State Taxation Tribunal - West Bengal
Dutta Automobiles vs Deputy Commissioner, Commercial Taxes ... on 21 June, 2000
Equivalent citations: [2001]123STC599(TRIBUNAL)
JUDGMENT
D. Bhattacharyya, Technical Member.
1. In this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, the applicant has challenged the validity of the order passed by the Deputy Commissioner, Commercial Taxes, Durgapur Circle, reopening under Section 9A(2) of the West Bengal Sales Tax Act, 1954, the deemed assessments for the four periods of 12 months each, ending March 31, 1989, March 31, 1990, March 31, 1991 and March 31, 1992.
2. There is no dispute regarding important facts. The applicant is a firm registered under the Indian Partnership Act, 1932, and is a dealer registered under the Bengal Finance (Sales Tax) Act, 1941 (in short "the 1941 Act") and the West Bengal Sales Tax Act, 1954 (in short "the 1954 Act").
3. The applicant had filed returns both under the 1941 Act and the 1954 Act all along and had paid due sales tax in time, but in the returns filed under the 1954 Act the applicant had kept the return for turnover tax blank without filling it up, He was not informed of any assessments made for the four periods mentioned above. He had wanted to know from the respondent No. 2, the Assistant Commissioner, Commercial Taxes, Durgapur Charge, whether assessment for the said four periods had been completed under Section 9A(1) or Section 9(2) or Section 9(3) of the 1954 Act. The applicant did not receive any reply. Much later in March 1997, the applicant received four notices, all dated March 10, 1997, from the respondent No. 1 asking him to show cause why assessments made under Section 11(E) of the 1941 Act for the four periods mentioned above should not be reopened. In these notices no reason for reopening the deemed assessments allegedly made under the 1941 Act was given.
4. The applicant replied to the show cause notices, made his submission at the hearing before respondent No. 1 and explained why, according to him, the deemed assessments, if made should not be reopened. On October 13, 1998, the applicant received four orders from the respondent No. 1 all dated October 9, 1998, for the aforesaid four periods, by which the deemed assessments were reopened and fresh assessments were directed to be made by the respondent No. 2. All these four orders were under the 1954 Act and not under the 1941 Act. It may be remembered that the four notices in this regard which the applicant received were issued under the provisions of the 1941 Act. In the present application, the applicant has challenged these four orders.
5. Shri Sumit Kumar Chakraborty, learned Advocate appearing for the applicant, had argued mostly on points of law. The first submission made by him concerned the facts that the four notices for reopening the deemed assessments were issued under Section 11(E) of the 1941 Act, but the final orders reopening the assessments were issued under Section 9A(2) of the 1954 Act. The applicant had received no notice for reopening under the 1954 Act which, according to Shri Chakraborty, means that initiation of proceeding had not been done at all under Rule 22AA(1) of the West Bengal Sales Tax Rules, 1954 (in short the "the 1954 Rules"). Therefore, there was in his view no jurisdiction assumed by respondent No. 1 to issue the order that he did under the 1954 Act. Shri Chakraborty, submitted that the issue of notice is a condition precedent for starting of the proceeding, there is an absence of proceeding and not an irregularity in the proceeding, because this is not a case of misquoting of a section which may in certain circumstances be condoned as an irregularity, but the case of invoking the provisions of a separate Act altogether.
6. He therefore contended that the orders dated October 9, 1998 were issued without jurisdiction and are void.
7. The second main submission of Shri Chakraborty relates to the fact that all the four notices for showing cause had been issued without specifying the reason why respondent No. 1 wanted to reopen the deemed assessments. Without knowing this reason, the applicant can never show cause properly. Therefore, any notice asking any person to show cause, without indicating the lapses for which cause is to be shown, is not a notice at all. In such a situation the respondent cannot exercise his judgment properly under Rule 22AA(2) of the 1954 Rule. But the four impugned orders were passed by respondent No. 1 without specifying any reason in the notice and therefore Shri Chakraborty submitted that the orders are untenable because they were passed in violation of the principles of natural justice. In support of his contention Shri Chakraborty cited a number of judgments of different courts including those in :
(1) Y. Narayana Chetty v. Income-tax Officer, Nellore reported in [1959] 35 ITR 388 (SC) and (2) Commissioner of Income-tax, Gujarat II v. Kurban Hussain Ibrahimji Mithiborwala, reported in [1971] 82 ITR 821 (SC).
8. The third main submission of Shri Chakraborty arises from the fact that, in the returns submitted by the applicant for the periods concerned, the columns regarding turnover tax were left blank. The return, according to Shri Chakraborty, is a composite return in respect of sales tax, purchase tax and turnover tax. The parts of the return relating to sales tax and purchase tax were filled up. The part relating to turnover tax was not filled up. The turnover had no doubt been mentioned for other purposes in the part relating to sales tax/ purchase tax, but no turnover for the purpose of turnover tax had been mentioned in the part relating to turnover tax. No turnover tax had also been paid at the time of furnishing return. Thus there was no concealment of sales in the return and no incorrect particulars had been given by the applicant in the return. On the basis of these facts Shri Chakraborty, disputed the legality of the four orders passed by respondent No. 1 on October 9, 1998 on the following grounds :
(i) In the returns the part relating to turnover tax was left blank. Therefore the return was a truncated return. As a consequence, the applicant will be deemed to have failed to furnish the return. Reference was made to the decision in the case of Calcutta Jute Manufacturing Co. v. Commercial Tax Officer reported in [1997] 106 STC 433 (SC), paras 7 and 8. If there was no return, there cannot be any deemed assessment. The question of reopening therefore does not arise.
(ii) Section 9A(2) authorises reopening only when a dealer has concealed any sales or particulars thereof, or has furnished incorrect statements of his turnover or incorrect particulars of his sales in the return. As already explained above, the applicant was not guilty of any of these when he furnished his return. Therefore this section and rules thereunder cannot be invoked for reopening the assessments of the applicant for the concerned periods.
(iii) Non-payment of turnover tax cannot be a ground for reopening the assessment. Reference was made to the judgment of this Tribunal in RN-394/99 (M.S. Prayas Papers Private Limited v. State of West Bengal) where it was held that "non-payment of turnover tax or even non-mention of amount of turnover tax does not, in our opinion, amount to furnishing of incorrect statement of turnover" and that "non-payment of any tax and non-payment of turnover tax are no ground for reopening of deemed assessment under the relevant provisions of 1941 Act and 1954 Act".
Shri Chakraborty therefore requested that all the four orders reopening the deemed assessments for the four periods be set aside.
9. Sri K.K. Saha, learned advocate appearing for the respondents, disputed all the submissions of Shri Chakraborty. He, of course, did not dispute the fact that the notice for reopening was issued in terms of the 1941 Act, and the final order for reopening was issued under the 1954 Act. What he disputed is the legal consequence of these undisputed facts. According to Shri Saha, the mistake in issuing the notice under the 1941 Act, in place of the 1954 Act, does not make the proceeding void. The purpose of this notice, according to Shri Saha, is to inform the assessee of the intention to reopen deemed assessments, and that purpose was served. Deputy Commissioner of Commercial Taxes, Durgapur Circle, respondent No. 1, had jurisdiction to reopen deemed assessments under both the Acts. After the notice was issued, the applicant submitted to the jurisdiction and appeared before respondent No. 1 twice. The applicant was not denied natural justice during the proceeding, and he should have no cause for complaint. The mistake in quoting the wrong Act did not cause jeopardy and hence it ought to be considered a technical irregularity worthy of being condoned. The authorised representative of the applicant appeared before respondent No. 1 on August 5, 1988 and September 1, 1998 and prayed for time on both occasions. However, nobody appeared thereafter, and the case was heard and disposed of ex parte. In support of his contention Shri Saha, referred to the judgment in the case of Anandji Haridas and Co. (P.) Ltd. v. S.P. Kushare, Sales Tax Officer, Nagpur, reported in [1968] 21 STC 326 (SC), specifically to page 340 of the same.
10. The basic contention of Shri K.K. Saha on this point was that since the applicant had submitted to the jurisdiction of respondent No. 1, appearing before him on at least two dates, he was in a position to know from the respondent No. 1 the correct Act under which, and the correct section in terms of which the reopening of deemed assessment was proposed, as well as the reason on the basis of which such proposal was being considered. Therefore, according to him no principle of natural justice was violated.
11. Coming to the contention of Shri Chakraborty, learned Advocate for the applicant, that since the relevant columns were left blank, there were no returns in respect of turnover tax and hence there could be no deemed assessments, Shri Saha submitted that the view was untenable. The gross turnover of the applicant was given in the main return and it cannot be said that there was no return about turnover, simply because certain columns were left blank. According to Shri Saha, the position is that the applicant in the returns had furnished information about turnover but had not disclosed their liability to pay turnover tax, thereby furnishing incorrect particulars about sales which are liable to turnover tax. Shri Saha pointedly argued that non-payment of turnover tax was not the ground on which deemed assessments had been reopened, the ground was that incorrect particulars had been furnished in the returns about turnover which was liable to tax.
12. Shri Saha, referred to a number of judgments excerpts from two of which are quoted. In a case relating to C.P. and Berar Sales Tax Act, 1947, Anandji Haridas and Co. (P.) Ltd. v. S.P. Kushare, Sales Tax Officer, Nagpur, reported in [1968] 21 STC 326, the Supreme Court observed :
"We are unable to accept the contention of Mr. Gokhale that a notice under Section 11(4)(a) or 11A(1) is a condition precedent for initiating proceedings under those provisions or that it is the very foundation for the proceedings to be taken under those provisions. The notice contemplated under Rule 32 is not similar to a notice to be issued under Section 34(1)(b) of the Income-tax Act, 1922. AH that Sections 11(4) and 11A(1) prescribe is that before taking proceedings against an assessee under those provisions, he should be given a reasonable opportunity of being heard. In fact, those sections do not speak of any notice. But Rule 32 prescribes the manner in which the reasonable opportunity contemplated by those provisions should be afforded to the assessee. The period of 30 days prescribed in Rule 32 is not mandatory. The rule itself says that 'ordinarily' not less than 30 days' notice should be given. Therefore, the only question to be decided is whether the defects noticed in those notices had prejudiced the appellants. It may be noted that when the assessees received the notices in question, they appeared before the assessing authority, but they did not object to the validity of those notices. They asked for time for submitting their explanation. The time asked for was given. Therefore, the fact that only nine days were given to them for submitting explanation could not have in any manner prejudiced them."
13. Shri Saha, contended that provisions of Section 9A(2) of the 1954 Act, and Rule 22AA of the 1954 Rules of the West Bengal are such that the observations of the Supreme Court can be readily applied to the present case. In a case under the Orissa Sales Tax Act, 1947, Sales Tax Officer, Ganjam v. Uttareswari Rice Mills, reported in [1972] 30 STC 567, the Supreme Court observed as follows :
"There is nothing in the language of Section 12(8) of the Act which either expressly or by necessary implication postulates the recording of reasons in the notice which is issued to the dealer under the above provision of law. To hold that reasons which led to the issue of the said notice should be incorporated in the notice and that failure to do so would invalidate the notice, would be tantamount to reading something in the statute which, in fact, is not there. We are consequently unable to accede to the contention that the notice under the above provision of law should be quashed if the reasons which led to the issue of the notice are not mentioned in the notice. At the same time, we would like to make it clear that if the Sales Tax Officer is in possession of material which he proposes to use against the dealer in proceedings for reassessment, the said officer must before using that material bring it to the notice of the dealer and give him adequate opportunity to explain and answer the case on the basis of that material."
14. Sri Saha, therefore submitted that the first two submissions of Sri Chakraborty were directly opposed to the principle enunciated by the Supreme Court, and hence are of no validity.
15. We have considered the submissions of both sides. We find that before the applicant received the orders reopening the deemed assessments under the 1954 Act, he had no inkling that such an order was contemplated. In the notices dated March 10, 1997 it was mentioned that it appeared necessary to the respondent No. 1 to proceed under Section 11E(2) of the 1941 Act. The notices never mentioned the 1954 Act. The applicant had responded to these notices by letters dated February 16, 1998 addressed to the respondent No. 1. In all these letters, applicant had explained that he did not think that, in his case, deemed assessments should be reopened under the 1941 Act. He had not mentioned the 1954 Act at all. Similarly, on the same issue he addressed another set of letters to the Deputy Commissioner on October 9, 1998, the date on which the hearing was last fixed. In these letters also, the applicant dealt with only the 1941 Act and not the 1954 Act. On that same date, that is on October 9, 1998, respondent No. 1 passed the order reopening the deemed assessments.
16. This sequence of events leads to the conclusion that the applicant was unaware that deemed assessments in respect of his returns were proposed to be reopened under the 1954 Act till he got in his hand the orders of respondent No. 1 dated October 9, 1998. In this situation it cannot be stated that he had got an opportunity to show cause why such deemed assessments should not be reopened. Since he did not get the opportunity, the principle of natural justice was violated. In the process Rule 22AA of the 1954 Rules which specifies the issue of a notice in this regard, as well as consideration of the cause shown, was violated. Just because an authorised representative of the applicant had appeared on two dates before the respondent No. 1 and had asked for time, it cannot be concluded that, since the authorised representative could know if he wanted from the respondent No. 1 the correct Act and the correct section and could have thereby created a situation where cause could be shown, adequate opportunities for showing cause had been given to the applicant. The orders passed by respondent No. 1 therefore cannot be sustained. It is not the case of the respondents that respondent No. 1 or anybody else, had ever informed the applicant, orally or in writing, the reasons why the reopening of the deemed assessments was considered necessary. We therefore hold that the orders were passed without following Rule 22AA of the 1954 Rules and therefore these orders should be struck down. In this situation it is not necessary for us to go into other questions raised and debated in the present case, whether there were proper returns submitted in the four periods, whether there were any concealment of sales or particulars thereof, and whether there were incorrect statements of his turnover.
17. As a result, the application is allowed. The orders dated October 9, 1998 passed by respondent No. 1, Deputy Commissioner, Commercial Taxes, Durgapur Circle, reopening the deemed assessments made under Section 9A(2) of the West Bengal Sales Tax Act. 1954 for the periods of four quarters each ending March 31, 1989, March 31, 1990, March 31, 1991 and March 31, 1992 are all set aside. We uphold the applicant's contention that the deemed assessments for the four periods should not have been reopened in the manner it was done. Before us, the applicant never raised the contention that in any of the four periods he had paid as turnover tax an amount larger than what was legally payable by him, and hence we have no reason to decide whether any turnover tax paid by him in respect of the four periods should be refunded to him or not.
18. The application is thus disposed of without any order regarding costs.
J. Gupta, Judicial Member.
19. I agree.