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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 ..... itled to the concessional rate available to the assessees fulfilling the requirements under Section 8 of the Central Sales Tax Act, 1956, the assessees would have been assessed at the rate of 4 per cent, which is the rate, which is higher than the rate at which the appellant/writ petitioner has been assessed. Therefore, we cannot say that there was no power even prior to the amendment to deal with a case like the present case. Therefore, we do not agree with the argument of the learned counsel for the appellant/writ petitioner that the impugned order is bad for the reason that it was beyond his powers. 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 giving any opportunity or there being no reason. In the notice, the Commissioner would state that a request has been sent by the Deputy Commissioner to authorize him under Section 29(4) of the Act and the reasons are as have been stated. In fact, there is no reference in this notice, to the notice, which he has already issued acting under Section 29(1) of the Act, namely, Annexure No. 3, dated 20.11.2015. Thereafter, we may notice the actual order, which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 said annexure is dated 11.01.2016. The appellant/writ petitioner gave its response vide Annexure No. 6. Thereafter, the Commissioner proceeded to pass Annexure No. 7 dated 15.02.2016. It is the said order, which came to be questioned before the learned Single Judge. This was besides seeking other relief, which we have already noted. 3. The learned Single Judge did not find it fit to interfere with the matter. The learned Single Judge dealt with the arguments of the appellant/writ petitioner that he was only a seller and that the C Forms wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant/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 the amendment, he points out that Section 29 of the Act has undergone a change. In Section 29, in Sub-Section (1), the legislature has added Clause (dd). It reads as follows: 29(1)(dd). During Assessment rebate or concession has been allowed on the basis of submitted declaration form or certificate but such submitted declaration form or certificate is found to be false or wrong, afterwards; or. 6. Learned counsel for the appellant/writ petitioner would submit that the object behind insertion of Section 29(1)(dd) was as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 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 Legislature being more cautious, namely, invoking the principle of abundans cautela non nocet. In other words, he would submit that even without Section 29(1)(dd), there was power available with the Commissioner under the provisions of Section 29 of the Act, as it existed to deal with a case like the present. In other words, the appellant/writ petitioner came to be assessed at the rate of 1 per cent tax. The rate of tax, which the appellant/writ petitioner would have been called upon to pay, but for the concessional rate available unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nover 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, apply accordingly: Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment or full assessment as the case may be. Explanation (1).- Nothing in this sub-section shall be deemed to prevent the Assessing Authority from making an assessment to the best of its judgment. Explanation (2).- For the purposes of this Section and of Section 30, Assessing Authority means the officer who passed the earlier assessment order, if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 comes to less than one year, such assessment or reassessment may be made within one year from the date of receipt by the Assessing Authority of the order vacating the stay. 12. Admittedly, Annexure No. 2 order of assessment was passed in this case. It is here that we must clear the ground by dealing with the argument of Mr. N.K. Arora, learned counsel for the appellant/writ petitioner that there is no power with the authorities to reassess, in the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessor 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 relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in section 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any tax required to be collected under this Act in such St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exercise all or any of the powers they have under the general sales tax law of the State in Section 9(2) of the Central Act are important. The words and for this purpose relate to assess, re-assess, collect and enforce payment of tax including any penalty payable by dealer under this Act. In that context, the last limb of Section 9(2) of the Central Act viz. and the provisions of such law...shall apply accordingly mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 of income-tax. This Court in Jain Brothers and Ors. v. Union of India 77 I.T.R. 107 said that penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax. 25. The Federal Court in Chatturam and Ors. v. Commissioner of Income-tax, Bihar 15 I.T.R. 302 said that liability does not depend on assessment. There must be a charging section to create liability. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (See Rishabh Agro Industries Ltd. vs. P.N.B. Capital Services Ltd.) The legislative casus omissus cannot be supplied by judicial interpretative process. Language of Section 6(1) is plain and unambiguous. There is no scope for reading something into it, as was done in N. Narasimhaiah v. State of Karnataka. In State of Karnataka v. D.C. Nanjudaiah the period was further stretched to have the time period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 concession has been allowed on the basis of submitted declaration form but such submitted declaration form is found to be false or wrong, afterwards. It is, undoubtedly, true that this may not assist the department in this case as it has been inserted only w.e.f. 31.03.2016. 17. We must, however, refer back and deal more specifically with the argument of Mr. N.K. Arora, learned counsel for the appellant/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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), as is the attempt of the Commissioner, namely, that it cannot be treated as a case where the assessment is at a rate lower than the rate at which it is assessable. On the other hand, the argument of Mr. Mohit Maulekhi, learned Brief Holder for the State/Revenue is that there is indeed power even de hors the amendment to deal with the contingency at hand. The argument of Mr. Mohit Maulekhi, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it 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. P. Lucknow reported in 2003 NTN (Vol. 22) 454. The learned Single Judge, as His Lordship then was, was dealing with a case, which involved the following facts: 2. For the assessment year 1978-79, a notice under Section 21 of the Act, was issued on the basis of information received from STO (SIB) that the dealer had supplied Gutti for ₹ 1,80,146.65 paise which was not shown i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 issued under the U. P. Trade Tax Act while the order was passed under the Central Sales Tax Act and hence, the order was patently without jurisdiction and the First Appellate Authority and the Tribunal ought to have quashed the order instead of remanding back the case. He further submitted that there was absolutely no material that there was any interstate sale even the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 passed in exercise of such powers are called ''reassessment orders' and the proceedings are popularly known as ''reassessment proceedings' for the simple reason that after the assessment has been made, the finality to an order is attached. But in fiscal Statutes, to protect the interest of Revenue, limited power to reopen final assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, 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, undoubtedly, reference is made to the order passed by the Commissioner. Section 29 of the Act and Section 9(2) of the Central Sales Tax Act, 1956 are specifically invoked. Therefore, may be, after issuing an earlier notice on 20.11.2015, without obtaining the approval of the Commissioner, but apparently on realizing that it would be unauthorized, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 giving any opportunity or there being no reason. In the notice, the Commissioner would state that a request has been sent by the Deputy Commissioner to authorize him under Section 29(4) of the Act and the reasons are as have been stated. In fact, there is no reference in this notice, to the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2016. 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 ₹ 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 the basis of the letter of Joint Commissioner in which the sale of aforementioned forms was mentioned, notice was issued under section 29(4) whereas no turnover was escaped from tax assessment on whose basis notice was being given under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, 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 Annexure 8. In Annexure No. 8, all the details have been given in regard to C Forms. The second aspect, we may notice, is that there is no reference in Annexure No. 8 to Annexure No. 3 notice. We may also notice that un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 group of appeals all the alternatives in the printed form were retained, and in others one or more but not all the alternatives were retained. Counsel for the State of Madras urged that a certificate in Form 'C&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, 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 his mind to the various contentions raised by the appellant/writ petitioner in regard to the C Forms and will also decide the matter untrammeled by what is stated above in the judgment of the learned S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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