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Gauhati High Court · body

1995 DIGILAW 98 (GAU)

Nowrangrai Rameswar v. Commissioner of Taxes

1995-05-19

J.N.SARMA

body1995
The books of account of the petitioner were seized by the respondent No.3 when the books were produced for examination for the purpose of assessment. This was on 27.10.88. Thereafter, the seized books were verified by the authority and on 29.11.88 seized books of accounts were released after being satisfied that the petitioner firm is not liable to registration under section 7(1) of the Central Sales Tax Act, 1955 as the* petitioner firm despatched jute to Calcutta on its own account. On 29.11.90 the petitioner firm served with a notice dated 29.11.90 under section 31 (1) of Assam Sales Tax Act, 1947 directing the petitioner to produce all the books of accounts for the year 1988-89 and 1989-90 on 6.12.90 in connection with verification of some particulars, i.e. Annexure II to the writ application. That notice is quoted below : “To M/s Nowrangrai Rameswar, Nagaon. Whereas in connection with verification of some particulars, you are required to produce all Books of A/cs relating to your business for the year of 1988-89 and 1989-90 and upto date before the undersigned on 6.12.90 at 11 AM in the office of the Assistant Commissioner Taxes, Nagaon Zone, Nagaon. Please note that for non compliance of the notice action will be taken under the provisions of the Act. Books of Account to be produced. 1. Cash Book and Ledger. 2. Bills and Cashmemoes. 3. Purchase vouchers. 4. Stock Accounts. 5. Returns submitted and copy of assessment order passed.” 2. The petitioner prayed for time and the case was refixed on 20.4.91; The case was further adjourned to 3.5.91 and lastly it was fixed on 17.5.91.On 17.5.91 the petitioner filed an adjournment petition which was dated 16.5.91. On 30.5.91 this writ petition was filed by the petitioner challenging the notice dated 29.11.90. The writ petition was admitted by the High Court and the operation of the notice dated 29.11.90 was stayed. The Assistant Commissioner of Taxes was informed by the petitioner verbally about the passing of the order by the Hon'ble High Court. The petitioner informed that the certified copy of the order has been applied and the same will be submitted immediately after receipt. On 1.6.91, the prayer for adjournment was rejected and the proceeding was finalised i.e. Annexure VI to the writ application. The petitioner informed that the certified copy of the order has been applied and the same will be submitted immediately after receipt. On 1.6.91, the prayer for adjournment was rejected and the proceeding was finalised i.e. Annexure VI to the writ application. That is quoted below : “ ORDER dated 29.5.91 On the basis of informations available with me as well as on the basis of information received from the case records, I am led to believe that the dealer is liable to registered under Central Sales Tax Act'59 under section 7(1) of the said Act as he has got sales of jute in course of interstate trade & commerce. But he was only registered under Assam Purchase Tax Act'67 and had paid upto date taxes regularly. But in the meantime it was found from the case records that some books of accounts relating to the dealer was seized by the Supdt. of Taxes, Nagaon on 27.10.88 on the ground that the dealer has got applied for registration under section 7(1) of the Central Sales Tax Act'56 in spite of his liability to do so and thereafter the seized books of accounts were also released by the officer on 29.11.88 stating inter alia that the books of accounts seized were released as he does not attract liability under section 7 (1) of the said Act as he despatched jute to Calcutta in their own account only. So the question of law steps into the process. Accordingly to avoid such ambiguity and to arrive at a definite conclusion as to the sale or otherwise of the purchases and to complete the suo-moto proceedings of the case notice under section 31 (1) of the Assam Sales Tax Act'47 was served to the dealer. The dealer, on the other hand, instead of producing accounts on the dates fixed had gone on applying for time, for adjournment of the cases one after another. Ultimately having got no other alternative I have finalised the suo-moto proceeding against the dealer. It was, however found from records that the dealer is registered under section 7 (1) of the CST Act'56 as an importer. His application for registration does not indicate anything as regarding to his other places of business outside the State except Guwahati. There is no informations in respect of other Agents etc. outside the State. Taxes were paid on jute so purchased within the State. His application for registration does not indicate anything as regarding to his other places of business outside the State except Guwahati. There is no informations in respect of other Agents etc. outside the State. Taxes were paid on jute so purchased within the State. While dispatching outside the State being last purchaser within the State under Assam Purchase Tax Act'67 such jute so despatched outside the State may also attract liability under CST Act'56. If these are not despatched outside the State either on his own account or to this Commission Agent. Particulars received in Check Gate declarations from the case records shows clearly that he has got despatched outside the State to others than his own account which can well be settled to be a sale in course of interstate trade & commerce. Since the dealer failed to produce accounts and did not avail himself of the opportunities so offered from time to time I have got no other alternative but to determine the sales in course of interstate trade & commerce on the basis of entire purchase of the jute, so despatched period wise outside the State adding 20% charges as freight and another 15% as profit and accordingly determined the sales under CSTAct'56 during the period as follows: Periods Sales Determined Purchase Prices 30.9.88 Rs. 11,11,032/- Rs.8,31,032/- 31.3.89 Rs.20,70,723/- Rs. 15,33,910/- 30.9.89 Rs.31,72,312/- Rs.23,43,864/- Superintendent of Taxes concerned is hereby directed to complete the assessment under CST Act'56 of the dealer for the above periods and to issue demand notice at once after getting him registered under CST Act' 56 under section 7(1) of the Act. While completing the assessments as above, he may however take course to the provisions of section 15 (b) of the CST Act' 56 to avoid double, taxation as jute being a declared item for special importance in course of interstate trade & commerce.” The legality and validity of that order is also challenged in the writ application. By the impugned order dated 29.5.91 the Asstt. Commissioner of Taxes directed that the Superintendent of Taxes should complete assessment under the Central Sales Tax Act, 1956 for the period ending 30.9.88 and 30.9.89 and after getting the petitioner No. 1 registered under section 7 (1) of the Central Sales Tax Act. 4. The following points were raised by the learned counsel for the petitioners Dr. AK Saraf. Commissioner of Taxes directed that the Superintendent of Taxes should complete assessment under the Central Sales Tax Act, 1956 for the period ending 30.9.88 and 30.9.89 and after getting the petitioner No. 1 registered under section 7 (1) of the Central Sales Tax Act. 4. The following points were raised by the learned counsel for the petitioners Dr. AK Saraf. (i) That the Superintendent of Taxes being the competent authority for the purpose of section 7 of the Central Sales Tax Act having released the books of account as per coming to the conclusion that the petitioner firm is not liable to registration under section 7 (1) of the Central Sales Tax Act, the Assistant Commissioner of Taxes had no jurisdiction under section 31(1) of the Assam Sales Tax Act in respect of the said matter and, as such, the impugned order is without any authority of law and null and void. (ii) That the conditions precedent for the exercise of power under section 31 (1) of the Assam Sales Tax Act being non-existent in the instant case, the Assistant Commissioner acted without jurisdiction in exercising powers under section 31 (1) of the Act as such, the impugned order dated 29.5.91 is illegal, without jurisdiction and not tenable in law. (iii) That the respondent No.2, Assistant Commissioner of Taxes being not the competent authority under section 9 (2) of the Central Sales Tax Act, he had no jurisdiction at all to pass the order dated 29.5.91 under section 31 (1) of the Assam Act directing the assessing authority to register the petitioner No. 1 under the Central Sales Tax Act is wholly illegal, without jurisdiction and not tenable in law. (iv) That the Assistant Commissioner of Taxes has impered its own finding on that of the finding arrived at by the Superintendent of Taxes without corning to the conclusion that the order passed by the Superintendent of Taxes on 29.11.88 was erroneous in so far as it was prejudicial to the interest of Revenue and, as such, the impugned order dated 29.5.91 is illegal without jurisdiction and not tenable in law. (v) That the Assistant Commissioner of Taxes was not justified in ignoring the adjournment petition filed on 17.5.91 as well as his own order passed adjourning the case fixed on 3.5.91 and refixing the same on 12.5.91 and subsequently passing the impugned order under section 31(1) after rejecting the petition dated 3.5.91, which was already allowed by him. (vi) That the impugned order having been passed after being aware of the order of this Hon'ble Court passed on 31.5.91, the impugned order dated 29.5.91 served on the petitioner firm after 31.5.91 is illegal and without jurisdiction. 5.1 have heard Dr. AK Saraf, learned Advocate for the petitioners and Dr. BP Todi, learned Govt. Advocate for the respondents. The particular question which arises for decision in this case is the power of the Commissioner of Taxes under section 31 (1) of the Assam Sales Tax Act, 1947. Section 31 (1) of the Assam Sales Tax Act is quoted below : “31. Revision by Commissioner. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any person appointed under section 8 to assist him, is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the dealer an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such orders thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.” 6. The impugned order of revision was exercised by the authority taking hold of section 9 (2) of the Central Sales Tax Act. Let us have a look at section 9 (2) of the Central Sales Tax Act. The impugned order of revision was exercised by the authority taking hold of section 9 (2) of the Central Sales Tax Act. Let us have a look at section 9 (2) of the Central Sales Tax Act. Section 9 (2) is quoted below: “ Subject to the other provisions of this Act and the rules made thereunder the authorities for the time being 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, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or 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 transfer of any business, imposition of the tax liability of a person carrying on business on 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, by rules made in this behalf make necessary provision for all or any of the matters specified in this sub-section.” 7. Dr. Saraf, learned Advocate for the petitioner submits that in exercise of the power under section 31 (1) it cannot take cue from the Central Sales Tax Act. It can instruct the authority to take action in respect of the matters mentioned there i.e. (i) to assess (ii) to re-assess and (iii) to collect and enforce payment of tax including any penalty. It can instruct the authority to take action in respect of the matters mentioned there i.e. (i) to assess (ii) to re-assess and (iii) to collect and enforce payment of tax including any penalty. He submits that the procedure of registration is provided by section 7 of the Central Sales Tax Act and in section 31(1) read with section 9(2) of the Central Sales Tax, the authority is not entitled to pass an order for the registration of the dealer. 8. The next submission of Dr. Saraf is that while going through the impugned order it will be seen that he relied on a personal information and the other materials which was not before the assessing authority in passing the impugned order under section 31 (1). Dr. Saraf submits that the authority does not have that power and it can only consider the materials which were before the assessing authority and it cannot consider any other fresh materials. In this connection Shri Saraf places reliance on the following decisions : (i) (1975) 35 STC 571 (Khemka & Co. Agencies Pvt. Ltd. vs. State of Maharashtra) wherein the question which came for consideration was that whether penalty can be imposed by the State Sales Tax Authority by taking cue of Central Sales Tax as unamended and the Supreme Court in this connection pointed out inter alia as follows : “(a) 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, reassess, 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, reassess, 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. (b) In other words, the genus is assessment, reassessment, collection and enforcement of payment. The genus is applicable in regard to the procedure for assessment, reassessment, collection and enforcement of payment. (b) In other words, the genus is assessment, reassessment, collection and enforcement of payment. The genus is applicable in regard to the procedure for assessment, reassessment, collection and enforcement of payment. The genus is from whom to collect and against whom to enforce. (c) These provisions in some cases are also for failure to submit return or failure to register. It is rightly said that those provisions cannot apply to dealers under the Central Act because the Central Act makes similar provisions. The Central Act is a self-contained code which by charging section creates liability for tax and which by other sections creates a liability for penalty and imposes penalty. Section 9 (2) of the Central Act creates the State authorities as agencies to carry out the assessment, reassessment, collection and enforcement of tax and penalty payable by a dealer under the Act.” 9. After this decision, section 9 (2) was amended and the word penalty was inserted therein. This will show that the power under section 9 (2) can be exercised by the State authority in respect of those matters specifically mentioned therein and not in respect of other matters. Registration is not a matter mentioned in section 9 (2) of the Central Sales Tax Act and in that view of the matter in exercise of the power under section 31 (1) of the Assam Sales Tax Act, 1947, the Asstt. Commissioner of Taxes prima facie cannot be deemed to have the power to give order for registration under section 7 (1) of the Central Sales Tax Act. 10. The next contention of Dr. Saraf is against an order passed by the Superintendent of Taxes regarding registration. No revision lies under section 31 (1) of the Assam Sales Tax Act, 1947 and in that connection Dr. Saraf submits that appeal or revision is the creative of the statute and when the statute does not make any provision either for appeal or for revision, the authority cannot exercise that power and/or cannot delegate that power. He submits that against the order either allowing the registration or rejecting the prayer for registration, no appeal or revision is provided and as such Assistant Commissioner of Taxes should not have exercised the suo-moto power of revision under section 31(1) of the Assam Sales Tax Act, 1947 and in that connection he places reliance on (1979) 44 STC 331 (Subhash Chandra & Co. vs. The State of Punjab & another) wherein the Punjab and Haryana High Court pointed out as follows :- “The right of appeal is the creature of a statute. Without a statutory provision creating such a right the person aggrieved is not entitled to file an appeal. We fail to understand as to why the legislature while granting the right of appeal cannot impose conditions for the exercise of such right. In the absence of any special reasons there appears to be no legal or constitutional impediment to the imposition of such conditions. It is permissible, for example, to prescribe a condition in criminal cases that unless a convicted person is released on bail, he must surrender to custody before his appeal against the sentence of imprisonment would be entertained. Likewise, it is permissible to enact a law that no appeal shall lie against ' an order relating to an assessment of tax unless the tax had been paid. Such a provision was the statute book in section 30 of the Indian Income-tax Act, 1922. The proviso to that section provided that”......no appeal shall lie against an order under sub-section (1) of the section 46 unless the tax had been paid.” Such conditions merely regulate the exercise of the right of appeal so that the same is not abused by a recalcitrant party and there is no difficulty in the enforcement of the order appealed against in case the appeal is ultimately dismissed. It is open to the legislature to impose an accompanying liability upon a party upon whom a legal right is conferred or to prescribe conditions for the exercise of the right. Any requirement for the discharge of that liability or the fulfilment of that condition in case the party concerned seeks to avail of the said right is a valid piece of legislation, and we can discern no contravention of Article 14 in it.” 11. Dr. Saraf further points out that in the judgment the learned Assistant Commissioner of Taxes relied on the information available with him as well as the information received from the records. Dr. Saraf submits that this is not permissible. Dr. Saraf further points out that in the judgment the learned Assistant Commissioner of Taxes relied on the information available with him as well as the information received from the records. Dr. Saraf submits that this is not permissible. Even if it is held that the Assistant Commissioner of Taxes had the power of revision, it is the fundamental principle of law that in exercising the power of revision, the authority is bound to consider only those materials and/or those records which were available before the subordinate authority. It cannot consider fresh materials or other things which were not before the subordinate authority. Dr. Saraf in support of this contention placed reliance in a number of decisions but it is not necessary to cite these decisions in the instant case inasmuch as that proposition of law is well established. 12. Next contention of Dr. Saraf is that going to the extreme even if it is held that the Assistant Commissioner of Taxes had all the powers in spite of it, it should not have passed the order in exercise of revisional powers fixing the quantum of sold property and give direction to the authority to assess the tax on the basis of the quantum determined by him. Dr. Saraf submits that this power is of the assessing authority and that power cannot be exercised by the revisional authority even if all the power rests with the Assistant Commissioner of Taxes and he submits that part of the order is absolutely without jurisdiction. 13. Next submission of Dr. Saraf is that before this order was passed by the authority, the further proceeding was stayed by the High Court and in that view of the matter, the order passed by the authority is nullity in the eye of law. The position of a stay order passed by the higher Court has been settled by the decision of the Supreme Court in AIR 1967 SC 1386 (Mulraj vs. Maruti Raghunathji Maharaj) wherein the Supreme Court has pointed out that any order of stay does not take away the jurisdiction of the Court. All that it does is to prohibit the Court from proceeding further and the Court unless it knows of the order it cannot be expected to carry it out. All that it does is to prohibit the Court from proceeding further and the Court unless it knows of the order it cannot be expected to carry it out. Therefore, till the order comes to the knowledge of the Court its jurisdiction to carry on execution is not affected by a stay order which must in the very nature of things be treated to be a prohibitory order directing the executing Court not to proceed further or to stay till further orders. The Supreme Court further points out that in the interest of justice even if the Court in the ignorance of the stay order proceeds with the matter subsequently when it comes to the notice of the Court, it should do away with that order. In the instant case it is not necessary to consider that aspect of the matter inasmuch as I am going to quash this order on other grounds but I am referring that aspect of the matter as it does not appear to be proper for an authority to proceed with the matter even when it is brought to the notice of that order, which has been passed by the High Court. That is what appears to be done in the instant case. The authority in spite of the knowledge of the stay order of this Court proceed with the matter and passed an order against the petitioner. Dr. Saraf also draws my attention to Annexure II the notice. He submits that this notice cannot be issued by the authority without first determining that assessment is erroneous. The precondition to issue this notice is that the authority must be satisfied that the order of assessment is erroneous. No materials whatsoever have been placed before this Court to show before issuing this notice i.e. Annexure II the authority was satisfied with prerequisites and in that view of the matter, I am of the view that this notice should not have been issued by the authority under section 31(1) of Assam Sales Tax Act, 1947. 14. Dr. No materials whatsoever have been placed before this Court to show before issuing this notice i.e. Annexure II the authority was satisfied with prerequisites and in that view of the matter, I am of the view that this notice should not have been issued by the authority under section 31(1) of Assam Sales Tax Act, 1947. 14. Dr. Todi, learned Advocate for the respondents submits that the registration under section 7 (1) of the Central Sales Tax Act is nothing but a proceeding in connection with the assessment of taxes and as such registration must be deemed to be a part and parcel of the proceeding of the assessment and in that view of the matter he submits that the authority can exercise the power under section 31 (1) by passing the order of registration by taking cue from section 9 (2) from Sales Tax Act. This submition of Dr. Todi cannot be accepted in view of the law and as amended and stated above. Dr. Todi in support of this submission relied on two decisions but those two decisions are not relevant for the purpose of this case. 15. After hearing learned counsel of both the parties and on perusal of the materials on record I allow this writ application and quash the notice dated 29.11.90 Annexure II and order dated29.5.91, Annexure IV to the writ application. I leave the parties to bear their own costs.