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TMI Blog1998 (11) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1 to the writ petition as also the demand notice dated September 9, 1980 as contained in annexure 2 issued in pursuance of annexure-1 for payment of Rs. 2,10,19,242.25 (rupees two crores ten lakhs nineteen thousand two hundred forty-two and paise twenty-five) only. 2.. The writ petition (C.W.J.C. No. 727 of 1980-R) relates to Bihar sales tax and C.W.J.C. No. 728 of 1980-R relates to Central sales tax-both for the assessment year 1974-75. This judgment will govern the disposal of both C.W.J.C. Nos. 727 of 1980(R) and 728 of 1980(R). 3.. Before adverting to the point in issue, we may state at the very outset that by order dated November 20, 1980 on the very first day when the case was placed for admission and stay of the recovery proceeding of a huge amount, instead of passing appropriate order on admission, learned court at Ranchi Bench of this Court, granted stay of recovery of huge amount and directed issuance of notice to the respondents by way of serving three copies of the petition on the learned State counsel. However, it appears that the learned court realising that without exhausting the statutory alternative remedy by way of appeal and depositing 20 per cent of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ jurisdiction under article 226 of the Constitution without exhausting the alternative statutory remedy. Besides the jurisdictional error, a number of other grounds have also been raised by the petitioner which we will deal with later after disposing of the preliminary objection raised by the learned counsel for the respondent-State of Bihar. 8.. The concept of jurisdiction is to be understood in its right perspective. In common knowledge jurisdiction means authority to decide and authority means statutory authority, which is vested/conferred by the statutory powers under the relevant statute, therefore, whenever an order is assailed attacking jurisdictional error, the root cause of jurisdiction is to be enquired into, as to whether the authority who passes the order, is conferred with the statutory powers so as to seize with the matter and decide it. If by examining the same, it is found that the authority was conferred with the statutory powers, the authority indeed gets jurisdiction to decide it and merely if the authority comes to a wrong conclusionin law or in fact, it does not lose its jurisdiction by passing the order making it coram non judice . Thus only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory powers to pass the impugned order. 10.. With the above touchstone if the instant case is examined what we find is that the authority who has passed the impugned order acting and discharging its statutory function under the provisions of section 18(1) of the Act is vested with the jurisdiction under the Act and thus it cannot be said that the order impugned is without jurisdiction. 11.. Thus the word jurisdiction is an expression which is used in variety of senses and takes its colour from its context. Elaborately this point has been dealt with by Lord Denning in his book Discipline of Law and also by De Smith in Judicial Review of Administration -4th edition. 12.. Therefore, the submission made by learned counsel that the order is without jurisdiction is of no avail. However, it does not cut the ice. Having kept the matter pending for 18 years the petitioner cannot be asked to seek redressal in accordance with the statutory provisions of the Act invoking appeal or revisional jurisdiction under the Act. 13.. Learned counsel for the respondent submitted that since the matter is kept open vide order dated November 20, 1980 therefore, still the petitioner may be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, on December 28, 1977 a notice was issued by respondent No. 4, Deputy Commissioner, Commercial Taxes, Jamshedpur, to the petitioner for verification of the petitioner s books of account for the period, inter alia, 1974-75 under section 37(1) of the Act, read with section 54 of the Bihar Sales Tax Ordinance, 1977, and on examination of the same he submitted his report charging the company, inter alia, on following counts: (i) The returns were not in the prescribed form and all informations were not given in the prescribed manner because the quarterly statement filed did not contain the details of sales outside State in terms of the definition of turnover given in section 2(k) of the Bihar Sales Tax Act. The sales through Jamshedpur stockyard (local sales) were not accounted for correctly and the periods were abruptly changed without assigning reasons in the annual returns. Similarly auction sales of miscellaneous stores, etc., were not shown quarterly and a single annual return was filed at the end of the period. The figures of different accounts of sales were changed several times without giving any explanation therefor. (ii) The gross turnover shown in the publish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n December 31, 1979, January 2, 1980, January 4, 1980, January 5, 1980 and January 7, 1980 and assessee s Bombay stockyard was also examined including all the books of account and entries made therein. The stockyards accounts of the petitioner at Bangalore, Madras, Calcutta and Delhi were also examined on different dates. The production accounts of the company were examined in its factory office at Jamshedpur on different dates. The statements of Shri R.S. Sethi, Metallurgical Adviser, TISCO and of Shri A.K. Ghosh, Manager, Ring Rolling Mill, were recorded on the point of production. Similarly, statements of Sri R.K. Balasara, Senior Marketing Officer, Shri R.K. Venkatachelam, Chief of Production Control on the point of procedure of sales and despatches were recorded. Shri R.S. Kashyap, Controller of Accounts presented the company s case on the point of production and all books of account which were made available were also examined. On these examinations there was non-accountal of 1,85,764 number of alloy steel ball-bearing rings and the trading position was found as below: Opening stock on 1-4-1974 8,084 nos. Turnover 6,20,639 nos. Production ... 6,11,856 nos. Closing stock 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes to 3,52,714 m.t. and on deducting 2,57,446 m.t. a net gap comes to 95,268 m.t. representing non-accounted production and its value would be added back of the gross turnover of the assessee as shown in the books of accounts. 21.. Similarly unaccountal ingot production as per record comes to 95,268 m.t. This is not all. Even semi-finished and scrap combined accounts relating to the analysis of production and consumption of semi-finished and scrap was also not accounted for correctly and ultimately the chart submitted by the company showed a discrepancy of 65,047 m.t. in the consumption of semi-finished at the finishing mill. Non-accountal of 1,25,000 m.t. of hot metal in blast furnace was also found. 22.. Thus 17,217 number of unaccounted ball-bearing rings, 95,000 m.t. unaccounted production as per steel melting shop as discussed above, 20,218 m.t. as gap in primary mills production and finishing mill production were found. Accordingly, the total selling value of unaccounted production is estimated for unaccounted rings at Rs. 1,54,953.00 (rupees one lakh fifty-four thousand nine hundred and fifty-three), for unaccounted steel at 3,54,577 m.t. Out of total unaccounted stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cape assessment and Shri B.D. Roy had no jurisdiction to proceed with the said escape assessment proceeding, escape assessment is made without any basis, no finding has been recorded as to whether the suppressed production was sold, finding with regard to ball-bearing ring is vitiated and the finding with regard to levy of Central sales tax over the sales made to Steel Priority Committee (S.P.C.) allottees has been rendered only on account of change of opinion, which is not permissible. 25.. On behalf of the respondent-State of Bihar, while supporting the impugned order, it is contended by Shri V.N. Sinha that the escape assessment is also an assessment and reassessment includes assessment and therefore, procedure prescribed for assessment is to be followed and if the same procedure is followed, the proceeding cannot be challenged on the ground that the reassessment or escape assessment is not permissible. 26.. Sri K.D. Chatterji, learned counsel appearing for the petitioner, has laid much emphasis that mere change of opinion on the same facts cannot constitute reassessment. In support of his contention, while placing strong reliance on a decision in the case of Oudh Sugar Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escape assessment authority, which are based on relevant materials of the petitioner-company itself, suppression of huge quantity of production was found and on that basis sale was inferred. Therefore, the decision in the case of Oudh Sugar Mills [1978] ELT (J.172) is of no avail to the petitioner considering the facts of the present case. 28.. On the other hand, law laid down by the apex Court in Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77, applies in full force to the facts of the present case wherein their Lordships have ruled that it was open to the officer to infer that the assessee had large scale dealings outside the account and, in such a situation, it would not be possible for the officer to find out precisely the turnover suppressed and he could only make an estimate of the suppressed turnover on the basis of materials before him. So long as the estimate made by him was not arbitrary and had a reasonable nexus with the facts discovered, it could not be questioned. It was wrong to hold that the officer must have materials before him to prove the exact turnover suppressed. 29.. In the instant case also the escape assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be invalid and, therefore, it cannot also be said that it is a case of mere change of opinion on the same facts; but on the other hand, it is a case of getting information that sale had escaped assessment. In Commissioner of Income-tax, Madras v. Rathinasabapathy Mudaliar [1964] 51 ITR 204 (Mad.) and in Phool Chand Bajrang Lal v. Income-tax Officer [1993] 203 ITR 456 (SC), elaborately this point has been dealt with and has been taken care of by the apex Court, which applies in full force to the facts of the present case. 32.. It is also submitted that sales tax and Central sales tax are only leviable where sale of goods has taken place. Learned counsel for the petitioner, Sri K.D. Chatterji, attacking on the impugned reassessment order has also contended that the provisions of the Central Sales Tax Act have no application inasmuch as it has not been proved that transaction of sale had taken place from one State to another attracting the provisions of the Central Sales Tax Act and until and unless that is proved the provisions of the Central Sales Tax Act cannot be attracted. This point as argued by Mr. Chatterji, has been suitably dealt with in Oil India Ltd. v. Superintendent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, and in the case of Co-operative Sugars (Chittur) Ltd. v. State of Tamil Nadu [1993] 90 STC 1 (SC)]. 33.. Therefore, the basis of findings as reached by the reassessment authority in respect of inter-State sale cannot be said to be unjustified or illegal as argued by learned counsel for the petitioner. In our opinion, rightly in reassessment proceeding Central sales tax has been charged and imposed and this is our finding in respect of issues involved in C.W.J.C. No. 728 of 1980(R). 34.. This legal position is not disputed that the escape assessment is also an assessment and reassessment includes assessment and, therefore, the procedure prescribed for assessment is to be followed and if the same procedure is followed the same cannot be challenged on the ground that reassessment or escape assessment is not permissible. In Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77, the apex Court has held that: What is true of the assessment must also be true of reassessment because reassessment is nothing but a fresh assessment. When reassessment is made the earlier assessment is completely reopened and in its place fresh assessment is made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es suppression of production of 17,217 number of unaccounted ball-bearing rings, 95,000 m.t. unaccounted production as per steel melting shop and 20,218 m.t. as gap in primary mills production and finishing mill production. The total selling value is estimated for unaccounted rings at Rs. 1,54,953 (rupees one lakh fiftyfour thousand nine hundred and fifty-three). Out of the total unaccounted steel of 3,54,577 m.t. sale of 2,54,577 m.t. is estimated to be that of finished steel and remaining 1,00,000 m.t. is estimated to be that of semi-finished material and scraps, the value whereof is determined of semis and scraps at Rs. 1,415 per m.t. for 1,00,000 m.t. which comes to Rs. 14,15,00,000 (rupees fourteen crores and fifteen lakhs) and that of finished steel at Rs. 2,006 per m.t. for 2,54,577 m.t. which comes to Rs. 51,06,82,462 (rupees fifty-one crores six lakhs eighty-two thousand four hundred and sixty-two) and thus the total value comes to Rs. 65,23,37,415 (rupees sixty-five crores twenty-three lakhs thirty-seven thousand four hundred and fifteen). Similar discrepancy was also found with respect to sale through stockyard. 37.. Thus, in this regard law is well-settled that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icult to hold that the law envisages the assessee to predicate the final assessment and expect him to pay the tax to avoid interest and that would be asking him to do the near impossible. In Smt. Vrinda Gujarati v. Bareilly Development Authority AIR 1997 All 107 wherein one of us (B.M. Lal, J., as he then was) is a member of the Bench, it is held in paragraphs 27, 28, 29, 30 and 31 that if by court s order recovery of the amount is stayed, till that order operates no interest can be charged. 40.. However, strong reliance has been placed by the learned State counsel Shri V.N. Sinha, on a decision in the case of Agricultural and Processed Food Products v. Oswal Agro Furane AIR 1996 SC 1947 (para 51) and also in a case reported in 1996 (2) All PLR 1207 (Indian Explosives Ltd. v. State of Bihar) and submitted that interest should be charged. These cases no doubt envisage a proposition of interest to be charged at the rate of 18 per cent per annum under the presumption that the imposed tax has been utilised by the assessee. Thus, no doubt, we can impose interest at the rate of 18 per cent per annum but not for the period during which order of stay is operative, i.e., from November 20, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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