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TMI Blog2014 (4) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... o motu powers under Section 36 more than one reason - Primarily, there was no factual basis for forming the opinion that two grounds exists for invoking Section 36 against assessee - Neither the Commissioner and nor the Board took into consideration the detail explanation offered by the petitioner with a view to find out as to whether any ground had been made out to withdraw the show cause notice - This being the legal error in the proceedings, the impugned orders are not legally sustainable. Evasion of tax – Intention to Evade – Whether assessment order was erroneous and prejudicial to interest of revenue – Invocation of power u/s 36(1) Assam General Sales Tax Act 1993 - Held That:- Mere perusal of the explanation given by the petitioner would go to show that they had disclosed in their reply all sales both (inter-state and intra- state) and had also filed their price lists applicable for the North East Region - It clearly indicated that looking to their market strategy applied for North East Region due to long distances from other part of the country, coupled with a separate price list for sale of the products, the explanation offered deserved acceptance for withdrawal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P(C) No 253 of 2004 because firstly: both the writ petitions are filed by the same writ petitioners against the same set of respondents (Sales Tax authorities of the State) and secondly: both involves identical issues and arise out of one impugned order of the Board. By filing this writ petition under Article 226/227 of the Constitution of India, the writ petitioners seek to challenge the order dated 24.7.2003 passed by the Assam Board of Revenue (for short hereinafter called the Board ) in case no 15 STA and 16 STA of 2001 which in turn arise out of the order dated 14.7.2000 passed by the Commissioner of Sales Tax arising out of two assessment order dated 11.8.1999 passed by the Assessing Authority for the assessment year 96-97/97-98. In order to appreciate the issue involved in the case, few relevant facts need mention in brief. The petitioner is a leading biscuits and confectionary items manufacturer in the country. They sell their products by and under the brand name Parle all over the country including in State of Assam. They are registered dealer under the Assam General Sales Tax Act 1993 (for short hereinafter called the Act). The petitioner filed their sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided into two category, viz. N.E. 1 (consisting the States of Meghalaya, Manipur, Tripura and Nagaland) and N.E. 2 (consisting the States of Arunachal Pradesh and Mizoram). The sales prices of our product for both the N.E. 1 and N.E. 2 States are different as will be clear from the relevant price lists produced before you for your verification. The said price lists will show that sale price of the products in N.E. 2 States is higher as compared to the such sale price for the N.E. 1 States. It may further be noted that the sale price of our products for the N.E. 2 States is even more than such sale price fixed for sales of the products within Assam. But such sale price for the N.E. 1 States is lower than the sale price of the same goods within Assam. Because of this variation in sale prices in the different States of the N.E. Region, the actual sales proceeds realized by us do not and cannot remain the same as compared to our stock transfer value. That is why a difference has been made out by you by deeming it to be alleged suppression of sales whereas a case of suppression of sales in fact does not exist in the facts and circumstances of the case. 3. As to the fixation of diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner contended that the Commissioner erred in invoking suo motu revisionary power under Section 36 ibid in relation to two assessment orders and further erred in passing orders on the basis of the said show cause notice against the petitioner. Elaborating his submissions, learned senior counsel contended that firstly: the assessment orders were neither erroneous and nor prejudicial to the interest of Revenue, as alleged by the Commissioner in his show cause notice within the meaning of Section 36 ibid, Secondly: the show cause notice did not mention any grounds as to how the assessment orders were erroneous and prejudicial to the interest of Revenue, thirdly and most importantly neither the Commissioner and nor the Board took into consideration the detail reply filed by the petitioner and lastly: a change of opinion on any particular issue could not be made basis to invoke the suo motu jurisdiction by the Commissioner for treating the assessment to be erroneous and prejudicial to the interest of Revenue. Learned counsel placed reliance on the decisions reported in [2002] 1 GLR 197, Santalal Mehendi Ratta (HUF) vs. Commissioner of Taxes and Others, [1990] 1 GLR 449 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer is erroneous insofar as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to Section 263(1) of the Act. 7. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 8. The phrase prejudicial to the interests of the Revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Devi Saraogi v. CIT [1968]67 ITR 84 (SC) and in Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) Since the object and scope of Section 36 of the Act is in pari materia with the object and scope of Section 263 of the Income Tax Act, we can safely apply the principle laid down by the Supreme Court in the case of Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax. (Supra) to the facts of this case. Indeed, this court too, while interpreting Section 36 of the Act in the case of Shri Rajendra Singh Others vs. The Superintendent of Taxes and Others (Supra) has held as under: 9. The power of Suo Motu revision under sub-section (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of suo-motu revision under this sub-section, (i) the order is erroneous (ii) by virtue of the order being erroneous prejudice has been caused to the interest of the revenue. It is not sufficient that the order is erroneous. It must be erroneous and also prejudicial to the interest of the revenue. If an order is erroneous but not prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is because the officer has exercised the quasi judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interest of the revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, that the order is erroneous, is absent. Similarly if aa order is erroneous but not prejudicial to the interest of the revenue then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be subject matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. Applying the aforesaid principles to the facts of this case, we notice that the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght on record by the dealer, then Commissioner in his suo motu jurisdiction could not substitute his own opinion. To us, it appears that Commissioner acted like an Appellate Court over the decision of the Assessing Authority for examining the findings. It was not permissible in law while invoking powers under Section 36 ibid. As rightly argued by the learned counsel for the petitioners, there was no reason for the petitioners to have suppressed their sales to the extent of Rs. 11,39,132. 24 because petitioner s yearly sales were in crores. If the petitioner s intention was to evade the payment of taxes, then they would have indulged in suppression in crores rather than in few lacs. We find substance in this submission which is clear from the reply filed by petitioner. It is apart from the fact that even the revised tax liability after invoking the powers under Section 36 ibid was not found to be such so as to satisfy the phrase prejudicial to the interest of revenue . In the light of all these reasons, we are of the considered opinion that finding recorded by the Commissioner that the petitioners suppressed the sale to the extent of Rs. 11,39,132.24 is not factually and l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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