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TMI Blog1985 (3) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... tors Company of Kampti as its selling agents for the State of M.P. by and under an agreement dated 3rd June, 1978. 3.. Further according to the petitioner the company's selling agents secure orders from customers in Madhya Pradesh who in turn place orders to the petitioner. In pursuance of these orders goods are despatched by the petitioner from their manufacturing centres to the respective customers f.o.r. destination. The price of the goods is remitted to the petitioner by the customers under instructions of the petitioner's said commission agents by deposit in the petitioner's bank account. The petitioner has an office at Mandsaur which does not deal with sale or purchase of goods, but looks after the monetary and business interests of the petitioner-company. Further, according to the petitioner, even during the time business was being carried on by the firm, M/s. Pyarchand Keshrimal Porwal, it had a similar office at Mandsaur which was registered as a dealer under the Act in the year 1960, but as the said office was not carrying on business of sale and purchase of bidis, and had no turnover, the registration was cancelled by order dated 31st December, 1968, as per annexure A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant material to show that the petitioner was not liable under the Act. 7.. After examining the record produced by the petitioner and after hearing the petitioner, respondent No. 3, i.e., Sales Tax Officer, Circle I, Mandsaur, on 10th November, 1982, passed a detailed order holding that the sales effected by the petitioner were inter-State sales and that the petitioner's office at Mandsaur does not carry on any transaction of sale or purchase and that the petitioner is not liable as a dealer to pay any tax under the Act (annexure E). 8.. However, respondent No. 1, Sales Tax Officer, Flying Squad, Mandsaur, by a notice dated 21st January, 1983, called upon the petitioner to appear before him on 31st January, 1983, in connection with the determination of the liability of the petitioner under the Act as per annexure F. In response to the said notice the petitioner's representative appeared before respondent No. 1 and pointed out, amongst other things, that the question about the liability of the petitioner was already decided by respondent No. 3 vide his order dated 10th November, 1982 (annexure E). However, respondent No. 1, Sales Tax Officer, Flying Squad, Mandsaur, transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , respondent No. 3, there is no question to reassess the petitioner on the basis of some material by respondent No. 1, namely, Sales Tax Officer, Flying Squad, Mandsaur, or respondent No. 2, Assistant Sales Tax Officer, Flying Squad, Mandsaur. (3) Officers appointed to the flying squad can exercise only those powers under section 29-D of the M.P. General Sales Tax Act regarding investigation only and they cannot determine the liability of a dealer unless such a power is delegated to them by the Commissioner, which is not the case here. (4) The impugned order annexure H is not a speaking order, gives no reasons, violates principles of natural justice as hearing was done by respondent No. 2, namely, Assistant Sales Tax Officer, Flying Squad, Mandsaur, but the order was passed by respondent No. 1, Sales Tax Officer, Flying Squad, Mandsaur. It is not necessary to deal with this point as the learned Government Advocate, in fairness, submitted that he was not in a position to controvert this fact. 11.. According to the respondents, section 4-A of the Act, proceedings for determination of liability to pay tax can always be initiated in respect of any preceding period up to five year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le I, Mandsaur, is restricted to the territorial jurisdiction of the area where the petitioner had their registered office, whereas the jurisdiction of respondents Nos. 1 and 2, namely, Sales Tax Officer, Flying Squad, Mandsaur, and Assistant Sales Tax Officer, Flying Squad, Mandsaur, by virtue of their additional powers under section 29-D(2) of the Act is enlarged over the entire subdivision including the area where the petitioner has its office. Further, according to the respondents, order determining the liability does not mean assessment of liability, as the petitioner in pursuance of the order determining the liability can point out and raise all those objections which he has raised here, including that of jurisdiction and consequently no prejudice has been caused to the petitioner as such because assessment proceedings have not yet started, as they have to be started within a period of one year from 12th April, 1983, and have to be completed within a period of two years as provided under section 18(6) and (8) of the said Act. Further, according to the respondents, section 29-D is a machinery section to implement the main provisions of the Act relating to charging section and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d within the local limits of the jurisdiction of a Sales Tax Officer as specified under sub-section (3) of section 3". 15.. Section 29-D relating to the establishment of flying squads, which is quoted below, was inserted with effect from 19th January, 1976, vide Act No. 20 of 1976: "29-D. Establishment of flying squads.-(1) The State Government may establish flying squads for investigation into any case of alleged or suspected evasion of tax and the officers of flying squads shall exercise such powers as may be delegated to them by the Commissioner. (2) Each flying squad shall exercise jurisdiction within such area as may be notified by the Commissioner." Section 30 which deals with delegation of Commissioner's powers and duties, which was substituted with effect from 1st June, 1967, vide Act No. 23 of 1967 is as follows: "30. Delegation of Commissioner's powers and duties.-Subject to the provisions of this Act and to such restrictions and conditions, as may be prescribed, the Commissioner may, by order in writing, delegate any of his powers and duties under this Act except those under sub-section (2) of section 46, to any person appointed under section 3 to assist him: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability of the petitioner. 17.. Section 18 of the Act deals with assessment of tax and section 19 deals with assessment of turnover escaping assessment and section 20 deals with exclusion of time in assessment proceedings. Sub-section (2) of section 20 provides that: "In computing the period of limitation prescribed for assessment or reassessment, as the case may be, under section 18 or section 18-A or section 19, the time during which any assessment or reassessment proceedings remained stayed under the order of any civil or other competent court, or under special or general order of the Commissioner issued under section 42-A shall be excluded." 18.. Section 4-A regarding determination of liability to pay tax under this Act, which is reproduced below, was inserted with effect from 25th August, 1973, vide amending Act No. 35 of 1973: "4-A. Determination of liability to pay tax under this Act.-(1) For the purpose of determining liability of a dealer to pay tax under this Act, the Commissioner shall institute proceeding in such manner as may be prescribed and such liability shall be determined within a period of twelve months from the date of institution of such proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y his order annexure E had already decided about the liability of the petitioner, which could not be twice-over reopened by another officer of the flying squad. 21.. The learned counsel for the petitioner, after referring to the provisions of rule 52-A of the M.P. General Sales Tax Rules, 1959, which deals with notice under sub-section (1) of section 4-A of the Act, submitted that this rule only speaks about intimation, but even then there should have been a separate order giving reasons on the basis of which the liability of the petitioner was determined by respondent No. 1. He, therefore, submitted that the Sales Tax Officer, Circle I. Mandsaur, on the basis of annexure D having passed the order annexure E, on the same material, respondent No. 1 had no jurisdiction to reopen the same. 22.. The learned counsel for the petitioner further submitted that the respondents have not placed any material on record to indicate that respondent No. 1 was also appointed as Sales Tax Officer, Circle I, Mandsaur, in addition to his duties as an officer of the flying squad, even though his jurisdiction as a member of the flying squad might be much more covering a larger area apart from Mandsa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Officer for a particular circle, determine the liability of the petitioner. Therefore, this authority helps the case of the petitioner. The same principle has been laid down in the other decisions on which the learned counsel for the petitioner has placed reliance. 24.. The learned counsel for the petitioner, after referring to the wording of section 29-D of the Act and relying on it, submitted that the flying squad is empowered only to investigate and the word "investigation" means in the context the process of collection of evidence or the gathering of material as has been observed in the decision reported in Liberty Oil Mills v. Union of India AIR 1984 SC 1271. 25.. The learned counsel for the petitioner after referring to the provisions of sections 15, 17 and 18 of the Act and also relying on rule 15 of the Rules submitted that rule 2(b) defines "appropriate Sales Tax Officer" referred to above. He, therefore, submitted that even on that basis the Assistant Sales Tax Officer, Flying Squad, namely, respondent No. 2, had no jurisdiction to pass the impugned order. 26.. On the other hand the learned counsel for the respondents submitted that at present only sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. The courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated. It is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it. Wherever the intention to impose liability is clear the courts ought to have no hesitation in giving a common sense interpretation to the machinery sections so that the charge does not fail. The principle enunciated in this decision is not disputed. But the question involved in the present case is about the jurisdiction of respondent No. 1 and respondent No. 2, who admittedly are appointed as Sales Tax Officer, Flying Squad, and Assistant Sales Tax Officer, Flying Squad, Mandsaur, and not as Sales Tax Officer, Circle I, Mandsaur, or as Assistant Sales Tax Officer, Circle I, Mandsaur. If there is no jurisdiction or there is lack of jurisdiction in a particular officer, question of operation of the machinery provision does not arise. 27.. Thus, after the hearing the learned counsel and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner, according to which the Sales Tax Officer has been delegated the powers exercised by him under section 30 of the said Act. Therefore, at the relevant time, in the present case, no Sales Tax Officer had any such jurisdiction with the result that even on that ground the impugned order annexure H cannot be sustained. The Sales Tax Officer, Flying Squad, or Assistant Sales Tax Officer, Flying Squad, in our opinion, does not have the implied authority to act as Sales Tax Officer or Assistant Sales Tax Officer in a particular circle unless be is so appointed or powers are delegated to him to that effect while working with the flying squad. To elucidate this point further a District judge who is appointed as the Registrar or Additional Registrar of the High Court, during his tenure on that post cannot exercise the powers of a District Judge even though his substantive post is that of a District Judge. 29.. In the result this petition succeeds and is allowed with no order as to costs. The impugned orders annexure H and annexure I are quashed and set aside. The amount of security deposit, on verification, be returned to the petitioner. - - TaxTMI - TMITax - CST, VAT & Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X
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