9911796707
TMI Blog1997 (7) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the Act ) calling upon the petitioner-firm to show cause as to why foregoing taxable turnover should not be reassessed at the rate of 10 per cent as falling under the residuary entry. On July 29, 1993 the petitioner-firm filed reply to the notice. Without applying its mind to the merits of the case the assessing authority reopened the entire matter and framed reassessment order the same day subjecting the taxable turnover to tax at the rate of 10 per cent instead of 8 per cent. A demand for an additional sum of Rs. 24,347 inclusive of the amount of interest under section 11B of the Act was raised against the petitioner-firm. It has been averred that the rate of tax as provided under entry 66 of the notification dated March 23, 1989 on all types of soap (whether toilet or washing) is 8 per cent. This entry 66 was replaced by entry 64 vide notification dated June 27, 1990 which classified soap into various categories. It provided that all types of soap cakes whether toilet or washing were taxable at the rate of 8 per cent, but it excluded from its operation all soaps and detergents in powder form which were to fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble because the petitioner-firm has failed to avail itself of the alternative remedy provided under the Act. 4.. In the rejoinder filed on behalf of the petitioner-firm, there is repetition as usual of the self-same averments which have been made in the writ petition. It has been alleged that the alternative remedy was of no avail in the present case inasmuch as the validity of provisions of section 12 of the Act is under challenge. 5.. We have heard the arguments and examined the material on record. The pleadings of the parties and the contentions advanced on their behalf give rise to the following points: 1.. Whether the present writ petition is maintainable. 2.. Whether section 12 of the Act is valid. 3.. Whether the reassessment made in the present case falls within the ambit and scope of section 12 of the Act. 4. Whether the categorisation of soap cakes and washing powder as two different items for the purpose of taxation is valid. Point No. 1: 6.. The learned counsel for the department, Shri S. Lodha, contends before us that the present writ petition is not maintainable in view of the failure on the part of the petitioner-firm to avail itself of the altern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed or has been assessed at too low a rate, he may at any time subject to the time-limit specified in sub-section (2), either direct the assessing authority to assess or reassess the amount of tax or himself proceed to assess or reassess the tax. Explanation.-Nothing in this section shall be deemed to prevent the assessing authority from making an assessment to the best of his judgment. (2) No notice under sub-section (1) shall be issued in respect of any business, registration fee or exemption fee for any year after the expiry of five years from the end of the relevant assessment year: Provided that nothing contained in the sub-section shall apply to any assessment or reassessment made in consequence of, or to give effect to any finding or direction contained in an order under sections 13, 14 or 15 or in an order of any competent court. Explanation.-Where the assessment proceedings relating to any dealer remain stayed under the orders of any competent court, the period during which the proceedings remain so stayed shall be excluded in computing the period of limitation for assessment or reassessment provided under this sub-section. 9.. Shri Kothari has drawn our attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the wordings of section 12. We have to put upon them a meaning which their language can ordinarily and naturally bear. We find that here the assessing authority is authorised to reopen the case provided certain conditions are satisfied. The first such condition is that the whole or any part of the business of a dealer has escaped assessment to tax or the registration fee or exemption fee has escaped levy or the assessment has been made at too low a rate in any year. The second condition is that such escapement or assessment at too low a rate must have been made for any reason whatever. The third condition is that such reopening can take place only before the expiry of a period of five years from the end of the relevant assessment year. The opening words if for any reason are wide enough in their amplitude so as to cover all probable cases where the escapement may have taken place or the assessment may have been made at too low a rate. It does not mean that the assessing authority can act in an arbitrary fashion or in a whimsical manner. It is a matter of discretion of the assessing authority which must be exercised in a judicious and reasonable manner. Anything which sounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed earlier can be ordered in consequence of information in the possession of the Assessing Officer provided he has reason to believe that the income has escaped assessment. Such reopening can be done not only in a case where escapement is by reason of the omission or failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year but also in a case where the Assessing Officer has in his possession certain information which gives him reason to believe that escapement has taken place. The procedural requirements to be followed as also the time-limit to be observed are different in both such cases but the fact remains that reopening can be done even in the case of information which the Assessing Officer has in his possession. Reference may also be made to the decisions in (i) Income-tax Officer v. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 239 (SC), (ii) Gemini Leather Stores v. Income-tax Officer, B Ward, Agra [1975] 100 ITR 1 (SC) and (iii) Purushottam Das Bangur v. Income-tax Officer [1980] 126 ITR 580 (Raj). 12.. Having considered the matter in a clear perspective, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing powder are regarded as homogeneous articles or products in commercial parlance by the dealers and customers who deal in them. As against this, Shri Lodha has contended before us that soap cakes and washing powder are two distinct items and are considered as such in commercial parlance by those who deal in them. He further contends that washing powder can be used by a person not only for ordinary cleansing purposes but also in the factories and industries. Both these articles have connotations different from each other. We have considered the rival contentions in the light of the facts as well as authorities produced before us. 17.. The terms soap , soap cake and washing powder have not been defined either in the notifications referred to above or in the Act. We have, therefore, to call in aid the rules of interpretation to facilitate our understanding of these terms as also to know as to whether soap cakes and washing powder or soap in powder form can be put under one and the same category for the purposes of taxation. As per the definition of the terms soaps and detergents as given in the New Encyclopaedia Britannica, Volume 21, 15th Edition, soaps and detergents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form. It is distinguishable from the soap in powder form or the washing powder. Both traders and customers regard them as different and distinct products. When the Legislature or for that matter the State Government as a delegate of the Legislature have made their intention clear and as the words used by them are susceptible to only one interpretation, i.e., soap cake expressly excludes soap in powder form, we see no reason why we should not put upon the words used the meaning which these words can bear. 19.. Shri Kothari has pressed into service a number of authorities which we shall discuss here. 19.1. In Centuary Ecka v. State of Rajasthan [1987] 67 STC 103 (Raj) the question was whether the butter paper, PVC bags and poly propylene bags and waterproof paper were exempted goods chargeable to tax at concessional rate in view of clauses (a) to (h) of item No. 8 of the notification dated July 1, 1975. It was held that the butter paper was not an exempted item because it was not specifically mentioned in any of the clauses mentioned above. Hence it was to be charged to tax at the rate of 7 per cent for the accounting year 1978-79 and at the rate of 8 per cent for the accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the soap cake . 19.4. In the case of Haran D. Manufacturing Co. v. State of Gujarat [1993] 91 STC 130 (Guj), the question was whether the product of the appellant-company detergent is included in the term soap . The question was answered in the affirmative. We have to set out here the circumstances under which their Lordships of the Gujarat High Court came to this conclusion. The position of the relevant entries was as hereunder: Before August 1, 1977, the relevant entry 34 read as under: 34. Soaps (excluding shampoo) Taxable at five paise in the rupee. As per amendment effected from August 1, 1977, the said entry reads as under: 34. Soaps and detergents (excluding Taxable at six paise in the shampoo) rupee. Thus, before August 1, 1977, detergents were not specifically included in entry 34. In the view of these entries it was held that detergents were included in soaps . The position before August 1, 1977, was that the detergents were not specifically mentioned in the entry 34. That is why a dispute arose whether detergents were to be regarded as soaps. This position was clarified when it was provided in the amended entry after August 1, 1977 that soaps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s soap in powder form is specifically excluded from the term soap cake . 19.6. Shri Kothari has placed great reliance upon the decision in Arya Vaidya Pharmacy v. State of Tamil Nadu [1989] 73 STC 346 (SC); AIR 1989 SC 1230, which dealt with the question whether ayurvedic drugs and medicines including arishtams and asavas could be taxed at the rate of 30 per cent when other medicinal preparations belonging to different systems of medicines were being taxed at the rate of 7 per cent only. The higher rate of tax in the case of arishtams and asavas was sought to be justified on the ground that they contained a higher alcohol content and the main purpose was to restrict the use of these medicines. It was found that almost all the medicines of this type irrespective of the medicinal system to which they belonged did contain alcohol in small or large proportion. There is no reason why arishtams and asavas should be singled out for the levy of an excessively higher rate of tax. It was nothing but invidious discrimination against the manufacturers of arishtams and asavas. It was further held that where the commodities belonged to the same class or category as was the case before the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a rational relationship to the object sought to be achieved by statute or notification in question. This power of classification is much wider in the field of taxation in fiscal laws than in matters concerning civil rights. The classification so made by the Legislature cannot be challenged or put down as illegal until it is shown that it is arbitrary, unjust and palpably unreasonable. It may also be mentioned here that a presumption exists in favour of the validity and constitutionality of every piece of legislation. Such a presumption is enhanced in the case of fiscal laws regulating economic activities. Shri Kothari has placed his reliance upon the decision in International Cotton Corporation (P) Ltd. v. CTO, Hubli [1975] 35 STC 1 (SC); AIR 1975 SC 1604, wherein certain transactions made during a particular period from November 10, 1964 to June 9, 1969 were exempt from the liability to pay tax but a similar concession was not granted in respect of the transactions made prior to November 10, 1964. It was held that such a classification was valid. It was held in para 5 at page 1610 of the Report (AIR) (page 35 of STC) thus: A concession is not a matter of right. Where the Legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JAIN, J. (Chairman).-With respects, I agree with the above discussions and conclusion. I wish to add a few words here. 27.. According to section 5, Rajasthan Sales Tax Act, 1995 (in short, the Act ) which dealt with rate of tax, tax was leviable at such rate as notified by the State Government. It was/is open to the State Government to select different rates of tax for different goods. Section 2(h) of the Act defined goods . It meant all kinds of movable property and included all material articles and commodities. In this case, entry No. 64 of the Notification No. F. 4(37)FD/Gr. IV/90 dated June 27, 1990 is the relevant entry. It has been quoted in para 14 supra. Several goods find mention in it, namely, (1) soap cakes, (2) soaps and detergents in powder form, (3) soaps and detergents in liquid form, (4) soaps and detergents in shampoo, jelly and flakes form and (5) soaps and detergents in granules/paper form. The goods of the groups (2), (3), (4) and (5) have been excluded from the group (1). The word exclude means to shut out or to except. The word excluding also appears in the items Nos. 6, 8, 11, 13, 14, 22, 36, 49, 54, 55, 64, 70, 75, 80, 87, 93 and 104 of the said no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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