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1995 DIGILAW 957 (MP)

JHULELAL ENTERPRISES v. SALES TAX OFFICER

1995-12-12

A.K.MATHUR, S.C.PANDEY

body1995
JUDGMENT The petitioner by this petition has challenged the validity of section 38-A(2) of the M.P. General Sales Tax Act, 1958 and also prayed that the order (annexure P17) dated August 20, 1993, demanding security of Rs. 10,00,000 may be quashed and the order dated September 2, 1993 (annexure P20) cancelling the certificate of registration under the Sales Tax Act may also be quashed. It is also prayed that the respondent No. 3 may be directed to furnish the requisite information to the respondent No. 1 as per their record maintained in accordance with the provisions of the Krishi Upaj Mandi Act and the Rules framed by the Krishi Upaj Mandi, Dabra. The petitioner also prayed that the notice for assessment (annexure P24) may also be quashed. 2. The petitioner is carrying on the business of purchase and sale of grain, oil-seeds, pulses and paddy at Dabra, which commenced with effect from November 1, 1992 and applied for registration under section 16 of the M.P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act"). The petitioner was liable to pay tax with effect from November 12, 1992 and according to proviso (ii) of the rule 15 of the M.P. General Sales Tax Rules, a dealer is required to file a return for the broken period of a quarter ending first after the date on which the dealer becomes liable to pay the tax and the quarter immediately following. As such, the first return which the petitioner was required to file was for the period from November 12, 1992 to March 31, 1993. The broken period was from November 12, 1992 to December 31, 1992. For this broken period, when the last return which was due to be filed for the period from January 1, 1993 to March 31, 1993, was filed on April 30, 1993. Despite that, the respondent issued show cause notice why the security of Rs. 10 lakhs may not be furnished by the petitioner under section 16-A(2) read with sub-section (3) of the Act. The petitioner filed return on April 30, 1993 but despite that, the order was passed for security of Rs. 10,00,000 vide annexure P17. Since the petitioner did not furnish security, therefore, his registration was cancelled vide annexure P20, dated September 2, 1993 under section 15(1)(c) of the Act. The petitioner filed return on April 30, 1993 but despite that, the order was passed for security of Rs. 10,00,000 vide annexure P17. Since the petitioner did not furnish security, therefore, his registration was cancelled vide annexure P20, dated September 2, 1993 under section 15(1)(c) of the Act. Therefore, the petitioner rushed to this Court by filing this petition challenging the validity of section 38-A(2) and also prayed for quashing both these orders and further prayed that he should be given all the relevant information for assessing his taxing liability. 3. A return has been filed by the respondents and the respondents in their return have denied the factum of return filed by the petitioner on April 30, 1993. The respondents have pointed out that as per return filed by the petitioner, it appears that the petitioner has made purchase to the tune of Rs. 7,94,640 but has not shown the same in his turnover, thereby he has concealed this income. This fact came to light by the Flying Squad. It is stated that since the petitioner appears to be guilty of concealment of this income, therefore, the respondents are demanding a security of Rs. 10 lakhs. 4. We have heard the parties and perused the record. 5. So far as the validity of section 38-A is concerned, suffice it to say that validity of section 38 was challenged before this Court which provides for appeal and the condition that when appeal is filed, the appellant has to deposit certain amount of the tax. That question was agitated before this Court in the case of Lachhmandas v. State of M.P. [1995] 98 STC 271; 1995 MPLJ 925 and the liability thereof has been upheld. Similarly, under section 38-A, the appeal is also maintainable for demanding the security under section 16-A of the Act and there also, the appeal has been provided before the Deputy Commissioner up to Rs. 25,000 and in case of more than that, it shall be sent to the Commissioner. There is also a condition that the appellant shall deposit half of the security. The condition in section 38-A for payment of security and in section 38 for payment of tax, are the same. We hold that section 38 is valid for the reasons mentioned in the aforesaid case of Lachhmandas [1995] 98 STC 274 (MP); 1995 MPLJ 925 . 6. The condition in section 38-A for payment of security and in section 38 for payment of tax, are the same. We hold that section 38 is valid for the reasons mentioned in the aforesaid case of Lachhmandas [1995] 98 STC 274 (MP); 1995 MPLJ 925 . 6. Next question is regarding the order passed by the authority vide annexure P17, demanding security of Rs. 10 lakhs. The jurisdiction of the authority for levying his penalty arises when the return has not been filed. Under section 16-A(2) it is laid down that where a dealer registered under section 15 or section 16 fails to furnish returns under section 17 in time or fails to pay the tax payable according to such returns in time or fails to furnish any return or fails to pay tax payable under the Act, such return is required to be submitted. In the present case, the petitioner has alleged in para 4 that he has filed the return on April 30, 1993, as per proviso (ii) to rule 15(1) within time and also deposited tax due according to the return, therefore, there is no need for the respondents to have issued a show case notice for demanding the security of Rs. 10 lakhs. This fact has not been disputed by the respondent in the return rather at the time of passing this order, the respondent was aware of the return filed by the petitioner and on the contrary, they have admitted that return has been filed by the respondents and as per return, it appears that there is concealment of the taxable turnover, which shows that the petitioner had filed return on April 30, 1993 and also denied the fact. Both these facts have been admitted by the respondents in their return. There was no necessity for the respondents to have issued show cause notice to the petitioner. It appears that as per section 16-A(2), where the assessee has failed to file the return or has failed to pay tax, then alone the contingency of issuing the show cause notice under sub-section (3) of section 16-A arises and authority will acquire jurisdiction for demanding the security. It appears that as per section 16-A(2), where the assessee has failed to file the return or has failed to pay tax, then alone the contingency of issuing the show cause notice under sub-section (3) of section 16-A arises and authority will acquire jurisdiction for demanding the security. But in the present case, it appears that the return has been filed by the assessee on April 30, 1993, as required under proviso (ii) to sub-rule (1) of rule 15, then in that contingency, there is no necessity for the respondents to initiate the proceedings for demanding the security. On failure to do so, his registration has been cancelled by annexure P20 dated September 2, 1993, which is also without jurisdiction. 7. The next question is that the petitioner has already filed return and made a request to the respondents to furnish all the material which they want to use against the petitioner and also requested that all the records of Krishi Upaj Mandi may be summoned but this demand of the petitioner is not being acceded to by the respondents. Section 18 deals with "assessment of tax" and sub-section (2) of section 18 provides for - "(2) In every other case, the Commissioner shall serve the dealer with a notice appointing a place and day and directing him - (i) to appear in person or by an agent entitled to appear in accordance with the provisions of section 21; or (ii) to produce evidence or have it produced in support of the returns; or (iii) to produce or cause to be produced any accounts, register, cash memoranda or other documents as may be considered necessary by the Commissioner for the purpose." Therefore, the assessee if requests the respondents for summoning the record of Krishi Upaj Mandi, then he has right and the respondents are under obligation to summon the record in accordance with law. Likewise, it is also incumbent on the respondent to furnish all the documents which they want to utilise against the petitioner for assessment. It is for the fair-play as well as for the requirement of section 18 of the Act. 8. Therefore, it is directed that the respondents make all the records which they want to use against the petitioner available to the petitioner and shall also summon the record. Validity of section 38-A of the Act is upheld. The petition is allowed in part. 8. Therefore, it is directed that the respondents make all the records which they want to use against the petitioner available to the petitioner and shall also summon the record. Validity of section 38-A of the Act is upheld. The petition is allowed in part. The order dated August 20, 1993 (annexure P17) and the order dated September 2, 1993 (annexure P20) are quashed. Petition partly allowed.