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2006 DIGILAW 124 (HP)

BIMTARA ENTERPRISES (INDIA) v. DEPUTY EXCISE & TAXATION COMMISSIONER-CUM- APPELLATE AUTHORITY

2006-05-04

RAJWANT SANDHU

body2006
ORDER 1. This appeal has been field under Section 30(2) of the H.P. General Sales Tax Act, 1968 against an order dated 27.8.2004 passed by the first Appellate Authority vide which three appeals filed by the appellant against three different orders passed by the Assessing Authority, Kangra dated 31.10.2003, who had ordered re-assessments against the appellant for the assessment years 1998-99, 1999-2000,2000-01, were dismissed. 2. Brief facts of the case are that the dealer who is engaged in manufacture of wires, nails etc. purchased the raw materials against forms ST-XXV after payment of tax on the first stage. The dealer claimed deduction on account of purchase value of goods as raw material as per Rule-31 (xii) of the H.P. General sales Tax rules, 1970.The Assessing Authority, however, refused the same holding that as per Section 42 (c) the dealer was entitled to only set of tax as provided under the said section. Hence he ordered re-assessment against the dealer as mentioned hereinbefore. The appellant assailed the orders of the Assessing Authority before the first Appellate authority vide three separate appeals which were rejected on 27.8.2004. It is against the said orders that the present appeal has been filed. 3. I have heard the Ld. Counsel for the parties and have also perused the orders of the authority below. 4.The counsel for the appellant stated that the Assessing Authority had on the basis of the statutory forms submitted by M/s Bimtara Enterprises framed the original assessment of the appellant on 27.8.2002 allowing deduction under section 6 read of the H.P. G.S.T. Act, 1968 read with Rule 31(xii) of the H.P.G.S.T. Rules, 1970. Subsequently, the Assessing Authority issued notice on 13.10.2003 for framing re-assessment and proceeded to frame the re-assessment hurriedly within a period of 5 days while disallowing deduction under Section 6(2) read with Rule 31 (xii) and created an additional demand on account of tax, penalty and interest without assigning reasons for the change in opinion. He stressed that the Assessing Authority could not take up re-assessment of the case of M/s Bimtara Enterprises without there being additional material on the record available with him and from the perusal of the order of the Assessing authority no information was available as to what was the nature of the additional material that he had riled upon while framing the re-assessment orders. Counsel further argued that since the assessee does not fall in category as mentioned under Section 42-C as he had neither paid the tax at full rats under Section 6(2) at the time of purchase of material nor at concessional rate under section 42-B, the assessee cannot be debarred from claiming deduction under section-6 read with Rule (xii). Section-6 and the corresponding Rule 31 were an integral part of the H.P.G.S.T. Act, 1968 and H.P. Sales Tax Rules, 1970 respectively and could not be ignored for determining the taxable turnover of the assessee. Besides, audit objection cannot be made the basis of re-assessment as has been held in the rulings of several courts. The re-assessment was illegal as it appeared to be framed on the basis of the changed opinion and audit objection and the revised appreciation of legal provisions cannot be said to be the definite information as required for framing reassessment. 5. Besides, Assessing authority had imposed the penalty under Section 12(7) meant for not maintaining true records without any observation to this effect in his order. The accounts had been accepted by the Assessing Authority, no discrepancy had been pointed out in the account books and the additional tax demanded was on account of changed interpretation of the provisions,. Thus, the imposition of penalty was illegal and unwarranted and therefore liable to be set aside. Besides, additional interest had also been charged by the Assessing Authority in contravention of the provisions of the Act and the verdicts of the Supreme Court regarding non-admissibility the interest for the pre-assessment period. To buttress his arguments the counsel for the appellant cited following judgments:- (a) {2003) 133 STC 147 (A.P.) Kankadara Manure Works Vs. State of Andhra Pradesh "For exercising power under section 14(4) (Re-assessment) of the Andhra Pradesh General Sales Tax Act, 1957, what was required to be seen was not whether earlier order of the assessing authority was correct in law but whether there was fresh material for interference. If there was no fresh material no subsequent assessment should be made even though the earlier order was erroneous." (b) AIR 1979 SC 1960: judicial proceeding. It acquires finality bf the order being made. And the finality of such an order can be disturbed only in proceedings and within confines provided by law. If there was no fresh material no subsequent assessment should be made even though the earlier order was erroneous." (b) AIR 1979 SC 1960: judicial proceeding. It acquires finality bf the order being made. And the finality of such an order can be disturbed only in proceedings and within confines provided by law. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion and is not "information" entitling the Assessing officer to reassess the concluded assessment." (a) (1966) 17 STC 326 "In interpreting a fiscal statute the court can not proceed to make good the deficiencies, if there be any, in the statute. It shall interpret the statue as it stands and incase of doubt it shall interpret it in a manner favourable to the taxpayer. In considering a taxing Act, the court is not justified in straining the language in order to hod a subject liable to tax." (b) (1994) 94 STC 422 J.K. Synthetic Vs CTO "No interest can be charged in the cases where assessee has paid the due amount according to the returns submitted." 6. Counsel for the State merely stressed that Rule-31 (xii) could not override provisions of the H.P. G.S.T. Act, 1968 which did not make specific mention of deduction of purchase price of goods on which tax had been paid from the gross turnover in order to determine the taxable turnover and therefore the assessee could not challenge the re-assessment order on this ground. He also stressed for the recovery of interest on the ground that there had been non-payment of tax by the assessee earlier and since on re-assessment additional tax had been levied. The interest was also recoverable from the due date of payment of additional tax. 6. I have carefully perused the record and gone through the written arguments filed by the counsel for the appellant and weighed the oral arguments of counsels of the appellant and the State. It is clear from the record that no additional material was available with the Assessing Authority on the basis of which he could take up the case of M/s Bimtara Enterprises for re-assessment. The re-assessment order does not refer to any such material. It is clear from the record that no additional material was available with the Assessing Authority on the basis of which he could take up the case of M/s Bimtara Enterprises for re-assessment. The re-assessment order does not refer to any such material. It appears that the case for re-assessment order is due to some audit objection having been raised regarding this case and while the Assessing Authority initially accepted the deduction under Rule 31 (xii), later through the reassessment he decided to disallow this deduction. The order of the Assessing Authority was, therefore, not in accordance with the law as interpreted by the courts from time to time that reassessment can only be taken up on the basis of "additional information" and not on the basis of "changed opinion" regarding interpretation of the statue. 7. The first Appellate Authority had upheld the order of the Assessing Authority dated 23.10.2003 on account of re-assessment for the years 1998-99, 1999-2000 and 2000-2001. In view of the reasons cited above the order of the Appellate Authority dated 27.8.2004 is set aside as also the re-assessment orders issued by the Assessing Authority, Kangra at Dharamsala in this case. 8. Announced in the open court today on the 4.5.2006. The file may be consigned to the record room after due completion.