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1996 DIGILAW 268 (GAU)

Harlalka R. G. and Co v. State of Assam

1996-12-20

V.DUTTA GYANI

body1996
By this petition under Article 227 of the Constitution, the petitioner seeks to challenge the action of the Assistant Commissioner of Taxes, respondent No.3 in initiating suo motu revisiohal proceedings, and set aside the order of assessment and direct the Superintendent of Taxes to forfeit the amount of taxes under section 13B of the Assam Finance (Sales Tax) Act, 1956, hereinafter referred to as Sales Tax Act. 2. Few basic facts need be noted : The petitioner firm is an assessee, it submitted its return of turnover for the period ending 30th September, 1983 having paid full taxes. Subsequently, the petitioner was served with notice under section 9 (2) of the Assam Finance (Sales Tax) Act, 1956. The petitioner produces all books of account in support of his return. During period ending 30th September, 1983 a total sale of CI Sheets amounting to Rs. 19,97,902 was made out of which sales amouting to Rs. 18,3 8,782 were made to the Director of Food and Civil Supplies, while the balance of Rs. 1,59,120 was made to others. Sales amounting to Rs.6,85,495 were made on account of sales on goods purchased locally. The Director of Civil Supplies deducted tax @ 4% on the total sales made to the Director of Civil Supplies as per section 22 (5) of the Sales Tax Act. This deduction at the source was to the tune of Rs.70,722 which was deposited in the Government Treasury. A deduction of Rs.6,85,495 was allowed by the Superintendent of Taxes, on account of locally purcahsed goods, who completed the assessment vide order dated 21.4.84. An amount of Rs.50,477 was determined by the Superintendent of Taxes as payable, by the petitioner. Adjudging the amount of Rs.70,722 deducted at the source under section 22 (5) of the Act, a sum or Rs.20,45 5 was found to be paid in excess. What followed thereafter is a notice dated 23.10.92 by the Assistant Commissioner of Taxes under section 20 (1) of the Act to initiate suo motu revisional proceeding. The ground stated was that the deduction allowed by the Superintendent of Taxes of Rs.6,85,495 on account of locally purchased goods, was erroneous. The petitioner filed his objection vide letter dated 11.11.92 which stood rejected by order dated 30.11.92. The assessment order dated 24.1.84 was set aside and the Superintendent of Taxes was directed to make a fresh assessment in the light of the observations made. The petitioner filed his objection vide letter dated 11.11.92 which stood rejected by order dated 30.11.92. The assessment order dated 24.1.84 was set aside and the Superintendent of Taxes was directed to make a fresh assessment in the light of the observations made. It was further directed to forfeit the amount of tax on sales of Rs.6,85,495 under section 13B of the Act. Being aggrieved, the petitioner preferred an appeal before the Assam Board of Revenue which also met with dismissal vide order dated 15.12.94. Hence this present petition. 3. Learned counsel appearing for the petitioner argued that the impugned action is bad in law and without jurisdiction, at any rate, the direction to forfeit the amount of tax on sales of Rs.6,85,492 would not have been legally made. Learned Govt Advocate appearing for the respondent State, on the other hand, maintained that the impunged order and action is prefectly right and does hot call for any interference. 4. A mere glance of section 20 (1) of the Assam Finance (Sales Tax) Act, 1956, Would go to show that to attract the suo motu revisional power and to invoke the jurisdiction two conditions must be fulfilled. Firsly, there must be an order passed by subordinate authority and secondly, which is more important, the order must be erroneous and prejudicial to the interests of revenue. In the instant case, there are two aspects of the matter. Firstly, the invoking of suo motu revisional power and secondly, the forfeiture of taxes as ordered by the respondent No.3 and the matter has been remanded to the Superintendent of Taxes for a fresh determination in accordance with law. Assuming for the sake of argument, that the order passed by the Superintendent of Taxes is erroneous and prejudicial to the interest of the Revenue, in face of the direction made by the respondent No.3 to decide afresh the whole matter, it does not stand to reason as to why should a simultaneous direction of forfeiture be made by the same order. The Superintendent of Taxes is yet to decide the matter of remand. There is no order passed by the Superintendent of Taxes for such forfeiture and as the earlier order has been set aside by the respondent No.3, who has remanded the matter to the Superintendent of Taxes. The Superintendent of Taxes is yet to decide the matter of remand. There is no order passed by the Superintendent of Taxes for such forfeiture and as the earlier order has been set aside by the respondent No.3, who has remanded the matter to the Superintendent of Taxes. No proceedings have been initiated by the Superintendent of Taxes as regards forfeiture, the respondent No.3, therefore, was not justified in law to order forfeiture by invoking suo motu revisional powers. It is a cardinal rule of interpretation that taxing statute is to be strictly construed. The following passage from the celebrated commentray on Principles of Statutory Interpretation by Justice GP Singh, (Fifth Edition Reprint 1993) is highly instructive on the point: "If the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called on equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to tife words of the statute." 5. Of course, the principle of strict construction has its limits. Going by the plain-language and reading section 20 (1) in juxtaposition with section 13B, particularly sub-section (1) and (2) thereof, the impugned action of forfeiture cannot be sustained on the plain language of the provisions of the law. The host of authorities were cited on both sides but the real controversy lies in a narrow compass. It v/as contended by the learned Govt Advocate, as has also been averred in affidavit-in-opposition: "It is not correct that the forfeiture of tax can be made only when the tax is collected explicitely. The deponent states that the tax can be forfeited even when there is implied collection of taxes." 6: This submission cannot be accepted as it runs counter to the basic tenets of interpretation of taxing statute. There is nothing like 'implied' in a taxing statute. 7. The deponent states that the tax can be forfeited even when there is implied collection of taxes." 6: This submission cannot be accepted as it runs counter to the basic tenets of interpretation of taxing statute. There is nothing like 'implied' in a taxing statute. 7. For the foregoing reasons, this petition deserves to be allowed The impugned action of forfeiture is liable to be set aside and is accordingly set aside. The impugned order dated 30th November, 1992 as passed by the Assistant Commissioner of Taxes, Zone C, Guwahati, Annexure IV, is severable. There is a direction to make fresh assessment and yet another direction of forfeiture, it is the forfeiture part of the impugned order which stands set aside. So far as the fresh assessment is concerned, the Superintendent of Taxes is at liberty to proceed with fresh assessment in accordance with law and not be swayed or influenced by the observations made by the Assistant Commissioner of Taxes. Hie petition stands partly allowed.