.
16. Writ petition allowed.