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TMI Blog2001 (8) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... y 2, 1993, issued by the respondent No. 2 in exercise of powers under section 3(3) of the Act is ultra vires the provisions of rule 10 of the Assam General Sales Tax Rules, 1993, inasmuch as rule 10 expressly debars such delegation to any officer below the rank of a Superintendent and as such the said notification is violative of section 3(3) of the Act, and is liable to be quashed." Provisions of section 3(3) of the Act are reproduced below: "Subject to such restrictions and conditions as may be prescribed the Commissioner may by order in writing, delegate any of his powers under the Act to any person appointed to assist him under subsection (1)." 3.. Rule 10 is quoted below: "The power to call for returns, to make assessment, to cancel or rectify them, to impose a penalty, to compound offences and to order maintenance of accounts shall not be delegated to any officers below the rank of a Superintendent." 4.. It may be stated herein that during the pendency of this civil rule an amendment was introduced to the Assam General Sales Tax Rules, 1993 (hereinafter called "the Rules"), by inserting a proviso to rule 10 and it came into force on September 22, 1998. This writ appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of this Act shall get himself registered with the assessing officer and shall possess a certificate of registration. (2) Every dealer required by sub-section (1) to be registered shall apply for registration to the assessing officer in the prescribed manner and obtain a certificate of registration. (3) On receipt of an application under sub-section (2) the assessing officer shall, if he is satisfied after such inquiry as may be deemed necessary that the application is in order, register the applicant." 7.. Rule 21 of the Rules is quoted below: "21. (1) Every person liable to get himself registered under section 11 shall submit to the assessing officer of the area in which his principal place of business is situated, an application for registration within sixty days from the date of commencement of the Assam General Sales Tax Rules, 1993, if he was carrying on business on such date and within thirty days from the date of his becoming so liable if he commences his business after the date of such publication of the rules. (2) An application for registration under section 11 shall be made to the assessing officer- (a) in a case covered by sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is available in the record produced by the Government and signed by the petitioner. That declaration reads as follows: "I Shri Satya Ranjan Saha do hereby declare that I have got 385 bags of raw supari in my business premises at Kharupetia on June 11, 1997." 11.. Having obtained that declaration a notice was issued to the petitioner under section 44(1) of the Act of 1993 to produce the documents. That notice is annexure 2 to the writ application and that is quoted below: Annexure 2 "To Sri Satya Ranjan Saha, Tillapatty, Kharupetia. Whereas in connection with the verification of your books of accounts for year ending March 31, 1997 you are hereby required to produce the following documents today on the 27th June, 1997 at 4 p.m. at your business premises. Failure to produce the same will attract penal action as per provision of law. Documents to be produced (1) Cash book and ledger. (2) Stock register of goods. (3) Purchase voucher of raw materials. (4) Any other documents relating to the business. Sd/Illegible, Inspector of Taxes, Mangaldoi." 12.. As the petitioner failed to produce the documents as demanded in the notices, on the same day vide anne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de affair. 14.. Having arrived at this findings a notice was issued on July 19, 1997 vide annexure 4 to show cause as to why penalty shall not be imposed as provided under section 44(5)(b) of the Act of 1993. He was also asked to show cause on July 25, 1997. The wife on July 25, 1997 filed an application which reads as follows: Annexure 5. "To The Inspector of Taxes, Mangaldoi Dated, Kharupetia, the 25th July, 1997. Ref: Your notice No. 475 dated 19-7-1997. Sir, With due respectfully to state that I have received your notice on 24-7-1997 but my husband 'Satya Ranjan Saha' is out of station for medical treatment. Yours faithfully, Sd/Sipra Saha, wife of Satya Ranjan Saha, Kharupetia, Darrang, Assam." 15.. There was no prayer for extension of time of submission nor any prayer for placing the accounts before the authority and vide annexure 6 on July 31, 1997 the authority came to the following findings: "(a) The dealer deals in taxable goods but does not maintain accounts at the business premises. (b) The accounts produced afterwards cannot be accepted as true and complete. (c) The accounts produced afterwards seem to be made after the seizure. (d) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has since been made to the credit sellers by the petitioner and if so, what was his source of fund for such payment, especially when the stock is held up. (4) Any other relevant point. The case is accordingly remanded to the seizing officer Shri B. Barman, Inspector of Taxes, Mangaldoi, for disposal as above. The stay order given on November 11, 1997 stands vacated to facilitate disposal of the case as per this order, by the seizing officer. The revision petition is thus disposed of as above. Return to the seizing officer the records submitted by him." 18.. Thereafter the Inspector of Taxes vide annexure 10 issued notice to the petitioner to make the investigation as directed by the Commissioner. It was also directed by the authorities that credit sellers may be produced before him and at that point of time a show cause notice was also served and that is, annexure 7. Thereafter vide annexure 11, the Inspector of Taxes found as follows: "(1) The dealer furnished a list containing the names of credit sellers numbering 68. But only three credit sellers were produced for personal verification. (2) It was also found that credit sale and purchase is found to be involved, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication made in the prescribed manner by the dealer or person affected by such order, call for the record of any proceeding under this Act in which any such order has been passed and may make such enquiry or cause such enquiry to be made and subject to the provisions of this Act, pass such orders thereon, not being an order prejudicial to the dealer or person to whom the order relates as he thinks fit." 21.. No revision was filed and this writ application has been filed with the prayers as indicated above. 22.. I have heard Shri N. Saikia, learned Senior Advocate assisted by Smt. G. Deka, learned advocate and Shri K.H. Choudhury, learned Advocate assisted by Mrs. D. Das, learned advocate for the respondents. An affidavit-in-opposition has been filed on behalf of the respondents and also an affidavit-in-reply has been filed on behalf of the petitioner. The learned advocate for the respondents has also produced before me the original record of the case. The learned advocate for the petitioner Mr. Saikia makes the following submissions: (1) The Inspector of Taxes has no authority to pass an order of penalty and this is against rule 10 of the Rules quoted above. (2) The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by such officers and be signed by the officer, the dealer or the person in-charge of goods or the person in-charge of the premises, and not less than two witnesses. (b) The authority referred to in clause (a) shall, in a case where the dealer or the person in-charge of goods as mentioned in clause (a) fails to produce any evidence or satisfy the said authority regarding the proper accounting of goods, impose a penalty, after giving an opportunity of being heard in the prescribed manner to the dealer or such person which shall be equal to three times the amount of tax calculated on the value of such goods and the goods shall be released as soon as the penalty is paid." 24. It should be noted that section 44 appears at chapter IX of the Act and chapter IX is with regard to accounts, inspection, search and seizure, restrictions on movement of goods and power to call for information. 25.. The first question in this case is that whether the amendment to Rule is declaratory and/or it is by way of explanation. If it is merely declaratory and/or by way of explanation the rule will be retrospective. If any authority is required for this proposition of law, one can see AIR 1968 SC 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specify the area in which powers are to be exercised by each of the above classes of officers: Provided that the Commissioner shall not delegate his powers under sub-section (1) of section 36 to any officer below the rank of a Deputy Commissioner of Taxes." That rule gives the power to the Commissioner to make all delegations save and except the restriction mentioned in the rule itself. Rules 8 and 10 must be read harmoniously. Rule 10 basically relates to Chapters V and VI of the Act. It is with regard to Chapters V and VI that can be gathered from a bare reading of Rules. Section 16 provides for payment of tax and return. Section 17 is assessment and section 18 is turnover escaping assessment. Section 19 is time-limit for completion of assessment and reassessment and section 20 is composition of tax payable and section 22 is interest payable by dealer. Section 23 is penalties. No power has been delegated to the Inspector of Taxes for these sections. The general delegation of power under these sections is by notification dated July 2, 1996 (No. C.T.S. 3/92/14) and the lowest level of officer is Superintendent of Taxes and it is for restriction imposed in rule 10. But the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in [1994] 94 STC 199 [Jyothi Laboratories v. Inspecting Assistant Commissioner (ITC)] wherein para 14 it has been pointed out that levying of penalty is not compulsive, but only enabling or permissible, if the action of a person is fraudulent, or otherwise blameworthy or objectionable conduct in fulfilling an obligation mentioned in a statute penalty may be imposed. That is what has been found by the authority on this case. (5) [1968] 21 STC 1 (State of Madras v. T. Narayanaswami Naidu). There, the Supreme Court dealt with last purchase. 29.. Though the judgment was delivered in open court on September 29, 1999 it was typed out late and was given to me for correction on November 22, 1999 and after correction, I have signed it on November 30, 1999. The delay is regretted. 30.. The writ application is dismissed, stay order stands vacated. The record shall be returned. JUDGMENT The judgment of the Court was delivered by R.S. MONGIA, AG. C.J.-The question that calls for our determination in this case is: "Whether the Inspector of Taxes, Mangaldoi, had the power under the Assam General Sales Tax Act, 1993, and the Rules made thereunder to impose penalty on the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) In case the penalty imposed under clause (b) is not paid or the goods remain unclaimed for a period of fifteen days from the date of seizure, the goods so seized shall be sold by auction in the prescribed manner and the sale proceeds shall be appropriated towards the amount of penalty imposed under clause (b), the balance of the sale proceeds if any, shall be deposited in the Government treasury and shall be refunded to the lawful claimant in the prescribed manner." It will be seen from reading of section 44(1) that it takes us to section 3(1) of the Act which is in the following terms: "3. Tax authority.-(1) For carrying out the purposes of this Act, the State Government may by notification appoint a person to be the Commissioner of Taxes, together with such other persons to assist him as it thinks fit and may specify the area or areas over which they shall exercise jurisdiction." At this stage, we may notice section 3(3) of the Act as well: "3(3). Subject to such restrictions and conditions as may be prescribed, the Commissioner may, by order in writing, delegate any of his powers under this Act to any person appointed to assist him under sub-section (1)." Under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the aforesaid two notifications, the Inspector of Taxes concerned, Mangaldoi, had passed the impugned orders of penalty on July 31, 1997 and February 10, 1998 as observed above. The learned single Judge before whom the imposition of penalty was challenged was of the view that since the amendment to rule 10 by insertion of proviso on September 22, 1998 had been brought on the statute book which was only clarificatory and explanatory in nature, the imposition of penalty by the Inspector of Taxes, Mangaldoi, could not be challenged on the ground that it was without jurisdiction. In other words, it was held by the learned single Judge that the said Inspector of Taxes had the requisite power under section 44 of the Act read with rule 8 of the Rules. The argument of the learned counsel for the writ petitioner, appellant herein, that the amendment to rule 10 of the Rules could not be made applicable retrospectively was not accepted and negatived. The amendment was held to be explanatory or clarificatory. 4.. We have heard learned counsel for the parties. 5.. Penalty under section 44(5)(b) of the Act can be imposed by authority referred to in clause (a) of sub-section (5) of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) of the Act to mean prescribed under the Rules. Any such notification must not be against any rule made under the Act. Rule 10 specifically bars any delegation below the rank of a Superintendent. Inspector of Taxes is below the rank of a Superintendent and, therefore, such delegation could not have been made to an Inspector under the notification issued under section 3(3) of the Act. Consequently, the notifications dated July 2, 1993 issued under section 3(3) of the Act so far as it delegated power to the Inspector of Taxes was ultra vires rule 10 of the Rules prior to the amendment of rule 10, i.e., prior to September 22, 1998. Consequently, any action under section 44(5)(b) by an authority below the rank of a Superintendent prior to September 22, 1998 would be without jurisdiction and illegal. 7.. We may deal with the argument of the learned counsel for the respondents, as was accepted by the learned single Judge, regarding application of rule 8. Reading of rule 8 (already quoted above) goes to show that the same is again subject to the rules, meaning thereby that giving of power to the persons mentioned in rule 7 would be subject to the rules and if there is any bar somewher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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