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TMI Blog2018 (1) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in brief, of the appellant/writ petitioner is as follows: Appellant/writ petitioner is registered under the Uttarakhand VAT Act, 2005 (hereinafter referred to as the "Act"). Appellant/writ petitioner is also registered under the Central Sales Tax Act, 1956. The appellant/writ petitioner was assessed under the Central Sales Tax Act, 1956 in respect of its Inter-State transactions, and the assessment order was passed vide Annexure No. 2. Assessment was completed under the Central Sales Tax Act, 1956. The appellant/writ petitioner was taxed at the rate of 1 per cent. This was done, apparently, on the basis that the appellant/writ petitioner produced 'C' Forms from its buyers, and it is on the said basis that the assessment was completed. Annexure No. 3 to the writ petition is a notice purported to be issued under Section 29 of the Act; it is dated 20.11.2015 (though it may be noted that it is seen dated in the month of October, 2015). The appellant/writ petitioner submitted its reply. Thereafter, the appellant/writ petitioner received Annexure No. 5 notice issued by the Commissioner, apparently, purporting to invoke the powers available to him under Section 29 (4) of the Act. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure on the ground, on which, it is purported to be done. Expatiating, he would submit that the Commissioner has purported to invoke the power under Section 29 (4) of the Act on the score that this is a case, which involved assessing the appellant/writ petitioner at the rate of tax, which was vouchsafed for the appellant/writ petitioner on the wings of the 'C' Forms, which were made available to the appellant/writ petitioner by its buyers. The ground, which apparently weighed with the authorities, is that 'C' Forms, relied on by the appellant/writ petitioner, were found to be not verifiable or rather not issued by the competent authorities. It also appears that the authorities noted that the buyers had not included the transactions in their returns before their competent authorities. If that be so, he would point out that the Taxing Authorities were not remediless as they could always proceed against the buyers. This is besides again pointing out that in such a case, that is to say where the 'C' Forms were found to be non-existent or false, there was no power with the Commissioner under Section 29 of the Act as it stood prior to the amendment, which took place on 31.03.2016. After t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1956, and still further, it was unsupported by any order under Section 29(4) of the Act. He would draw our attention to Section 32 of the Act. He would submit that under Section 32 of the Act, though assessment and re-assessment are contemplated and approved of under Section 29, the provision, contained in Section 32(7) which provides for excluding the periods when there was a stay obtained from a Court, could not be available to the department in the facts of this case, having regard to the wording used in Section 32(7), which also we will deal with. 8. Per contra, Mr. Mohit Maulekhi, learned Brief Holder for the State of Uttarakhand/Revenue would point out that after the issuance of Annexure No. 7 impugned order, Annexure No. 8 was issued, which is dated 23.02.2016 purporting to be under Section 29 of the Act and, therein, there is reference to Section 9(2) of the Central Sales Tax Act, 1956 also. As far as the contention based on absence of power with the Commissioner to issue Annexure No. 7, at the time he issued it, is concerned, having regard to the later development in the law by virtue of amendment, he would submit that it only represents the case of the Legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Single Judge refusing to interfere with the order passed under Section 29(4) of the Act. Since the consideration of the arguments of the parties in this case revolves around the provision of Section 29, we deem it appropriate to refer to the same. Section 29 of the Act reads as under: "Section 29 : Assessment of Escaped Turnover- (1) Where after a dealer is assessed under Section 25 or Section 26 for any year or part thereof, the Assessing Authority has reason to believe that the whole or any part of turnover of the dealer in respect of any tax period has- (a) escaped assessment; or (b) been under assessed; or (c) been assessed at a rate lower than the rate at which it is assessable; or (d) been wrongly allowed any exemption or deduction therefrom; or (e) been wrongly allowed any tax credit therein, the Assessing Authority shall, after recording the reasons in writing, serve a notice on the dealer and after giving the dealer a reasonable opportunity of being heard and making such enquiries as he considers necessary, he shall assess or reassess the turnover of the dealer and tax according to law and the provisions of this Act shall as far as may be, appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment or Reassessment (1) No order of assessment under Section 24 for any tax period of an assessment year shall be made after the dealer has submitted annul return for such assessment year and where annual return has not been submitted by the dealer, assessment shall not be made after the expiry of the period prescribed or time allowed, if extended, for submission of annual return for such period. (2) Except as otherwise provided in Section 28 no order of assessment or reassessment under any provisions of this Act for any assessment year shall be made after expiration of 3 years from the end of such assessment year. (3) Assessment or reassessment order under the provisions of Section 29 may be made within the time prescribed therein. (7) Where the proceedings for assessment or reassessment for any assessment year remain stayed under the orders of any Court or authority, the period commencing from the date of stay order and ending with the date of receipt by the Assessing Authority concerned of the order vacating the stay, shall be excluded in computing the period of limitation provided in this Section: Provided that if in so computing, the period of limitation c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties, charging or payment of interest, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, be rules made in this behalf make necessary provision for all or any of the matter specified in this subsection. (2A) All the provisions relating to offences, interest and penalties (including provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax is illegal. The Court proceeded to hold, inter alia, as follows: "12. Section 9(2) of the Central Act first provides that the authorities empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, re-assess and enforce payment of tax including any penalty payable by a dealer under the Central Act. The State Sales Tax authorities are thus created agents of the Government of India. The second important part in Section 9(2) of the Central Act is that the State authorities shall assess, re-assess, collect and enforce payment of tax including any penalty payable by the dealer under the Central Act as if the tax or penalty payable by such a dealer under the Central Act is a tax or penalty payable under the general sales tax law of the State. This part of the section sets out the scope of work of the State agencies. The words "assess, re-assess, collect and enforce payment of tax including any penalty payable by dealer under this Act" mean that the tax as well as penalty is payable only under the Central Act. 15. The words "and for this purpose they may exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as liability to pay penalty is created by the Central Act. One of the reasons why tax as well as penalty is the substantive provision in the Central Act and is not incorporated by reference to the State Act is illustrated by the history of Section 9(2) of the Central Act. The present Section 9(2) of the Central Act was formerly Section 9(3) of the Central Act. The Madras High Court in D.H. Shah & Co.'s (1967) 20 STC 146 (Mad) case pointed out that the imposition of penalty under Section 12(3) of the Madras Act, 1959 could not be attracted for levy of penalty. The Madras High Court gave the reason that the then Section 9(3) of the Central Act only adopted the procedure of the State Act for assessment, re-assessment, collection and enforcement of tax as well as penalty payable under the Central Act. 24. Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Reference may be made to Section 28 of the Indian Income-tax Act, 1922 where penalty is provided for concealment of income. Penalty is in addition to the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial Corporation and others reported in (2003) 2 SCC 455, the Hon'ble Apex Court, inter alia, held as follows: "11. It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the Legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said, "Statutes should be construed, not as theorems of Euclid", Judge Learned Hand said, "but words must be construed with some imagination of the purposes which lie behind them". (See Lenigh Valley Coal Co. v. Yensavage). The view was reiterated in Union of India and Ors. v. Filip Tiago De Gama of Vedem Vasco De Gama (SCC p. 284, para 16). 13. While interpreting a provision the Court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 25 and 26 of the Act. Section 29 of the Act contemplates, undoubtedly, the existence of an assessment under Sections 25 and 26 of the Act. It is thereafter that power is given to assess or reassess as provided in Section 29 of the Act. In fact, Section 29 of the Act contemplates the power of reassessment and assessment when the Assessing Authority has reason to believe that the whole or any part of the turnover in respect of any tax period has escaped assessment. It further contemplates the use of the power when there has been an underassessment in the course of the original assessment under Section 25 or 26 of the Act. Far more importantly, for the purpose of our case, it also empowers assessment when there has been an original assessment at the rate lower than the rate at which it is assessable. It also refers to cases of erroneous grant of any exemption or deduction. Clause (e) finally contemplates allowing any tax credit therein erroneously. It is, thereafter, that the amendment was brought about in the year 2016 w.e.f. 31.03.2016, by which Clause (dd) was added in Section 29(1) of the Act. It is true that it provides for the words "during assessment rebate or concessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy available to the authorities to undo the wrong assessment. We would think that this argument, which is based on the decision in the case of M/s Khemka and Co. (Agencies) Pvt. Ltd. Vs. State of Maharashtra reported in AIR 1975 SC 1549, does not appeal to us and we, therefore, reject it. 18. The fact that in the U.P. Act, there is no reference to Sections 25 and 26 in Section 29 may not, in our view, take away the power of the authorities to carry out the reassessment in the circumstances involved in this case. 19. Having dealt with the argument that this cannot be treated as having anything to do with Section 25 of the Act and must be treated as having been passed exclusively under Section 9(2) of the Central Sales Tax Act, we must deal with the argument that there is no power to invoke Section 29 of the Act, in the facts and circumstances of this case, as it involves the case of 'C' Forms being suspect on the ground that they are not verifiable and they are not issued by the authorities. The argument runs that till 31.03.2016, the Court may take it that there was no power under Section 29 of the Act to deal with such a contingency and it could not be brought under Clause (c), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure No. 3 jurisdictional notice, which was issued on 20.11.2015, is concerned, there is no reference to Section 9(2) of the Central Sales Tax Act, 1956 and, therefore, it is bad and without jurisdiction, and, also for the reason that at that time, there was no order passed under Section 29(4) of the Act, we are afraid that we cannot agree with the learned counsel for the appellant/writ petitioner. It may be true that on the day when Annexure No. 3 was issued, namely, 20.11.2015, the period of limitation, which is provided in Section 29(2) was over. In fact, there was much argument by Mr. N.K. Arora, learned counsel for the appellant/writ petitioner with reference to Section 29(2) and Section 29(3) of the Act. Section 29(2) of the Act, it may be noted, provides for the period of three years from the end of the year in question, whereas Section 29(3) of the Act provides for the period of three years and nine months, provided the notice is issued within a period of three years and six months, as we have already noticed. There is also support sought and drawn from the judgment of the Allahabad High Court in the case of M/s Kishan Chand Agarwal, Agra Vs. Commissioner of Sales Tax, U. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice, proceedings under Section 21, can not be quashed. Tribunal further observed that the dealer had sold Gutti to Faridabad (Haryana) which was alleged to have been supplied in Faridabad. Since the disputed supply was made to Faridabad, undoubtedly this supply shall not come under the ambit of U. P. Sales Tax Act but for the determination of question whether the disputed supply was interstate sale or not, Appellate Authority had not committed any error in remanding the case back to the Assessing Authority for an enquiry to this fact after giving a notice under Section 21 under the Central Sales Tax Act. Thereafter, the Court proceeded to hold, inter alia, as follows: "3. I have heard Sri R.R. Agarwal, learned counsel for the applicant and Sri U. K. Pandey, learned Standing Counsel. The learned Counsel for the applicant contended that the notice under Section 21 is a jurisdictional notice and unless it is properly issued. Assessing Authority could not assume jurisdiction to proceed and in support of his submission, he relied upon the full Bench Judgment of this Court in the Case of Laxmi Narain Anand Prakssh vs. CST 1980 UPTC 125. He further contended that the notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year and after making such enquiry as he considers necessary, shall determine the correctness and completeness of the returns filed by a dealer and shall assess the tax on the basis thereof, as provided under section - 7 of the Act. The power to assess the turnover is vested in the Assessing Authority irrespective of the fact whether the dealer has submitted the requisite return within time or the said return is correct or complete. The Assessing Authority is required to frame the assessment order after making such enquiries as he may consider necessary and for the purpose of making enquiry a notice is given under Rule 41 (8) of the Rules framed under the Act. The exercise to complete the assessment is to be completed within the prescribed period of limitation as per section 21 (2) of the Act. Such assessments are popularly known as ''regular assessment'. Under Section 21 of the Act like, other fiscal statutes, power has been given to the Assessing Authority to assess or reassess the dealer or tax if he has reason to believe that whole or any part of the turnover of the dealer for any assessment year or part thereof has escaped assessment to tax. Assessment orders p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olly without jurisdiction and absolutely illegal and without authority." 24. Per contra, Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue would refer to the judgment of the Allahabad High Court in the case of M/s Jagan Nath Dudadher Shah Kamal Road Aligarh Vs. State of U.P. and others reported in 2009 SCC OnLine All. 942. This was a case, where, on the basis of the 'C' Forms, assessment was completed and, thereafter, it was found that the 'C' Forms were unverified. In this case, the Commissioner passed an order extending the period of limitation. The Court was dealing with the question as to whether it should interfere with the order, having regard to the requirement in the statute about existence of reason to believe whether any turnover has escaped assessment. It did not specifically deal with the issue as such in this case and therefore, we need not advert to it more. 25. Mr. N.K. Arora, learned counsel for the appellant/writ petitioner, in fact, would discount the significance of Annexure No. 8. Annexure No. 8, it be reminded, is a notice, which was issued after the permission granted by the Commissioner by his order dated 15.02.2016. In Annexure No. 2, undoubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by them. Hence the on sales covered by such forms the tax at the rate of 4 percent is remained to be levied. In this reference you having presented before the undersigned on date 22-01-2016 at 11:30 am, must present your case in writing or orally and tell the reasons why on the basis of the "reasons and facts" submitted by the tax assessment officer they should not be authorized for the reassessment of tax under section-29(4). In the event of your absence at the fixed date it will be deemed that you are agreed to the reasons given by the tax assessment officer and on the basis of the same you also agree with him being authorized to reassess the tax under Section 29(4) and accordingly tax assessment officer will be given permission to reassess the tax under section- 29(4). Sign dated 11-01-2016 (B.B. Mathpal) Additional Commissioner, Commerial Tax Haridwar Zone, Haridwar. 26. The appellant/writ petitioner, in fact, has been given an opportunity and the appellant/writ petitioner making use of the same has given reply to the same. Be it noted that this is not a case where the order passed under Section 29(4) of the Act is bad for the reason that it was passed without g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the trader for service which was duly served to the Clerk of the firm Shri Jitendra ji on dated 14-01-2016. On 22-01-2016 the counsel for the firm Shri S. P. Batla was present. Further time was requested by him. Hearing was fixed for the date 03-02-2016. On 03- 02-2016 the counsel for the firm Shri S. P. Batla and the counsel Shri N. K. Arora were present. While submitting written answers, the following objection in respect of the notice issued were raised by them and it has been mentioned that........ 1- On 25-05-2014 the order was passed under Section 9(2) of the Central Act of the year 2010-11. In which the sale covered by the Form - C of Rs. 491842414.00 was accepted under Section - 3 of the Central Sales Tax Act. 2- Notice No. 37 under section 29(4) was issued on 20-11-2015 in which the particulars of 17 Form - C along with the name of purchasers were mentioned. 3- It was wrongly mentioned in the notice served that Form - C filed at the time of hearing was not verified by the Tax Assessment Officer of the Purchasers. Hence these have not been verified by the concerned officer. Therefore the basis of issuing notice under section - 29 is wrong and illegal. 4- On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, and it was issued beyond the period of limitation under Section 29(2) of the Act; but on the request for sanction under Section 29(4) of the Act, after giving an opportunity of hearing to the appellant/writ petitioner, a reasoned order came to be passed under Section 29(4) of the Act and on the strength of the same, a notice has been issued as Annexure No.8 on 23.02.2016 adverting also to Section 9(2) of the Central Sales Tax Act, 1956. The complaint of the appellant/writ petitioner about the vices that afflict Annexure No. 3 described as the jurisdictional notice cannot pose any insuperable obstacle for the Revenue. After getting sanction under Section 29(4) of the Act, a fresh notice has been issued as Annexure No. 8 on 23.02.2016. 28. Two features may be noted. In the writ petition, there is no challenge to Annexure No. 8, though the learned counsel for the appellant/writ petitioner does draw our attention to prayer no. 2 that mandamus is sought seeking to restrain the reassessment proceedings; but the restraining could have been done only if there is an illegality in Annexure No. 7 order. If Annexure No. 7 order passes muster then there is no independent challenge to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant/writ petitioner based on Section 32(7) of the Act not being available to the respondents. In fact, learned counsel for the appellant/writ petitioner did bring to our notice the dates, on which the interim orders were passed; but, in view of the nature of the order we are passing, we do not think that we should go into those aspects. 30. Finally, we must, no doubt, refer to the argument based on the contention that the appellant/writ petitioner being the seller, it is the buyers, who are responsible and the rights of the appellant/writ petitioner cannot be interfered with. The learned Single Judge, we notice, has in its judgment referred to the decision of the Hon'ble Apex Court in the case of State of Madras Vs. Radio & Electricals Ltd. reported in AIR 1967 (SC) 234. No doubt, the learned Single Judge has entered the finding in paragraph no. 8 of its judgment while distinguishing the aforesaid judgment of the Hon'ble Apex Court. 31. We notice that in the case of State of Madras Vs. Radio & Electricals Ltd. reported in AIR 1967 (SC) 234, the Court, inter alia, held as follows: "10. Now in certain certificates in Form 'C' furnished by the purchasing dealer in this gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any of the purposes mentioned by him in Form 'C', or that the goods purchased have in fact not been used for the purpose declared in the certificate." 32. We may notice, in fact, that the Court, therefore, inter alia, took the view that it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration can be used by him for any of the purposes mentioned in Form 'C', or that the goods purchased have, in fact, not been used. We may, at the same time, notice that the Hon'ble Apex Court has held that it is the Sales Tax Authority, who is competent to scrutinize the certificate to find out whether the certificate is genuine. 33. It is, thereafter, that, no doubt, after referring to the said judgment of the Hon'ble Apex Court, the learned Single Judge has proceeded to hold as follows: "In our case, however, this very sale is in doubt as the documents submitted by the selling dealer for this purpose have been found to be fraudulently obtained. Therefore, no benefit can be given to the petitioner of the judgment cited by him." 34. In regard to this, we only make it clear that the Assessing Officer will necessarily apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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