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2005 DIGILAW 379 (HP)

NARAIN DUTT v. DY-EXCISE & TAXATION COMMISSIONER-CUM-APPELLATE AUTHORITY, (CZ), MANDI HIMACHAL PRADESH

2005-10-06

A.R.BASU

body2005
ORDER This is an appeal against the order of Assessing authority dated 20.10.2000 & that of the 1st Appellate Authority dated 22-5-2004. The brief facts of this case are that the carriage of Khair wood togs worth Rs.23,30,000/- during the years 1996-97 & 1997-98 respectively, out of the territory of Bilaspur M.P. Barrier at Naina Devi, came to the knowledge of Assessing Authority of Bilaspur District. This much quantity of logs wood was sold to M/s Mahesh Katha Udyog of Una. The declaration about the carriage had been made in the Form of ST-XXVI at Barrier. On this information the mandatory notice under section 14(6) of H.P. General Sales Tax Act 1968 was sent to the appellate, but as the appellant did not co-operate so the assessment was done ex-parte on 20.10.2000. The assessing Authority raised a demand of Rs.42,000/- as tax Tax.8,000/, as penalties u/s 14(6) and u/s 35(2) for the years 1996-97 and Rs.3,12,000/- as tax, Rs.48,000/- as penalties u/s 14(6) and I 35(2) for the year 1997 & 1998 respectively. In fact the appellant used to purchase I standing trees of Khair Wood from the Jamindars and used to process the wood of these trees, which included (felling, cutting and making of loss) and then used to sell it to Katha Factories. Thus the act of the appellant was taxable being the first seller. The first appellate authority though upheld the earlier order, yet decreased taxable turnover of the appellant, by 10% and remanded the cases for taking the correct figures of taxable turnover. The appellant has come in appeal on the following grounds:- 1. That the appellant was never given an opportunity to prove his status with respect the disputed transactions and an exparte assessment was done illegally. 2. That a single notice u/s 14(6) was issued illegally for two years of assessment and the assessment has been done of the dealer being a registered dealer instead of unregistered dealer. 3. That the assessing Authority could not establish the appellant as dealer liable to pay sales tax before framing the assessment. 4. 2. That a single notice u/s 14(6) was issued illegally for two years of assessment and the assessment has been done of the dealer being a registered dealer instead of unregistered dealer. 3. That the assessing Authority could not establish the appellant as dealer liable to pay sales tax before framing the assessment. 4. That during the year 1996-97 the sales tax liability has wrongly been fixed w. e. f. 1.3.1997 as on that day the sales of the appellant were proved to have been amounting to Rs.2,70,000/- i.e., below the threshold limit of Rs.3 lacs and similarly during the year 1997-98 the tax liability has wrongly been fixed, as the entire sales were conducted between the period 1.5.1997 to 19.5.1997. 5. That the turnover had wrongly been taxed at full rate, despite the fact that the entire sales were made against R.M-1, as this were issued by the M/s Mahesh Udyog. 6. That the appellant has wrongly been treated as manufacturer/processor. The total amount of consideration received by the appellant was inclusive of substantial amount of labour charges and carriage charges. 7. That even if the contention of the State is taken as correct, the appellant has purchased trees and he is the second seller and the liability is that of the 1st seller and the 1st sale is tax-free under item No. 26 of the Schedule. The Stand of the respondent is:- (a) That the appellant was given full and sufficient opportunity to prove his status. The status of the appellant was clear from the documents i.e., the application of the appellant filed before the Forest Department at the pre-felling stage of the trees, discloses that he had purchased the standing trees from the growers. The memorandum of appeal before the 1st Appellate Authority also reveals that the appellant had claimed that he used to purchase standing trees from jamindars and later convert the into logs before selling to the Katha Factory. The memorandum dated 10.7.1996, issued by the forest department contained similar type of evidence showing that the appellant had purchased the standing trees of khair and he used to process it. The permission given by the forest department confirmed the same stand of the respondent department, which contained the conditions in the memo issued by the forest department and the certificate of the forest Range Officer. The permission given by the forest department confirmed the same stand of the respondent department, which contained the conditions in the memo issued by the forest department and the certificate of the forest Range Officer. (b) That as per Section 14(6) and Rule 34 of H.P. General Sales Act and Rules, there is no such condition or bar that a notice for a period of more than one year cannot be issued. The words in Section are "any period" makes the controversy clear. The "unregistered firm" 4417 dated 7.9.1999 & the clause (a) of the subsection (6) of Section 14 i.e. to unregistered dealer. (c) That there is clerical mistake in the order of the Assessing Authority with respect to the date of liability to pay tax should have been 3.3.97 in place of 1.3.97. That the 1st Appellate Authority has already reduced the taxable turnovers and rightly remanded the case to the Assessing Authority, as there was no reason to enhance the sales turnover as the sales figures were inclusive of the profit element being the gross sales. The department further submitted the total sales during the year 1996-97 were to the tune of Rs.6,44,000/- out of which sale worth Rs.2,70,000/- were made on 13.2.1997 and sales worth Rs.3,74,000/ were made on 3.3.1997 and the Assessing Authority has rightly assessed the appellant after giving him the benefit of the threshold limit of 3 lacs. Similarly the sales turnover for the year 1997-98 has rightly been assessed. (d) That the appellant is not simply a commission agent but he used to purchase the standing trees from the Jamindars and thereafter prepare logs after conversions or processing. (e) That as per the facts of this case, no notice of 30 days were needed as per the provisions of sub-section (2) of Section 4 of the HP. General Sales Tax Act, 1968. (f) That the appellant had purchased trees from the casual sellers i.e. Jamindars who were exempted under entry No.26 of Schedule-B of the Act and the appellant was the first seller and therefore liable to pay sales tax. 2.1 have heard the Ld. Counsel of the appellant and Ld. AETC (L) and have perused the record. The main controversy is the status of the appellant. 2.1 have heard the Ld. Counsel of the appellant and Ld. AETC (L) and have perused the record. The main controversy is the status of the appellant. As per the contentions of the Sales Tax Department there were number of documentary proofs to show that the appellant was not merely a commission agent but a person who used to purchase standing trees of Khair. The appellant used to process these trees before sale. I have perused the sub-section (6) of Section 14 of the Act, which makes it clear that any dealer, who is liable to pay the tax under the Act in respect of any period and who has failed to apply for registration may be assessed, after giving him an opportunity of being heard, within a period of five years. As per entry No. 26 of Schedule- B the jamindars appears to be not liable to pay any tax, being causal seller. The appellant has rightly been taxed to pay the sales tax being the first seller. 3. After the perusal of the order of the first appellate authority and the argument addressed by the Ld. AETC (L) it is clear that the appellant was a processor. The first appellate authority has already remanded the case to the Assessing Authority, by reducing the figures of taxable turnovers from Rs.3,50,000/- to Rs.3,44,000/- for the year 1996-97 and from Rs.26,00,000/- and Rs.23,30,000/- for the year 1997-98 and appears to have rightly been ordered for the re-determination of the tax liability for these years along with the liability to pay interest and penalty on these new figures u/s Section 14(6) and Section 35 of the Act. In the interest of justice the re-determination of the tax liability, penalty and interest if any, if the most appropriate remedy. However it is necessary to give the appellant due opportunity to prove his status with respect to disputed transaction. His contention that he is the second seller also needs to be examined. The appeal is accepted and the case is remanded back to the Assessing authority to do the needful, as per above directions and decide the case within a period of two months from the receipt of the copy of this order. The file after completion be consigned to the record room.