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TMI Blog1989 (6) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... dras and a branch office at Calcutta-formerly at 16, Topsia Second Lane and now at 23, Topsia Second Lane. The applicant used to procure goat skin through the branch office at Calcutta, process the same as semi-finished goat skin and transfer the same as stockin-trade to the main office at Madras. The applicant was registered as a dealer both under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter called "the BFST Act") as well as under the Central Sales Tax Act, 1956, sometime in July, 1975. 4.. During the relevant period the manufacturing business of the applicant was running at a heavy loss. The branch office at Calcutta was suspended from the last part of the year 1983. The employees did not attend office regularly and there was no co-operation from them due to default in the matter of payment of salaries and wages to them. The registration granted to the applicant was cancelled in July, 1985. In 1984, the applicant declared itself a sick unit and applied for nursing programme from the Madras branch of the Syndicate Bank. 5.. During the period 1978-79, the applicant submitted its quarterly returns as nil, as there was no business transaction of procuring goat skin in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice demanding Rs. 5,25,951.14. The applicant was not aware of the date of hearing of the appeal, no notice thereof having been served upon him. He could not, therefore, be present at the hearing of the appeal. However, on the applicant depositing Rs. 52,600 to show his bona fides, the Certificate Officer stayed the proceedings. 10.. In all these cases the substantial prayer of the applicant is for reopening the assessments so that the applicant could properly represent his case before the Commercial Tax Officer. 11.. All the cases are opposed both on questions of law and fact. It is further alleged that the applications are not maintainable being barred by limitation and also on the ground that remedial measures available to the applicant were not availed of before approaching this Tribunal. 12.. In regard to RN-2 of 1989, it is particularly alleged that the disputed assessment proceedings were started on July 1, 1981. About nine adjournments were granted to the applicant for production of their books of accounts and other materials. The applicant having failed to comply, finally June 21, 1983, was fixed for hearing with due intimation to the applicant at his registered plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present Act. Even though, we cannot throw out the applications summarily on the ground of limitation, we are certainly entitled to take into account the fact of unconscionable delay when considering the bona fides of the claim. 16.. Although elaborate statements were made in the applications challenging the vires of section 4(6) of the BFST Act, 1941, and the competence of the State Legislature to enact a provision like section 4(6), these points were not eventually pressed at the time of hearing. 17.. Learned Advocates for the applicant, however, argued that in the facts of the case, purchase tax could not be levied in view of the fact that admittedly the applicant was found not liable for payment of any other tax. This plea necessarily makes it incumbent to closely examine the provisions of section 4(6) of the BFST Act. It reads as follows: "(6) Every dealer, who has become liable to pay tax under subsection (1) or sub-section (2) or sub-section (4) of this section or sub-section (3) of section 8 and is registered under this Act, shall, in addition to the tax referred to therein, be also liable to pay tax under this Act on all his purchases from (i) a dealer who is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the dealer dealt in declared goods exclusively and all sales were effected in the course of inter-State trade, no tax under section 6B was payable. This does not, however, mean that there is no liability at all. All that the order indicates is that he was entitled to exemption for the total amount. Therefore, it is evident that the liability was there under the law even though in the peculiar circumstances no tax was demanded by the Commercial Tax Officer. 20.. Admittedly, the purchase tax was levied in terms of section 4(6)(i). It envisages purchases from a dealer, who is not registered, of goods intended for direct use in the manufacture in West Bengal of goods for sale. It was contended on behalf of the applicant that the purchase must be for the purpose of manufacture and sale both in West Bengal. It was argued on behalf of the applicant that what the applicant did was to procure raw goat skin, process them and turn them into semi-finished goods before transfer to their main office at Madras. Consequently, it is argued that mere processing of the raw skin does not amount to manufacture and that there was no sale thereof in West Bengal. The language of the section a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pig bristles. The basis for the decision was that what the assessee did, did not convert them into something essentially or commercially different. In the present case before us, the applicant's own admission is that he procured raw goat skin and that what he transported to Madras was not the same stuff. Before transportation he used chemicals and did some processing for converting the raw skin into semi-finished product. Therefore, what the assessee purchased and what it transported were essentially and commercially different commodities. 22.. The expression "manufacture" has been defined in section 2(dd) of the BFST Act, 1941. This amendment came into force with effect from February 1, 1979. The definition reads as follows: "'Manufacture', with all its grammatical variations and cognate expressions, means producing, making, extracting any goods; but does not include such manufactures or manufacturing processes as may be prescribed." Up-till now, no prescription appears to have been made under this clause. The definition came into force with effect from February 1, 1979, which covers at least one of the cases in full and another in part. 23.. In the case of Hajee Abdul Shu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the assessment made for the period ending July 31, 1979, was bad in so far the assessment proceedings were taken without service of proper notices on the applicant. The respondents in their opposition categorically stated that due notices were served on the applicant at their registered address, namely, 16, Topsia Second Lane, Calcutta. They also filed copies of the postal acknowledgements indicating receipt of the notices by the applicant. Faced with this situation, the applicant in his affidavit-in-reply, could not deny the fact of service of notice and Mr. Roy Chaudhury fairly conceded that this was a point which he could not legitimately urge. But he contended that in any case, the assessment was arbitrary and capricious and could not, therefore, be sustained. 27.. The records of the assessment proceedings were produced before us at the time of hearing. It shows that even though there was no appearance on behalf of the applicant at the initial stage, one Shri S.C. Bera, Advocate, appeared on behalf of the applicant before the Commercial Tax Officer and on his prayer successive adjournments were granted. Finally, the case was fixed on June 21, 1983, for hearing and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod ending July 31, 1979. The purchase price in this case was taken at Rs. 70 lakhs which, in our view, was not unreasonable in view of the materials available to the assessing authority. 30.. Case No. RN-20 of 1989, however, stands on a different footing. The records of the assessment proceedings of this case show that on September 25, 1981, one Zahirul Islam, Manager of the applicant, submitted a statement of stock transfer to Madras and prayed for an adjournment. On his prayer the matter was adjourned to November 12, 1981. On that date there was no appearance on behalf of the dealer. The dealing assistant was directed to check-up and report if dealer's petition, if any, for time was filed. The matter was again directed to be put up on November 21, 1981. The assessing officer on that date recorded an order to the effect that there was no petition from the dealer for adjournment. December 19, 1981 was fixed for passing orders. The assessment was completed ex parte on that date. Mr. A.K. Chakraborty, appearing on behalf of the applicant, contended that since November 12, 1981 was the date fixed and since the actual order of assessment was made on December 19, 1981, the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an appeal was preferred against the order of assessment along with an application for stay of realisation, but that appeal was summarily rejected on grounds of limitation without service of proper notice upon the applicant. It appears from the proceedings of the appellate authority that notice to show cause as to why the appeal shall not be rejected on ground of limitation, was initially issued by registered post. This registered letter was returned undelivered with the postal endorsement "left". Thereafter, recourse was taken to service by affixation obviously under rule 84 of the Bengal Sales Tax Rules, 1941. Rule 84 in its material part reads as follows: "Any notice which is issued under the provisions of the Act or these Rules or which is required to be issued for carrying out the purposes of the Act, may be served on a dealer by any of the following methods, namely: (i) personally upon the addressee, if present; (ii) by messenger; (iii) by registered post." The proviso to the rule lays down that if the authority issuing the notice is satisfied that an attempt has been made to serve a notice by any of the above-mentioned methods and the dealer is avoiding service or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant was 16, Topsia Second Lane. The appeal was presented from that address. There could be no question of trying to effect service at some other address in the State of Madras. At any rate, the order of the appeal case does not indicate sufficient compliance with rule 84. Consequently, we are unable to treat this as proper service of the notice. In support of the view we have taken, we may refer to the decision in the case of Textile Machinery Corporation Ltd. v. AdditionalMember, Board of Revenue reported in [1981] 48 STC 426 (Cal). Consequently, it follows that the appeal was disposed of without proper service of notice. 35.. In regard to RN-105 of 1989, there is a similar defect in the matter of service of the demand in form VII. In this case, after completion of assessment on July 27, 1984, there was an office report that form VII was returned with the postal remark "left". Thereupon, the officer concerned passed the following order: "Seen note in the margin. Serve the notice through P.S. re-fixing the date of payment by October 31, 1984." The report of the process-server is also on the record and it is exactly in the same terms as in the appeal case. There ..... X X X X Extracts X X X X X X X X Extracts X X X X
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