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TMI Blog2015 (2) TMI 1013X X X X Extracts X X X X X X X X Extracts X X X X ..... ct") in terms of the provisions contained in Section 54 thereof. 2. It may be mentioned here that by Section 106 of Delhi VAT Act, amongst others, the Delhi Sales Tax Act was repealed with effect from 01.04.2005. Notwithstanding such repeal, right, title, entitlement, obligation or liability already acquired, accrued or incurred under the repealed legislation survived. The authorities under the Delhi VAT Act have replaced the authorities created under the Delhi Sales Tax Act. The remedies of appeal against orders of such authorities, thus, are available through the machinery created by the new law. 3. It must also be added here that in the regime governed by Delhi Sales Tax Act, there was no provision of appeal to the High Court. The appeals under the said law would lie only before the Appellate Tribunal. After adjudication on the appeal by such Tribunal, the aggrieved party (the dealer or the Commissioner) could, however, request for a reference to the High Court under Section 45 on question of law. However, the new law (Delhi VAT Act) having now provided for a second appeal (Section 81) to the High Court against orders of the Appellate Tribunal, though confined to substantial q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion of law:- "3. Whether the order of Commissioner on application under Section 54 Sales Tax Act is final not subject to scrutiny by the Appellate Tribunal?" 7. The background facts need to be taken note of at this stage. 8. The assessee is an exporter-cum-wholesaler dealing in readymade garments and steel-make items since 1998 and was registered with Sales Tax Department of Govt. of NCT of Delhi during the relevant period. It is the case of the assessee that in the course of its business during the financial year corresponding to assessment year (AY) 2002-2003, it had sold steel balls to M/s DD Enterprises, G-134, Multani Dhanda, Pahar Ganj, New Delhi for a sum of Rs.23,50,000/- against ST-1 form bearing No. 22A 893932 (hereinafter referred to as "the ST-1 form"), receiving the sale consideration by way of cheques from the purchasing dealer. 9. In its return for AY 2002-2003, the assessee submitted the ST-1 form and furnished the requisite declaration in support of the claim of exempted sale of Rs.23,50,000/-. Upon verification, the ST-1 form was found by the assessing authority to be a forged document, inasmuch as it had not been printed under the authority of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not found it to be a case where the offences had been committed by the assessee "willfully". 12. At the hearing, it was submitted by the counsel that report of investigation (under Section 173 of the Code of Criminal Procedure) into the allegations made in the FIR (No. 126/04) thus registered came to be filed in the court of Metropolitan Magistrate on 20.10.2006 under Sections 50(1)(a) & (j) of Delhi Sales Tax Act and Sections 420/468/471 of Indian Penal Code. The counsel, however, were not aware as to whether charge has been framed in such proceedings for any offence other than one punishable under Delhi Sales Tax Act. To be specific, the counsel were not aware if the criminal court has prima facie found evidence as to facts constituting offences punishable under the Penal Code (i.e. cheating etc.). The counsel vaguely stated that the proceedings in criminal case are at final stages, pleading ignorance when asked to be specific. 13. Against the above backdrop, the assessee moved an application under Section 54 of the Sales Tax Act before the Commissioner for composition of the offences respecting which action had been initiated by registration of FIR, offering with the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal action continue in these circumstances. 17. It appears that the Appellate Tribunal, in its order dated 16.01.2006, was satisfied that a case had been made out for the offences under Sales Tax Act to be compounded. The Tribunal, thus, remitted the matter to the Commissioner issuing the directions in following terms:- "Keeping in view the facts and circumstances and considering the fact that the appellant dealer now has unconditionally offered an amount of Rs. 5,64,000/- which, according to him, is three times of the tax levied on the subject amount under section 50(1)(a) of the Act and also an amount of Rs. 5,000/- being the maximum amount prescribed under the law for compounding the offence committed under section 50(1)(j) of the Act, the Ld. Commissioner may consider for composition of the offence as provided for the commission of the offences under section 54 and consequently also consider not to proceed further in respect of the FIR already lodged in view of the provisions of section 54(2) of the Act. The records are ordered to be remitted to the Ld. Commissioner for the purpose. The appellant dealer is directed to appear before the Ld. Commissioner on 30.01.2006." [empha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already been lodged by the Department and thus, acceptance of the composition of money by this Court will affect the FIR lodged and consequently the criminal proceedings initiated against him adversely, this Court finds itself unable to accept the composition money at this stage. Hence, for this reason, and also the fact that petitioner who has defrauded the revenue by furnishing the fake form, should not go unpunished and the others may not follow suit, the offer of the applicant is not accepted and the law is allowed to take its own course and to book the offender for appropriate action under it. Ordered accordingly" [emphasis supplied] 19. It is clear from the afore-quoted observations of the Commissioner VAT that the request for composition was turned down again on the following considerations:- (a) The purchasing dealer had not confirmed the word of the assessee about it being the source of the fabricated ST-1 form; (b) Since fabricated ST-1 form had been furnished, criminal action had been rightly initiated and the FIR lodged was valid; (c) The criminal case registered at the instance of Sales Tax department was subject matter of investigation by the police which was un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a positive meaning in compliance of direction required to be followed' by the respondent. However, considering that for such forced filing of instant appeal by the appellant despite disobedience by the respondent which is nothing short of contempt for which appellant can be compensated, who is forced to file the present appeal because of such meaning given to the word 'may' by the respondent without taking into consideration the provisions as existed in this regard and quoted above. Not only the respondent shall act in compliance of the directions in term of order dated 06.01.2006 but also compensate the appellant with cost of Rs.l0,000/- to be adjusted or to be paid by the respondent separately. As submitted by the Ld. Counsel for the Revenue, there seems to be no case to absolve the respondent from his liability to act as per law as compensation shall suffice the purpose. The respondent shall report compliance after appearance of the appellant before the Commissioner for the purpose. The impugned order is, accordingly, set aside, the appeal is accepted and the appellant is directed to appear before the Commissioner for compliance of the order dated 06.01.2006 (16.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und, where admissible), remedies in the nature of appeal, reference and revision besides defining offences and penalties and the procedure for requisite action in such context. 27. Section 9 of the Act would provide for the Sales Tax Authorities as under:- "9. Sales tax authorities (1) For carrying out the purposes of this Act, the Lieutenant Governor shall appoint a person to be Commissioner of Sales Tax. (2) To assist the Commissioner in the execution of his functions under this Act, the Lieutenant Governor may appoint as many Additional Commissioner of Sales Tax, Sales Tax Officers and such other persons with such designations as the Administrator thinks necessary. (3) The Commissioner shall have jurisdiction over the whole of Delhi and the other persons appointed under sub-section (2) shall have jurisdiction over such areas as the Commissioner may specify. (4) The Commissioner and the other persons appointed under sub-section (2) shall exercise such powers as may be conferred, and perform such duties as may be required, by or under this Act." 28. As mentioned earlier, Delhi VAT Act has replaced the Delhi Sales Tax Act with effect from 01.04.2005. The authorities under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Police on deputation to Sales Tax Department. 33. While the functions of the Commissioner are broadly delineated in the statute, the other Sales Tax Authorities placed at his disposal for assistance exercise the powers which are delegated to them by the Commissioner, subject, of course, to "restrictions and conditions", if any prescribed by the rules [Section 10]. 34. Delhi Sales Tax Act would not specifically provide for functions of any Sales Tax Authority other than the Commissioner. Clearly, this is so, because all such authorities other than the Commissioner exercise only the delegated powers. 35. The powers and functions of the Commissioner are of wide amplitude and cover almost all processes required to be undertaken for carrying out the purposes of the law. They range from the subject of registration (Chapter IV), submissions of return, assessment leading to the enforcement by way of recovery (Chapter V), production and inspection of accounts, calling information, search and seizure, taking of evidence (Chapter VII), etc. The Commissioner has the power not only to confer jurisdiction but also to transfer proceedings from one appointee to the other (Section 11). It is hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll offences punishable under this Act or rules made thereunder shall be cognizable and bailable. 53. Investigation of offences (1)Subject to such conditions as may be prescribed, the Commissioner may authorize either generally or in respect of a particular case or class of cases any person appointed under sub-section (2) of section 9 to assist him to investigate all or any of the offences punishable under this Act. (2) Every person so authorized shall, in the conduct of such investigation exercise the powers conferred by the Code of Criminal Procedure, 1973 (2 of 1974) upon an officer in charge of a police station for the investigation of a cognizable offence." 38. The above provisions clearly show that the offences under the special law are "cognizable" and triable before the court of Metropolitan Magistrate. The prosecution for such offences, however, requires, as a pre-requisite, "previous sanction of the Commissioner". Though the offences having been classified "cognizable" it is permissible for FIR to be lodged by the Sales Tax Authorities, wherever deemed expedient in the facts and circumstances of the case, for investigation by the police (amongst others, to collect such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) the person alleged to have committed an offence shall apply in writing giving his consent to compound the offence; (b) the amount offered by such person shall be stated in his application; (c) the composition money accepted by the Commissioner shall be adequate and shall not be illusory; (d) the acceptance by the Commissioner of the offer to compound an offence shall broadly be based on the general principle of justice and of public policy. 2. Where under section 54 the Commissioner accepts from any person a sum by way of composition of any offence, he shall send an intimation in writing in that behalf to that person and also to the authority referred to in clause (c) below specifying therein,-- (a) the sum determined by way of composition; (b) the date on or before which the same shall be paid into the appropriate government treasury; (c) the authority before whom and the date on or before which a receipted treasury challan shall be produced as proof of such payment; and (d) the date on or before which the person shall report the fact to the Commissioner. 3. An intimation about the composition of an offence shall be sent forthwith to the court trying the case." XXX [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relates to Reference to High Court. 44. It is clear from a bare reading of the above provisions that appeal before the Tribunal is a remedy available to the assessee against such orders passed by the Commissioner as are specified. Section 44 excludes certain orders from amenability to challenge in appeal, each of them noticeably being interlocutory in nature. Two other provisions, also contained in the same Chapter (Chapter VIII), viz., Sections 46 and 47, confer revisional jurisdiction on the Commissioner. The said clauses clearly are designed to provide course correction wherever, during assessment proceedings etc., errors are committed by the other Sales Tax Authorities. The revisional jurisdiction conferred on the Commissioner is essentially intra-department remedy and would not render him as an adjudicatory forum akin to the status of the Appellate Tribunal. 45. That the Appellate Tribunal which adjudicates upon the appeals preferred before it, in terms of Section 43, is a quasi judicial forum is beyond question, this also in view of its very composition as prescribed by Section 13, wherein its Chairman (or sole member) must fulfill the prescribed eligibility criteria indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 52 to any person appointed under sub-section (2) of section 9: PROVIDED that the powers of the Commissioner under clauses (i) to (vi) (both inclusive) of sub-section (3) of section 41 shall not be delegated to any person lower in rank than that of a Sales Tax Officer, and those under sub-section (1) of section 49 shall not be delegated to any person other than an Additional Commissioner of Sales Tax appointed under sub-section (2) of section 9." [emphasis supplied] 49. Rule 13 of Delhi Sales Tax Rules also must be noted in this context. It reads as under:- "13. Conditions for delegation of powers by the Commissioner. Without prejudice to the provisions of section 10, the Commissioner may delegate any of his powers to any persons not below the rank of an Assistant Sales Tax Officer but he may delegate his powers under sub-section (1) or sub-section (2) or clause (b) of sub-section (8) of section 41 to a Sales Tax Inspector." [emphasis supplied] 50. A conjoint reading of Section 10 and Rule 13 brings out that the Commissioner may delegate any of his powers to other sales tax authorities (generally not below the rank of Assistant STO) except the following:- (a) The power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready quoted), the new law only adds clarity by (now) declaring expressly that the powers exercised by the VAT authorities (which includes the Commissioner, at the helm) are nothing but "administrative functions". The new law also confers on the Commissioner, VAT responsibilities concerning registration of dealers, submission of returns, assessment, recovery, search, seizure, audit, investigation etc., as indeed the task of overall superintendence and control, as were exercisable earlier by Commissioner, Sales Tax. The Commissioner, VAT also provides the guidance to the VAT authorities lower down in order through the powers of revision (Section 74A), rectification of mistakes and review (Section 74B), addressing objections including against assessment orders (Section 74), determination of specific questions (Section 84) or ruling on general questions (Section 85). 55. Though the Commissioner, VAT is responsible to guide the other VAT authorities by issuing from time to time such orders, instructions or directions as are deemed necessary for due and proper administration of the law, it does not extend to requiring any such authority to determine any objection or question "in a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier. 60. The general criminal law also permits compounding of offences. For purposes of the offences specified in the Indian Penal Code (IPC), there is an elaborate scheme available for such purposes, particularly, in the form of Section 320 of the Code of Criminal Procedure. Broadly speaking, the IPC offences are split into two categories; first, where the parties involved are at liberty to compound and approach the criminal court with the request for closure, and secondly, the class of offences where some further scrutiny is necessary by the court before the offence can be compounded. The check provided by the law in the latter category is in the form of "permission of the court". 61. Given the nature of the corresponding provision in the special law with which we are presently concerned, it is the first category, provided for in Section 320(1) of the Code of Criminal Procedure, which is more relevant. The clause indicates, in a tabular form, as to the offences (of IPC) which may be compounded and by whom. Noticeably, it is invariably the victim who was at the receiving end of such offence as must come forward to inform the criminal court that he is ready to bury the hatchet b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contrary, not even in exercise of power under Section 482 of Code of Criminal Procedure for compounding of the offence. 64. While there is no quarrel with the above proposition of law, it is trite that if the special law providing for a new offence (taking care of breaches of its provisions) also prescribes a certain procedure for its trial, pre-requisites for investigation or prosecution, presumptions or its classification (cognizable, bailable, compoundable etc.), the general procedural law (including rules of evidence) is to be applied as amended or modified by such special law. To put it simply, the criminal procedure (for investigation, trial etc.) in such cases is to be read as a complete code for such purposes, in the form it takes in light of modifications brought in by the special Law. 65. Seen in above light, Section 54 of the Delhi Sales Tax Act, read with Rule 44 of Delhi Sales Tax Rules is the complete code within which the Commissioner, Sales Tax had to examine and decide on the application for composition by the assessee. Drawing parallel with the provision contained in Section 320(1) of the Code of Criminal Procedure, the Commissioner, Sales Tax is the "person" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Commissioner to "determine" the amount of money subject to deposit of which he is agreeable to the composition. He cannot close the request for composition merely by conveying the composition money offered is inadequate. He must determine the appropriate amount of money and intimate to the offender giving him requisite time for its deposit. 69. Lest it is misunderstood, it must be clarified that the law does not expect or compel the Commissioner to accept the request for composition in each case. It only enjoins upon him to consider the request in light of the guidance provided by the law. As observed above, the process on the application for composition involves several stages. At the first stage, the Commissioner examines the request for composition on the principles of "justice" and "public policy". The Commissioner is within his jurisdiction to reject the prayer for composition if he finds it fails on such tests. If, on the other hand, he finds no such inhibition, the Commissioner proceeds further to examine the adequacy of the compensation offered. As mentioned above, inadequacy of the sum offered does not result in immediate rejection. The Commissioner must determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischiefs sought to be discouraged by Section 56 or those made penal by Section 50. 74. There, however, cannot be a punitive action on both fronts. If the Commissioner chooses to proceed under Section 56 to impose penalty, he is not allowed to launch prosecution. The first proviso to Section 50(1) prohibits criminal action if penalty has already been imposed. 75. It must be observed in above context that the law expects the Commissioner to take a conscious and informed decision. The prosecution for criminal offence under Section 50 is to be launched not as a general rule but in exceptional cases. If the Commissioner finds that enough deterrence can be provided by penalty to be imposed under Section 56 (inasmuch as it permits him to impose penalty two and half times the tax that has accrued in favour of the Revenue), he would choose that course instead of sending the matter to criminal court under Section 50. Noticeably further if, given the gravity of the facts involved, the matter has been taken to the criminal court for prosecution, the consequences for the wrongdoer are stiffer, even if he is able to persuade the Commissioner to compound, for the reason the composition money mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adequacy and no other adverse consideration had been mentioned before the Appellate Tribunal, the scrutiny at that stage was restricted to determination of the composition money only. As noticed earlier, the criminal action was initiated in this case for offence under Section 50(1) and not under Section 50(2) of Delhi Sales Tax Act. It only means that in the assessment of the sales tax authorities, there was no "willful" conduct on the part of the respondent. 79. In the above facts and circumstances, the expression "may consider" used by the Appellate Tribunal in its order dated 16.01.2006 could not have been construed by the Commissioner as anything but a direction. By using such phraseology, the Tribunal was being courteous. The only task remitted was to determine if the amount offered was the maximum permissible composition money that could be levied. In this fact situation, it was the turn of the Commissioner to show due deference to the views of the higher forum (Appellate Tribunal) and restrict his inquiry only to the subject of determination of the composition money. 80. As already found by us in earlier part of this judgment, the decision of the Commissioner on applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s actuated by malice, do not necessarily undermine "majesty of law" or lower the dignity of superior authorities. We, thus, direct the observations appearing in Para 3 of the impugned order dated 07.01.2014 to be struck out. 85. We, however, must add that by rejecting the request for composition, first on 01.06.2005 and then again on 07.03.2006, the Commissioner has failed to live up to the cause of Revenue for protecting which he is deployed. But for the manner in which the request has been handled, the composition money in the sum of Rs.5,64,000/- (assuming it represents three times the sales tax leviable) would have come as revenue in 2005-2006. In terms of the directions that we propose to issue in this matter, this money would hopefully now come to be deposited. Given the period of virtually a decade that has passed by, having regard to the effect of inflation, the real value of the money in the hands of the Revenue now would be a fraction of what would have been earned originally. Regrettably, the delay in the decision on appeal No.2/ATVAT/06-07 by the Appellate Tribunal (in which impugned order dated 07.01.2014 was passed), for which no apparent reasons have been cited befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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