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TMI Blog2018 (3) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... le element of examination of the declaration made by an assessee desirous of availing benefit of the scheme. Once the assessee applying for such a scheme fulfilled the eligibility conditions and paid the additional taxes, his assessment would be deemed to have been completed. The competent authority thereafter had no jurisdiction to question the declaration made by the assessee which would be in the realm of scrutiny assessment envisaged under subsection [3] of Section 41 of the Act. Quite apart from the plain language used in Section 41AA, for more emphasis, sub-section [1] of Section 41 was made notwithstanding anything contained in sub-sections [2] and [3] of Section 41AA. Further, even in the proviso granting benefit to one who availed the scheme, the Legislature has consciously provided that the same would be available irrespective of the fact whether notice under sub-section [3] of section 41 was issued or not. In other words, even if the scrutiny assessment under sub-section [3] of Section 41 had commenced, the dealer could make a declaration under Section 41AA and if fulfilled other conditions, the benefit flowing from such scheme would floss. Section 67 of the Act un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... often sale such DEPB to the importers of various goods. Between Department and the petitioner and other similarly situated exporters, there were long standing disputes about the nature of such DEPB benefits and in particular whether upon its transfer, the transaction would invite Sales-tax. 2.2 The petitioner had filed returns under the Sales Tax Act, 1969 [ the Act for short] for assessment years 1994-95 to 1999- 2000. These assessments were pending before the Assessing authority, when the State Legislature inserted Section 41AA in the said Act. We would take note of the background leading to insertion of the said provision and the detailed scheme for settlement of tax disputes contained in the said section a little later. For the time being, we may record that under the said newly inserted Section 41AA by the Gujarat Sales Tax [Second Amendment] Act, 2001 with effect from 1st September 2001, an eligible assessee could apply for the benefit of the said provision. If he fulfilled the required conditions and paid the required additional tax, his declarations made in the return would be accepted without scrutiny. 2.3 The petitioner applied for benefit under Section 41AA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10,98,696/= by way of tax, interest and penalty. He passed separate orders of the same date for the remaining assessment years also, levying unpaid duty with interest and penalty; figures of course would change in each year. 2.7 The petitioner filed revision petitions before the Tribunal and challenged the very jurisdiction of the revisional authority to assess the petitioner s returns once the petitioner s declarations under Section 41AA were accepted. The Tribunal, by the impugned judgment dated 31st August 2009 dismissed such revision petitions. The Tribunal s two significant observations were as under : 6. The learned revising authority has specifically noted in the order that account books and record of the applicant were seized by the officers of Sales Tax Department for the year 1994-95. The applicant/dealer did not disclose this fact at the time of hearing and filed application under Section 41 [AA]. Therefore, the applicant/dealer has misguided the officers of the Department and obtained order under Section 41[AA] by suppressing material facts. 7. The applicant has also not denied the fact that about the spot visit and spot inspection by the officers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revisional authority could not have carried out the assessment. Counsel also contended that the revisional authority could not have imposed penalty when no such proceedings were initiated by the competent authority. Counsel submitted that the Tribunal proceeded on completely erroneous facts. When the petitioner made a declaration, there was no impounding of the petitioner s documents nor the petitioner was subjected to any search. 3.1 In support of his contentions, counsel for the petitioner relied on the following decisions : 3.2 In case of A.St. Arunachalam Pillai v. M/s. Southern Roadways Limited Anr., reported in AIR 1960 SC 1191 in which, in the context of the revisional powers of the Government, the Supreme Court observed that the Government had power only to do that which the Regional Transport Officer could have done, but had refused to do. 3.3 In the case of State of Bombay v. Pandurang Vinayak Ors., reported in AIR 1953 SC 244, in which, in the context of deeming provision, the Supreme Court observed that, ..when a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to asce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. Sub-sections [2] and [3] of Section 41, which are relevant for our purpose read as under :- 41. Assessment of taxes : [1] xx xx xx [2] If the Commissioner is satisfied that the declarations or returns furnished in respect of any period are correct and complete, he shall assess the amount of tax due from the dealer on the basis of such declarations or returns. [3] If the Commissioner is not satisfied that the declarations or returns furnished in respect of any period are correct and complete and he thinks it necessary to require the presence of the dealer or the production of further evidence; he shall serve on such dealer in the prescribed manner a notice requiring him on a date and at a place specified therein, either to attend and produce or cause to be produced all evidence on which such dealer relies in support of his declarations or returns, or to produce such evidence as is specified in the notice. On the date specified in the notice, or as soon as may be thereafter, the Commissioner shall, after considering all the evidences which may be produced, assess the amount of tax due from the dealer. 5.1 Section 41AA was inserted to the said Act with effect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective of whether a notice under sub-section (3) of section 41 is issued or not, be deemed to have been assessed, if the dealer at his option makes payment of one thousand rupees for each specified period in the Government treasury on or before the 30th November, 2001; (b) in the case of a dealer whose tax payable for the specified period to which the declaration or return relates does not exceed fifteen thousand rupees, but does not exceed twenty-five thousand rupees, the amount of tax due from such dealer in respect of such declaration or return shall, irrespective of whether a notice of such declaration or return shall, irrespective of whether a notice under sub-section (3) of section 41 is issued or not, be deemed to have been assessed, if the dealer at his option makes payment of one thousand rupees for each specified period in the Government treasury on or before the 30th November, 2001. (2) The payment made by a dealer under 3[ ] of sub-section (l) shall be- (a) as if the dealer had furnished revised declaration or revised return under sub-section (3) of section 40, and (b) as payment made under sub-section (3) of section 47 towards the liability of the deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal rejects any application for revision under this section, the Commissioner or, as the case may be, the Tribunal shall record the reasons for such rejection. 6. As noted, Section 41 of the Act pertains to assessment of taxes. Under sub-section [1] of Section 41, a registered dealer would be assessed separately for each year. Under sub-section [2] of Section 41, if the Commissioner was satisfied that the declarations or returns furnished by a dealer were correct and complete, he would assess the amount of tax due from the dealer on the basis of such declarations or returns. If the Commissioner therefore proceed under sub-section [2] of Section 41, he would merely compute the assessee s tax liability on the basis of declarations made by him in the returns. Under sub-section [3] of Section 41, on the other hand, if the Commissioner was not satisfied about the correctness or completeness of the declarations or returns furnished by the assessee, he could require presence of the dealer or direct him to produce further evidence by issuing a notice in this respect. On the date so specified for such purpose or soon thereafter, the Commissioner would, after considering the evidence on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as if the dealer has furnished a revised declaration or return and the payment was towards liability of the dealer under such revised declaration or return. Sub-section [3] of Section 41AA laid down important conditions of eligibility for availing the scheme under Section 41AA. The provision is expressed in negative form, providing that nothing in this section shall apply to a dealer [a] whose books of accounts, registers, documents have been impounded or seized under Section 59 of the Act, or [b] who has availed of tax exemption or tax deferment under any of the incentive schemes of Government of Gujarat. 9. Analysis of this section would show that the provision was in the nature of a general amnesty. The State Legislature having noted that despite efforts made for simplification of assessments there are large number of pending disputes which had clogged the system, introduced a one-time amnesty scheme. The scheme was peculiar on two counts viz., unlike the settlement schemes under the Income-tax Act, 1961 or the Customs or Central Excise Act, it is not an ongoing scheme and covered only the assessments which were pending and which related to AY 1999-2000 and earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section does not envisage any formal acceptance of a declaration by the competent authority. The deeming fiction would automatically and immediately kick in. This is not to suggest that even if a declaration itself is found to be wrong, erroneous or as per the declaration, a dealer is found wanting in any of the conditions, he can still claim benefit of the scheme merely because he had made a declaration. To this extent, the role of the authority certainly is envisaged, but not beyond. To suggest that even when a dealer makes declaration; even if such a dealer is otherwise eligible fulfilling all conditions of Section 41AA of the Act, such a declaration could be rejected, would be wholly incorrect. 11. To suggest that in such a case a dealer may get away with tax evasion since his very initial declaration in the return may itself be incorrect, begs the question. If any such declaration still permitted a scrutiny at the hands of the assessing authority of the correctness of the declarations in the return, the very purpose of inserting Section 41AA would frustrate and the situation would be brought back to the stage of assessment under sub-section [3] of Section 41 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s invalid or in any other manner rejected, the natural consequence would be that the petitioner s pending assessment would be completed in terms of Section 41 of the Act. Mere rejection of the declaration under Section 41AA of the Act would not result into automatic tax liability being confirmed against the petitioner. In fact, the revisional authority proceeded in a summary manner and completed assessment at its own level by allowing a brief time and intervention to the petitioner. The Tribunal, in our opinion, proceeded on erroneous facts, and therefore, committed a legal error. We have reproduced the Tribunal s factual conclusions which suggests that the Tribunal was under impression that the petitioner s documents and books of account were seized prior to making declaration under Section 41AA of the Act something even the Department had not contended. Had the Tribunal been correct in such factual conclusion, the legal conclusion of the Tribunal would be unexceptionable. It is brought to our notice that the very Tribunal in another case [M/s. Devkrupa Industries v. State of Gujarat : Decided on 30th July 2008] where it is found that the disqualifications flowing from of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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