1978 (4) TMI 226 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Board was right in remanding the case to the Commissioner for giving an opportunity to the dealer to rectify the defect in the C form No. M 073138.

Issue-wise Detailed Analysis:

1. Whether the Board was right in remanding the case to the Commissioner for giving an opportunity to the dealer to rectify the defect in the C form No. M 073138:

This reference arises out of an assessment proceeding, the period of assessment being 1st July, 1957, to 31st March, 1958. In the assessment proceedings, the C form, which was produced by the assessee, was accepted by the Assistant Commissioner of Sales Tax, Indore. It is also not in dispute that the C form was defective as it bore no date of issue. The Commissioner of Sales Tax noticed this defect and exercised suo motu revisional jurisdiction and, after hearing the revision, held that the C form was not in order and further held that the assessing authority was wrong in accepting the form. Against this order of the Commissioner, the assessee went up in appeal before the appellate authority, i.e., the Board of Revenue. The learned Member of the Board of Revenue felt that when the form was produced before the assessment and, apparently, there was a clerical error, the assessment officer should have got it corrected. But it appears that the assessment officer did not notice the defect and, therefore, did not give an opportunity to the assessee to remove the defect. But the defect was noticed when the Commissioner of Sales Tax suo motu initiated proceedings for revision of the assessment. The learned Member of the Board of Revenue, therefore, felt that, under such a situation, the assessee should have been given an opportunity to rectify the mistake as apparently it is a clerical mistake, and remanded the case with a direction that the matter be considered in the light of the observations made by the learned Member. On an application submitted by the Commissioner of Sales Tax the Board has made this reference on the question stated above.

The learned counsel appearing for the department contended that no opportunity for rectification or correction could be given to the assessee in view of the decision of this Court reported in Commissioner of Sales Tax, M.P. v. Bombay Textile Stores, Ujjain[1978] 41 S.T.C. 484; 1977 Vikraya Kar Nirnaya However, the learned counsel contended that there are two decisions of this Court taking a contrary view as well, they being Commissioner of Sales Tax v. Dayaram Balchand[1973] 31 S.T.C. 249. and K.S. Nazarali Mills v. Commissioner of Sales Tax, M.P.[1973] 31 S.T.C. 243.

Admittedly, in the present case, the C form was produced before the assessing authority and it is not in dispute that the defect was that wrong date was mentioned in the certificate. It is also not in dispute that the assessing authority accepted this certificate in form C to be correct and assessed on that basis. The mistake was discovered by the Commissioner who instituted suo motu revision proceedings. The learned Member of the Board felt that, when the Commissioner detected the mistake and initiated suo motu proceedings in revision, an opportunity should have been given to the assessee to rectify the defect. In the decision on which reliance has been placed by the learned counsel for the department, i.e., Commissioner of Sales Tax, M.P. v. Bombay Textile Stores, Ujjain[1978] 41 S.T.C. 484; 1977 Vikraya Kar Nirnaya (10) 59., the question that arose was that form C, which was produced before the assessing authority, was defective, as it did not contain the purchasing dealer's date of registration and, for three out of eight such forms, a certificate from the Sales Tax Officer, Orai (U.P.), mentioning the date was not accepted in evidence by the Assistant Commissioner, relying on the decisions in Deputy Commissioner (Commercial Taxes), Coimbatore v. Parekutti Hajee Sons[1962] 13 S.T.C. 680. and K.M. Chopra & Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46. In that case also, the Board on appeal held that evidence should have been allowed and, in this decision, the Division Bench of this Court, placing reliance on Deputy Commissioner (Commercial Taxes), Coimbatore v. Parekutti Hajee Sons[1962] 13 S.T.C. 680. and K.M. Chopra & Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46., took the view: "In our opinion, when the statute gives a concession to an assessee subject to his compliance with certain provisions of the Act or the Rules, then, in that event, the assessee, to get the benefit given to him by the statute, has to strictly comply with the conditions which entitle him to that benefit. The reasoning, which weighed with the learned Member, Board of Revenue, is the principle of natural justice, which, in our opinion, in the circumstances, would be inapplicable. A declaration form, which leaves the column of date of registration blank and thus is not completely filled in, would not give the requisite information and details to the assessing authority as has been contemplated by the Act and the Rules in that behalf. In view of this, the assessing authority will have no option but to ignore such an incomplete C form. In this view, the three declaration forms in question being incomplete in themselves as they did not mention the date of registration, the assessee was not entitled to have the benefit of section 8(1) of the Central Sales Tax Act. The letters filed in the reassessment proceedings were thus of no avail."

The two cases on which reliance has been placed, i.e., K.M. Chopra & Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46 and Deputy Commissioner (Commercial Taxes), Coimbatore v. Parekutti Hajee Sons[1962] 13 S.T.C. 680., were cases where the C form was not produced at the time of assessment but an attempt was made to produce it at the appellate stage and the Division Bench of this Court in K.M. Chopra Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46, held:

"There is no doubt considerable force in the contention of the learned counsel for the petitioner that the words 'in the prescribed manner' used in sub-section (4) of section 8 only empowered the Government to lay down by rules the manner of filing a declaration in form C and not the time within which it is to be filed. The words 'in manner and form' were construed by Lord Campbell, C.J., in Acraman v. Herniman[1851] 16 Q.B. 999; 117 E.R. 1164., as referring only to 'the mode in which the thing is to be done' and not the time for doing it. This construction put by Lord Campbell on the words 'in manner and form' was accepted in Abraham v. Sales Tax Officer[1964] 15 S.T.C. 110 (F.B); A.I.R. 1964 Ker. 131 (F.B.). and Murli Dhar v. Sales Tax Officer[1965] 16 S.T.C. 21; A.I.R. 1965 All. 483., and it has been held in those cases that a rule framed under the Central Sales Tax Act, 1956, prescribing time-limit for submission of declarations spoken of by subsection (4) of section 8 is repugnant to section 8(4) of the Act. Rule 8(2) of the Madhya Pradesh Sales Tax (Central) Rules, 1957, in so far as it lays down that the declaration must be attached to the return cannot, therefore, be held to be valid. In any case, it cannot be construed as having a mandatory force so as to deprive the dealer of the benefit of the rate of tax under section 8(1) if he omits to attach to his return the declaration but files it before the assessment.

The time-limit for the filing of the declaration required by sub-section (4) of section 8 is to be found in that provision itself. Sub-section (4) of section 8 requires that the declaration has to be furnished 'to the prescribed authority' and the prescribed authority is the one under section 9(2) empowered to assess the tax. The declaration must, therefore, be produced before the taxing authority. It is plain enough that when a dealer claims that his turnover is liable to tax at the rate of one per cent of his turnover, then the declaration for claiming the benefit of the lower rate of tax must be produced before the assessment and not afterwards. It is thus implicit in sub-section (4) of section 8 that, for claiming the benefit of the rate of tax prescribed by section 8(1), the declaration must be produced before the taxing authority and before the assessment. In the present case, admittedly, the petitioner did not produce before the Sales Tax Officer the declarations which it should have produced for claiming the benefit of the rate of tax laid down in section 8(1) of the Act. The production of the declarations before the Additional Commissioner of Sales Tax was of no avail and the Additional Commissioner was right in not taking any notice of the C form declarations produced before him. If he had given effect to those declarations, he would have acted contrary to the provisions of sub-section (4) of section 8 requiring that the declarations must be furnished before the taxing authority and before the assessment."

In that case, the question before their Lordships was a little different. The certificates in form C as required to be produced before the assessing authority were not produced before the assessing authority, as, in this decision, it was observed:

"In any case, it cannot be construed as having a mandatory force so as to deprive the dealer of the benefit of the rate of tax under section 8(1) if he omits to attach to his return the declaration but files it before the assessment."

Admittedly, in the present case, the declarations have been filed before the assessment and before the assessing authority and they have even been accepted by the assessing authority, although, admittedly, there is some defect about date. Apparently, therefore, this decision reported in K.M. Chopra & Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46., cannot be pressed into service to hold that, if the defect is discovered at a later stage, no opportunity could be granted to the assessee for rectifying the defect.

In Commissioner of Sales Tax v. Dayaram Balchand[1973] 31 S.T.C. 249., the question referred to this Court was:

"Whether the assessing authority is required to give an opportunity to the dealer to explain errors or omissions noticed by the assessing authority in declarations in form C prescribed under the Central Sales Tax Act, 1956, before rejecting them as invalid?"

and a Division Bench of this Court ruled:

"In this case, it is pointed out that the only mistake was that the registration number of the purchasing dealer was not mentioned. It was also pointed out that the registration certificate number of the same dealer was mentioned in the certificates produced in the previous year. The assessee was prepared to satisfy the department that the purchasing dealer was a registered dealer, and it was a mere clerical mistake not to mention the number of his registration certificate. We see no reason why in such a case the taxing authorities should not permit either amendment of the C form, if satisfied of the facts, or the filing of a duplicate C form properly filled. "

In the decision reported in K.S. Nazarali Mills v. Commissioner of Sales Tax, M.P.[1973] 31 S.T.C. 243., the question was about production of A forms at a late stage and still a Division Bench of this Court held:

"In our opinion, the revising authority had power to admit and consider additional material, if it found it necessary so to do for effectively exercising its revisional jurisdiction and the Commissioner was not right in refusing to accept or consider the certificates in form A, which had been produced earlier before the assessing authority and rejected by it on account of delay, on the view that it was not possible or appropriate to permit production of additional evidence at the stage of revision."

In this case, the decision in K.M. Chopra & Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46., was also considered.

In view of these decisions, it could not be disputed that, in the present case, the view taken by the learned Member of the Board of Revenue appears to be correct, especially because the C form was accepted by the assessing authority. If the assessing authority had refused to accept it, then there was no difficulty for the assessee to rectify the defect as he could file the forms during the proceedings of assessment; and, admittedly, the assessing authority did not notice the defect and the form was accepted. But, it was only the Commissioner of Sales Tax who detected the mistake and suo motu instituted proceedings in revision. In Commissioner of Sales Tax, M.P. v. Bombay Textile Stores, Ujjain[1978] 41 S.T.C. 484; 1977 Vikraya Kar Nirnaya (10) 59., the situation was a little different. The question was about additional evidence in the proceedings after the assessment was reopened and it appears that, in that decision, the question of production of additional evidence was considered and, in view of the decisions reported in Deputy Commissioner (Commercial Taxes) v. Parekutti Hajee Sons[1962] 13 S.T.C. 680. and K.M. Chopra & Co. v. Additional Commissioner of Sales Tax, M.P.[1967] 19 S.T.C. 46., their Lordships did not accept the view of the Board that opportunity for additional evidence should have been granted. But the question before us is directly covered by the decision reported in Commissioner of Sales Tax v. Dayaram Balchand[1973] 31 S.T.C. 249. and, as it is clear that the C form originally was accepted by the assessing authority in this case, in our opinion, the case reported in Commissioner of Sales Tax, M.P. v. Bombay Textile Stores, Ujjain[1978] 41 S.T.C. 484; 1977 Vikraya Kar Nirnaya (10) 59., does not come in the way so far as the facts of the present case are concerned. In fact, it appears that, in view of this situation, now the rule has been framed, which is sub-rule (4) of rule 33 of the Madhya Pradesh General Sales Tax Rules, 1959, which has been made effective from 1st November, 1968. It reads:

"Any declaration or certificate required to be filed under the Act or the Rules or any notification issued thereunder, shall not be rejected as invalid on the ground that it lacks in certain material particulars or is defective until the dealer is given a reasonable opportunity to supply the omissions or to remove the defects occurring in such declaration or certificate or to furnish a fresh declaration or certificate."

In this view of the matter, therefore, in our opinion, the view taken by the Board appears to be right and, consequently, we answer the question in the affirmative. In the circumstances of the case, the parties are directed to bear their own costs.

Reference answered in the affirmative.