9911796707
TMI Blog1977 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ognised wholesalership of firms of repute, amongst others, like the Union Carbide India Ltd., Philips India Ltd., Crompton and Greaves Ltd., and Belrex India Ltd. It is also an undisputed fact that the said petitioners are registered under the said Act and the Central Sales Tax Act, 1956, having registration Nos. BH/3469A and 697A/BH/Central respectively under the Acts as aforesaid. It has been contended by the said petitioners that in terms of the conditions of such registration and in accordance with the requirements of statute, they have duly filed quarterly returns along with requisite treasury or Reserve Bank challans up to June, 1972, and they are neither in default on that account or on account of any arrear taxes. In fact, it has been stated that there is no return or challan outstanding against them up to the said period of June, 1972. The necessary particulars of the assessments have been shown in paragraph 7 of the petition. The accounting year of the petitioners is 4 (four) quarters ending on Akshaya Tritiya of Bengali Calendar and their assessments have been completed up to the 4 quarters ending Akshaya Tritiya 1375 B. S. They have further stated that until the middle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved and, as such irregularities were mentioned as the ground for refusing declaration forms, the said petitioners thereafter on 12th August, 1972, applied for the supply of declaration forms. But the issue of the said declaration forms was again withheld. The said petitioners have stated that on 10th November, 1971, they were supplied with declaration forms for the last time and although they required such forms essentially for the purchases made by them duly, the respondents without any authority, arbitrarily and without jurisdiction or in capricious use of the same, refused them such right to get the declaration forms. It has been stated that since the purchase of taxable goods of the said petitioners under the said Act is approximately for Rs. 2 lacs per month, so at all material times they required and still they require the declaration forms as asked for and in fact they have suffered and are suffering much for such non-supply of the said forms. It has also been stated by them that finding no other way, they made another application on 12th August, 1972, for supply of the required number of declaration forms and although the said application was duly received by the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was contended that the Commissioner of Commercial Taxes had and has every power or authority to take such action as has been taken in the instant case, on the basis of steps taken by the Bureau of Investigation or the report as mentioned. It has been stated in the affidavit dated 27th September, 1972, by respondents Nos. 2 and 5, after quoting the orders passed in connection with the applications for declaration forms, that excepting an application for such forms which was rejected by an order dated 3rd February, 1972, there was no application by the said petitioners before the deponent to the said affidavit, viz., respondent No. 5, the Commercial Tax Officer concerned. The action of respondent No. 4, viz., the Assistant Commissioner of Commercial Taxes concerned, in the matter of asking for the security, in view of the evasion of tax as alleged to have been committed by the said petitioners, was also sought to be justified as due and proper. The withholding of declaration forms, on the grounds as mentioned hereinbefore was also sought to be justified and a chart in annexure M to the said affidavit has been produced giving the particulars of the increase in the proportion of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egation at all for any non-payment or irregular payment of tax against the said petitioners, the more so when taxes have been duly and admittedly paid and the said petitioners are not in default or in arrears in such payment and, furthermore so, when such statements of the said petitioners have not at all been denied by the respondents in any of their returns to the rule. In view of the above, it was further submitted that the impugned notice in annexure B was bad and unauthorised, apart from the fact that the same disclosed no satisfaction of the Commissioner and, as such, the said order was also void, being made in arbitrary and capricious use of power, and when admittedly the provisions of the said Act, viz., section 7(4a) do not empower him to act in such an arbitrary manner. It may be mentioned that in this case the notice was issued by the Assistant Commissioner of Commercial Taxes and there is no dispute that he was invested with the powers of the Commissioner under the said Act and the Rules framed thereunder and in the matter of making the impugned order. In support of his contentions, Mr. Chakravartty referred to the determination of this court in the case of Durga Prosad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in that case was ordered to be wound up on 18th July, 1950, but the notice of demand for the tax assessed under section 11(1) of the said Act, was served on 17th May, 1950, directing payment on or before 30th June, 1950. It has been observed by Chakravartti, C.J., and Lahiri, J., agreeing with him, that: "The Bengal Finance (Sales Tax) Act, 1941, does not intend that the tax payable under the Act would become due and payable at the time the return became due to be filed. The amount paid under section 10(3) according to the return cannot be tax payable under the Act in the true sense of the term. The tax is payable on the taxable turnover and the taxable turnover is to be determined by making the various deductions specified in section 5. The assessee can make the deductions as best as he can, on his own understanding of the provisions of section 5 and on his own view of the facts, but before the deductions are checked and finally settled as allowable or disallowable and the taxable turnover is thereby determined, no tax due and payable under the Act can come into existence. The only two types of tax debts under the Sales Tax Act that may possibly come to be considered und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. (c) Subject to such rules as may be prescribed and for reasons to be recorded in writing, the Tribunal may, upon application, revise any appellate or revisional order passed in the matter of assessment. (4) Subject to such rules as may be prescribed, any assessment made or order passed under this Act or the Rules made thereunder by any person appointed under section 3 or section 3A may be reviewed by the person passing it upon application or of his own motion (and subject as aforesaid, the Tribunal may, in like manner and for reasons to be recorded, review any order passed by it, either on its own motion or on application)", the present provisions of section 58 of the 42nd amendment of the Constitution of India, which is to the following effect: "58. Special provisions as to pending petitions under article 226.(1) Notwithstanding anything contained in the Constitution, every petition made under article 226 of the Constitution before the appointed day and pending before any High Court immediately before that day (such petition being referred to in this section as a pending petition) and any interim order (whether by way of injunction or stay or in any other manner) made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y other manner) which was made before the appointed day, on, or in any proceedings relating to, a pending petition [not being a pending petition which has abated under sub-section (2)] and which is in force on that day, shall, if such order has the effect of delaying any inquiry into a matter of public importance or any investigation or inquiry into an offence punishable with imprisonment or any action for the execution of any work or project of public utility, or the acquisition of any property for such execution, by the Government or any corporation owned or controlled by the Government stand vacated. Explanation.-In this section, 'appointed day' means the date on which section 38 comes into force", would be a bar and this court, in view of the amended provisions of article 226(3), as incorporated by the said amendment and which is to the following effect: "226................... (3) No petition for the redress of any injury referred to in subclause (b) or sub-clause (c) of clause (1) shall be entertained if any other remedy for such redress is provided for by or under any other law for the time being in force", should not interfere and the more so when such provisions ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity which might be demanded; and (iii) it did not provide for any inquiry. On such contentions it has been observed that: "(1) that the power conferred on the Commissioner by the section was not an unlimited or unrestricted power; (2) that the power to levy a tax included the power to impose reasonable safeguards in collecting it, and demanding security for the proper payment of the tax payable under the Act was neither an arbitrary nor an unreasonable restriction; (3) that the amount that could be demanded as security must depend on the nature of the business and its turnover and must have relation to the payment of the tax for which the person concerned might become liable under the Act. Moreover the order of the Commissioner under section 8A was subject to revision by the Chief Commissioner and, therefore, even in the matter of the amount of the security, the power of the Commissioner was not unlimited or unrestricted; (4) that although the section did not provide for any enquiry, the principles of natural justice would apply and the petitioners were given an opportunity to say whatever they had to say in defence; (5) that the order of the Commissioner demanding secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions, reliance was placed on the case of Ram Kanai Jamini Ranjan Pal Private Ltd. v. Member, Board of Revenue, West Bengal[1970] 26 S.T.C. 489. The assessee in that case was a dealer registered under the Bengal Finance (Sales Tax) Act, 1941. While the revision petition of the assessee was pending before the Additional Commissioner, Commercial Taxes, he received a report of investigation and examination made by the Commercial Tax Officer (Central Section) under section 14 of the Act. The Additional Commissioner forwarded a copy of this report to the assessee for preferring objections, if any, against the findings of the Investigating Officer as it might lead to further enhancement of the gross turnover at the revisional stage. In response, the assessee filed a written statement and also appeared before the Additional Commissioner, who enhanced the assessee's turnover. The assessee thereafter filed a revision petition before the Board of Revenue, which rejected it and upheld the order of the Additional Commissioner of Commercial Taxes. On those facts, a point arose whether in exercise of the power of revision under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contravention of any other provision of this Constitution or any provision of any enactment or Ordinance or any order, rule, regulation, bye-law or other instrument made thereunder; or (c) for the redress of any injury by reason of any illegality in any proceedings by or before any authority under any provision referred to in sub-clause (b) where such illegality has resulted in substantial failure of justice", and, as such, if there is any other remedy for the necessary redress of the grievances under the said Act, then the petition would not be maintainable. The provisions of section 20(3) and (4), as referred to by Mr. Dutta, would be of no avail or assistance in my view. The impugned notice, not being either an assessment or order, finally determining the rights of the said petitioner, is not revisable under those provisions and, as such, Mr. Chakravartty is right in his submissions that the present provisions of article 226(3) would not be a bar in maintaining the petition, the more so when the impugned notice or order in annexure B would not come within the category of the orders as mentioned in the several clauses of sub-section (3) and of sub-section (4) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken or proposed on that basis, would be justiciable in a proceeding like the one under consideration. The respondents have stated in their returns to the rule that 6 per cent security on Rs. 21 lacs, would be more than a lac and, as such, the security as has been asked for, was neither excessive nor harsh or unreasonable. They have also annexed a chart to support and substantiate the basis of such claim. It is true that the said petitioners have goodwill, and as a result whereof, they have dealings and business with those firms or concerns of repute as mentioned in the petition and they are neither a defaulter in payment of taxes nor in filing the returns. Even in spite of such position, subsequent information may come in the possession or knowledge of the authorities concerned that the position as disclosed either in the returns or on payment of taxes is unreal and, in that event, for the protection of the revenue, the power as in section 7(4a)(i) amongst others, is provided for and, if such power is not used or exercised in an arbitrary or unauthorised manner or the security as has been asked for is not unreasonable, this court should not ordinarily interfere. In this case, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records of this case myself, I do not find any justification for deviating from such determination. As such, I hold that from the relevant records placed before him, the Assistant Commissioner concerned could and he did form his opinion and no case has been made out for interference with such formation of opinion. Now, the other question which is left over for consideration is whether due and proper reasons, in terms of the requirements of the said Act, have been recorded. It was submitted by Mr. Chakravartty that one of the prerequisites or the condition precedent for exercise of jurisdiction in the instant case was recording of reasons for justifying the demand of security as made, and such prerequisites have not at all been followed or complied with. The way and the manner in which the satisfaction was entered and the reasons recorded, for demanding the security, has already been quoted hereinbefore from the records. In support of his contentions, Mr. Chakravartty first relied on the case of Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District-I, Calcutta[1961] 41 I.T.R. 191 (S.C.); A.I.R. 1961 S.C. 372., and then on the case of Income-tax Officer, "I" Ward, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if they so want and, as such, at this stage, no interference should be made. Considering the submissions as ' noted hereinbefore, I am of the view that the recording of reasons as made, would not be enough or sufficient to comply with the terms "reasons to be recorded in writing" as used in the section and, as such, only on that ground this application should succeed. The power to levy a tax would include the power to impose reasonable safeguards for collecting the same and, as such, security can be demanded, but such exercise of power must have rational nexus or bearing with the original proceeding and when decision has been taken to ask for security for such protection of revenue, the appropriate reasons or the justification should at least appear from the reasons as recorded. The reasons as recorded in this case cannot serve that purpose. The rule is thus made absolute only on the limited ground as aforesaid and other grounds as argued and as noted hereinbefore are overruled, so also the preliminary point as argued by Mr. Dutta. There will however be no order for costs. Let appropriate writs be issued directing the respondents and each one of them to quash and not to give e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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