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TMI Blog1954 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the assessee had not registered himself during those quarters nor did he submit any return in respect thereof. On receiving notices of demand in respect of these three quarters, the assessee made an application on 26th November, 1949, to the Sales Tax Officer stating that he started business in betel-leaves only on the 17th of April, 1948, and that he was not accordingly liable under the Act to pay tax for those three quarters. Not having received any orders in respect of his review application to the Sales Tax Officer, he applied also to the Collector of Sales Tax by way of review. The Collector held that the review was not competent; but took up the matter in revision, suo motu, under section 23(3) read with rule 54 of the rules under the Act, but on consideration thereof rejected the application. Thereupon, the assessee went up in revision to the Revenue Commissioner, who also rejected the same. The assessee consequently made an application to the Revenue Commissioner under section 24(1) requiring him to refer certain questions of law to the High Court for its decision. The Revenue Commissioner rejected that application also. Hence the assessee has come up to this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue Commissioner however in confirming the assessment made by the Sales Tax Officer and in rejecting the applications by the assessee and in the application which he made to the authorities concerned for his registration as a dealer in the month of January, 1949, had stated categorically that. he had a gross turnover of Rs. 30,000 for the year ending 31st March, 1949. The assessee's objection to the use of this material against him by the Collector and the Revenue Commissioner is two-fold: firstly, that that was not the material on which the Sales Tax Officer proceeded to assess him for the quarters in question, because a reference to the assessment order shows that he was assessed "as directed by the Government Order" which has not been reproduced, either in the assessment order or in any of the orders of the Collector or Revenue Commissioner in these proceedings. Secondly, the application for regis- tration relied upon could not be used as evidence against him, without his being given an opportunity to show that the statements in that application were inaccurate and that in fact the truth was that he started his business only in April, 1948. It is not disputed before us by lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the present, as not arising before us, the questions that substantially arise are (i) whether the assessments in question are legal and valid, in the absence of an oppor- tunity having been given under sub-section (5) of section 12, and (ii) whether in view of the absence of that opportunity, and in view of the fact that the order of assessment by the Sales Tax Officer relies merely on the Government order the statements made in the assessee's appli- cation for registration in January, 1949, or the fact of that application itself, could be used as legal evidence against him, in proof of the liabi- lity for assessment for the three quarters in question. To satisfy ourselves that the questions so raised are not of a merely unsubstantial and academic nature we asked the assessee's counsel, whether apart from any substantive evidence that he might have given if he had opportunity, he has any definite case as regards the state- ments in the application for assessment or the fact of such application in January, 1949, having been made and if so to put it in writing. His case as regards the statements in the application has accordingly been set out in the affidavit which we have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may be also mentioned that the same question has been raised in the grounds of revision to the Sales Tax Collector, being ground No. 1, wherein it has been stated that the learned Sales Tax Officer should have given sufficient opportunity to the petitioner to prove his non-liability to tax in the particular circumstances. It is contended that this question though raised in the grounds, not having been dealt with in the order of the Revenue Commissioner, cannot be said to arise out of his order. Learned counsel on both sides have drawn our attention to the phrase "arising out of the order" which appears in the analogous section 66(1) of the Indian Income-tax Act, from which this phrase appears to have been borrowed. Undoubtedly, there is good deal of conflict in the decided cases as to the proper connotation of this phrase. To illustrate that conflict, it is sufficient to refer to New Piece-goods Bazar Co., Ltd., Bombay v. Commissioner of Income-tax, Bombay(1), Madanlal Dharnidharka v. Commissioner of Income-tax(2), Abboy Chetty v. Commissioner of Income- tax(3), Commissioner of Excess Profits Tax, West Bengal v. Jeewanlal Ltd., Calcutta(4) and Chainrup Sampatram v. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he may consider whether he ought not to refer the legality of such a waiver also for the decision of this Court. MOHAPATRA, J.-I agree. In pursuance of the above order, the Member, Board of Revenue, stated a case to the High Court on three questions of law. M.S. Mohanty and S.K. Ray, for the assessee. B. Mohapatra, for the Collector of Sales Tax. JUDGMENT MOHAPATRA, J.- This is a reference made by the Member, Board of Revenue, Orissa, under the provisions of section 24 of the Orissa Sales Tax Act, 1947. This Court by the order dated 25th July, 1952*, had called upon the Member, Board of Revenue, to state a case on two questions of law framed by the Court running as follows: * Printed at p. 341 supra. (i) Whether the assessments in question are legal and valid in the absence of an opportunity having been given under sub-section (5) of section 12; and (ii) Whether in view of the absence of that opportunity and in view of the fact that the order of assessment by the Sales Tax Officer lies merely on the Government order, the statements made on the assessee's application for registration in January, 1949, or the fact of that application itself, could be used as legal evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinent before proceeding further to quote sub- sections (4) and (5) of section 12 of the Act: "(4) If a registered dealer does not furnish returns in respect of any period by the prescribed date, the Collector shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judg- ment, the amount of tax, if any, due from the dealer. (5) If upon information which has come into his possession, the Collector is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless wilfully failed to apply for registration, the Collector shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and the Collector may direct that the dealer shall pay, by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount." It appears, on a reading of the provisions of the sections quoted above and also examining the scheme of the Act, that the provisions of sub-section (5) of section 12 are mandatory and the non-observati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax for the quarter or quarters will be payable by him. (b) If the tax for any or all of the three quarters has not been paid, the tax will be computed, as suggested in the petition on the basis of sales from the 1st January to the 31st March, 1949. (iv) Arrears of tax as above should be paid not later than the 15th June, 1949. (v) Dealers who have paid the tax for any of the quarters from the 1st October, 1947, to the 31st March, 1948, will, on application, get refund of the amount." Mr. Mohapatra relies upon two particular clauses embodied in this paragraph 2 of the letter, the clauses being that the dealers shall have to pay the tax from the 1st April, 1948, and further that if the tax for any or all of the three quarters has not been paid, the tax will be computed, as suggested in the letter on the basis of sales from the 1st January, to the 31st March, 1949. Mr. Mohapatra contends that the present assessments for the aforesaid quarters are based upon the clauses contained in the order dated 30th April, 1949, which was based in consequence of the negotiation between the Betel-leaves Dealers' Association and the Government. There is, as found by the Member, Board of Revenue, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve as the legal evidence for assessment for the quarters in question. 7.. Mr. Mohapatra has relied upon two decisions, Harmukh Rai v. State(1) and Chatturam v. Commissioner of Income-tax, Bihar(2), to build up his argument that the Sales Tax Authorities derive their jurisdiction to proceed against the assessee in the matter of assessment not on the basis of section 12 but on the basis of other sections of the Act. The provisions regarding notice or opportunity to the assessee are provi- sions made to facilitate the machinery for the realisation of the taxes and do not go to the very root of the jurisdiction of the authorities. Their Lordships of the Patna High Court (Ramaswami and Sarjoo Prosad, JJ.) have drawn a distinction between the two aspects of such cases that even though in cases where there has been no issue of notice (1) [1952] 3 S.T.C. 153; A.I.R. 1952 Pat. 278. (2) [1947] 15 I.T.R. 302; A.I.R. 1947 F.C. 32. or no valid service of notice, the assessment cannot be challenged as without jurisdiction, but it can be set aside as being invalid and illegal if really there has been prejudice to the assessee. The Patna case is to a great extent similar to our present case an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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