9911796707
TMI Blog2003 (2) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner for the period September 1, 1976 to December 31, 1984 as the same are time-barred. The petitioner has further prayed to restrain respondent Nos. 1 and 3 from raising any consequential demand of tax and direct the respondents to refund to the petitioner the sales tax collected by them or if it is paid by the petitioner along with return as per the direction of the Supreme Court of India along with interest at the rate of 24 per cent per annum from the respective dates of payment till the date of refund. 2.. The facts giving rise to this petition are as under: 2.1. FAG Precision Bearings Limited, Baroda, petitioner, is a company having its registered office at Bombay and its head office and factory at Baroda. It is registered as a dealer under the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act") as well as the local Act. The petitioner sells its goods within and outside the State of Gujarat. It has branch offices at various places in India. At places where the petitioner has branch offices, the petitioner despatches goods to its branch offices from time to time and the said branch offices subsequently sell the goods in the State in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 1st day of April, 1998 or part of such year or any year thereafter or part of such year shall be made under sub-section (3) or (4) of section 41 at any time after the expiry of three years from the end of the year in which the last monthly, quarterly or, as the case may be, annual return is filed. (2) Where the Commissioner issues a notice under sub-section (6) of section 41, to any dealer for assessment of tax in respect of any period, no order of assessment shall be made for such part of the period, if any as is prior to- (a) a period of eight years ending on the last date of the year immediately preceding the year in which such notice is issued, in a case where the Commissioner has reason to believe that such dealer has failed to apply for registration with intention to defraud Government revenue; and (b) a period of four years ending on the last date as aforesaid, in any other case: Provided that for the purpose of this section if it is considered necessary so to do, the State Government may, subject to such conditions as it may deem fit, and the Commissioner may, subject to such conditions as may be prescribed by a general or special order, extend, either generally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment in the case of the said assessee up to August 31, 1988 and in this respect show cause notice was given vide letter dated Nil as to why the period of assessment should not be extended." 2.5. The assessee made representation against the said show cause notice. After the representation of the assessee, the Deputy Commissioner of Sales Tax was pleased to pass the following order: "I under the authority conferred on me under section 9(2) of the Central Sales Tax Act, 1956 read with rule 37-A of the Gujarat Sales Tax Rules, 1969, hereby order that the assessment in respect of M/s. Precision Bearings India Limited, Baroda, who is registered vide registration No. 40602801/Guj 9B 81 under local-Central Sales Tax Acts and who is under the jurisdiction of Sales Tax Officer (1) Div. (6) Enforcement, Baroda for the period September 1, 1976 to August 31, 1984 be stayed up to August 31, 1988." 2.6. Being aggrieved and dissatisfied with the said action, the petitioner filed Special Civil Application No. 5343 of 1987. 2.7. The said petition was heard by a division Bench of this Court [Coram: G.T. Nanavati, J. (as he was then) and Y.B. Bhatt, J.] on February l2/13, 1992. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more the time that elapses the more difficult it is for the assessee to prove his accounts and claim set-off, exemptions and the like. We take the view that, in the circumstances, the power under rule 37-A may not be exercised by the Commissioner without first giving to the assessee notice to show cause why his assessment proceedings should not be stayed for a stated period. The notice should set out what the reasons and circumstances are which, according to the Commissioner, necessitate such stay so that the assessee has the opportunity of meeting the same. This is a requirement of natural justice that, having regard to the scope of rule 37-A, requires to be read into it. ......................... In the premises, the impugned order must be set aside. Consequently, all proceedings taken and assessment orders passed on the strength thereof must also be set aside. The Commissioner of Sales Tax shall be entitled, if so advised, to issue to the appellant a notice to show cause why assessments for the period 1st September, 1976 to 31st August, 1984, should not be stayed for a stated period for the reasons and in the circumstances to be set out therein, and he may proceed thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch transfer transactions and as it was necessary to scrutinise whether the said transactions were inter-State or branch transfers it was necessary to extend time-limit for making assessments. 2.13. It is the case of the petitioner that as per the judgment of the honourable Supreme Court the said assessment orders passed for the period September 1, 1976 to August 31, 1980 have been set aside. For the remaining period September 1, 1980 to December 31, 1984 no assessment orders were passed. 2.14. The petitioner stated that the reasons given in the show cause notices were not valid or justifiable reasons as per the ratio of the decision of the honourable Supreme Court in the petitioner's own case which required that (i) there should be extraordinary circumstances; (ii) supervening reasons which could not be attributed to the default or failure of the assessing authorities. The petitioner in the reply submitted that the books of accounts and all other records for the period September 1, 1976 to August 31, 1980 were already with the department for last 13 years as they were seized by the sales tax authorities. The petitioner for the reasons set out in the reply contended that the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extend time as it has clarified that the Deputy Commissioner shall be entitled to issue a show cause notice, "if so advised" which showed that any fresh show cause notice could only be issued if it could otherwise be issued for the reasons which would be justifiable on the ratio of the Supreme Court judgment. 3.1. The learned Senior Counsel for the petitioner has submitted that the reasons given by the Deputy Commissioner of Sales Tax for staying the assessments are almost identical in all matters. Identical notices have also been issued to the petitioner and orders have been passed accordingly. The said reasons are contrary to the ratio of the judgment of the honourable Supreme Court in the petitioner's own case and therefore the orders of the Deputy Commissioner of Sales Tax are illegal, and bad in law. He has further invited our attention to the relevant provisions of the Act and also judgment of the honourable Supreme Court as well as this Court and the relevant paragraphs have been extracted earlier. According to the learned counsel for the petitioner the reasons given by the Deputy Commissioner of Sales Tax are not in consonance with the judgment of the honourable apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record any valid reason as contemplated by rule 37-A of the Rules. Therefore, these two stay orders cannot be sustained and will not have the effect of extending the period of limitation for making the assessment orders." 3.3. The learned counsel for the petitioner has relied on another judgment of a division Bench of this Court in the case of Javer Jivan Mehta v. Assistant Commissioner of Sales Tax (Appeals) reported in [1998] 111 STC 199. 3.3A. The learned counsel for the petitioners submitted that if this Court comes to the conclusion that the petitioners are entitled for the refund of the tax already paid, then this Court may also pass order granting interest on the said refund. In support of the aforesaid contention, the learned counsel, for the petitioner has relied on the following decisions: (i) In Raja Ram Kumar Bhargava v. Union of India reported in [1988] 171 ITR 254 (SC) at 262 it is observed that interest to be awarded to do justice between the parties even though no provision in the Act. (ii) Salonah Tea Company Ltd. v. Superintendent of Taxes reported in [1988] 69 STC 290 (SC); [1988] 173 ITR 42 (SC) in which it is stated that when tax is collected without au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices and therefore the said show cause notices and the orders passed thereunder is legal and valid and this Court may not entertain the petition under article 226 of the Constitution of India. 3.7. As regards historical background of section 42 and the contention raised for time-limit for completion of assessment, the learned counsel for the petitioner has relied on one passage from the judgment of this Court in the case of Pag Precision Bearing Limited v. Sales Tax Officer reported in [1993] 90 STC 294 in which on pages 303-304 this Court has observed as under: "Prior to May 6, 1970, there was no provision in the Act prescribing time-limit within which assessment proceeding was required to be completed. It appears that the Legislature thought of making a provision for time-limit for completion of assessments in view of the report of the Sales Tax Enquiry Committee appointed by the Government of Gujarat, which gave its report in the year 1967. The position of assessment cases lingering for years was not regarded as satisfactory, as the dealers had to preserve account books for long periods and it used to become difficult for them to produce evidence at a very late stage to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, as extended because of the stay, becomes over. Therefore, it is not possible to accept the contention that on expiration of the period of two years, the power to assess comes to an end. As pointed out by us earlier, the combined effect of the two provisions is to extend the period of limitation by such time, during which the assessment proceeding is stayed, and, therefore, the power to complete that assessment will not come to an end immediately on expiration of two years." 3.8. The division Bench of this Court in Special Civil Application No. 5343 of 1987 which is reported in Pag Precision Bearing Limited v. Sales Tax Officer [1993] 90 STC 294, observed on page 305 as under: "As pointed out earlier, while providing three years' time-limit, a balance was sought to be struck between the difficulties of the department in completing assessment proceeding expeditiously and the likely harassment or hardship to be suffered by the assessee if the assessment proceedings linger on for a long time. Therefore, the Legislature, while providing for the time-limit, also provided for stay of assessment proceedings and exclusion of the period, during which assessment proceedings remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notices and the orders passed by the authorities. In our view, reasons given in the show cause notices as to whether transactions are inter-State sales or branch transfers and for that the department decided to stay the proceedings are the reasons not contemplated by the judgment of the honourable Supreme Court in Fag Precision Bearings [1997] 104 STC 143 and in fact, as we have stated in the facts, the books of account of the petitioner and all other records were lying with the department and bills and vouchers, etc., were available to the authorities and the authorities should have verified the same. Therefore, the ground stated in the show cause notice is not relevant or germane and the same is contrary to the judgment of the honourable Supreme Court in the case of Fag Precision Bearings [1997] 104 STC 143 and respectfully following the decision of a division Bench of this Court, the said show cause notices are also contrary to the decision of this Court. Therefore, the said show cause notices are liable to be set aside. 4.1. It may be noted that the authority has passed orders on March 17, 1991 in which the first ground given was as per the decision of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us as assessment orders stood quashed. (ii) It may be noted that no assessment orders were passed from 1980-81 to 1984. (iii) Assessment orders pursuant to fresh extension orders dated March 15, 1997 during the pendency of this Special Civil Application are quashed. All amounts collected as and by way of sales tax from September 1, 1976 to March 31, 1984 be refunded to the appellant (as per the Supreme Court order) and interest at the rate of 12 per cent from the date of payment till date of refund is granted. 4.1D. So far as Special Civil Application No. 3892 of 1997 for assessment period 1985, 1988-89 to 1990-91 is concerned, assessment orders for 1988-89 and 1990-91 are passed. Against the said orders the petitioner filed appeals before the Assistant Commissioner of Sales Tax (Appeals), Vadodara, which are pending. Assessment orders and the demand raised thereunder are required to be quashed as extension orders are not valid. Tax paid with returns be refunded as per the decision of the honourable Supreme Court for earlier years. Interest at the rate of 12 per cent is awarded from the date of payment till date of refund. (i) No assessment orders are passed for 1985, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
