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Commissioner of Sales Tax Vs. Shantilal Kalidas and Bros. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Reference Nos. 74 and 75 of 1976
Judge
Reported in[1978]42STC166(Bom)
ActsBombay Sales Tax Act, 1953 - Sections 14, 15 and 34(1)
AppellantCommissioner of Sales Tax
RespondentShantilal Kalidas and Bros.
Appellant AdvocateM.S. Sanghavi and ;V.C. Kotwal, Advs.
Respondent AdvocateB.C. Joshi and ;P.C. Joshi, Advs.
Excerpt:
sales tax - reassessment - sections 14, 15 and 34 (1) of bombay sales tax act, 1953 - respondents alleged to have escaped assessment - notice issued under section 15 to show cause why turnover escaping assessment should not be assessed - reassessment proceedings can be initiated under section 15 provided that officer concerned is clothed with authority under statute to do so. - - 1. these are two references under section 34(1) of the bombay sales tax act, 1953, in each of which the following two questions have been referred to us :(1) whether the tribunal is correct in law in holding that an authority acting under section 15 of the bombay sales tax act, 1953, cannot resort to best judgment assessment ? (2) whether, on the facts and in the circumstances of the case and on a true and..........whether the tribunal is correct in law in holding that an authority acting under section 15 of the bombay sales tax act, 1953, cannot resort to best judgment assessment (2) whether, on the facts and in the circumstances of the case and on a true and proper interpretation of section 15 of the bombay sales tax act, 1953, the tribunal was correct in law in holding that the sales tax officer (viii), enforcement branch, bombay, could not initiate the proceedings under that section on the ground that the original assessment under section 14 of the said act was passed by the sales tax officer, c ward, bombay ?' 2. the brief facts necessary for deciding these references are that the respondents were registered as a dealer under the said act. their assessments for the period 1st april, 1955, to.....
Judgment:

Madon, J.

1. These are two references under section 34(1) of the Bombay Sales Tax Act, 1953, in each of which the following two questions have been referred to us :

'(1) Whether the Tribunal is correct in law in holding that an authority acting under section 15 of the Bombay sales Tax Act, 1953, cannot resort to best judgment assessment

(2) Whether, on the facts and in the circumstances of the case and on a true and proper interpretation of section 15 of the Bombay Sales Tax Act, 1953, the Tribunal was correct in law in holding that the Sales Tax Officer (VIII), Enforcement Branch, Bombay, could not initiate the proceedings under that section on the ground that the original assessment under section 14 of the said Act was passed by the Sales Tax Officer, C Ward, Bombay ?'

2. The brief facts necessary for deciding these references are that the respondents were registered as a dealer under the said Act. Their assessments for the period 1st April, 1955, to 31st March, 1956, and 1st April, 1956, to 31st March, 1957, were made by the Sales Tax Officer, C Ward, Bombay. In the respondents' income-tax proceedings certain books were seized by the Income-tax Officer. On receipt of this information, the Sales Tax Officer (VIII), Enforcement Branch, Bombay, also took charge of these books. On 24th February, 1964, the said Sales Tax Officer (VIII), Enforcement Branch, issued notices to the respondents under section 15 of the said Act to show cause why turnover escaping assessment for the said two periods should not be assessed. On 21st May, 1964, the said Sales Tax Officer (VIII), Enforcement Branch, passed reassessment orders under the said section 15. Against these reassessment orders the respondents filed appeals to the Assistant Commissioner of Sales Tax. Before the Assistant Commissioner of Sales Tax certain preliminary objections were raised as to the jurisdiction of the said Sales Tax Officer (VIII), Enforcement Branch, one of them being that there was no valid order of transfer to the said Sales Tax Officer (VIII), Enforcement Branch. The Assistant Commissioner of Sales Tax rejected all the contentions taken by the respondents and dismissed the said appeals. Against these orders of dismissal the respondents filed revision applications, and by his orders dated 11th October, 1967, the Deputy Commissioner of Sales Tax confirmed the orders of the Assistant Commissioner of Sales Tax. Thereupon, the respondents approached the Sales Tax Tribunal in further revision. The revision applications of the respondents were decided by the Tribunal on 5th November, 1969, holding that the two points which went to the root of the two cases and which arose in the revision applications before it were covered by its decisions in the case of Messrs. Hansraj Vishram Ravani v. State of Maharashtra and in the case of Messrs. P. Ambalal and Co. The Tribunal shortly stated the effect of these two decisions thus :

'In short it appears the Sales Tax Officers, Enforcement Branch, had initiated reassessment proceedings under section 15 (of the Bombay Sales tax Act, 1953) without having the proceedings duly transferred to his file, and in doing so he had made best judgment assessment under section 15 of the Act. Both theses questions are now in issue, and since the Tribunal has given its decision on these points, the orders of the Deputy Commissioner of Sales Tax will have to be set aside.'

3. It is against this judgment of the Tribunal that these two references have been made at the instance of the Commissioner of Sales Tax.

4. Now, from the passage from the judgment of the Tribunal quoted above it will be seen that there are two grounds on which the Tribunal held that the said Sales Tax Officer (VIII), Enforcement Branch, had no jurisdiction to pass the impugned orders of reassessment, these two grounds being (1) that he had initiated reassessment proceedings under section 15 of the said Act without having the proceedings duly transferred to his file, and (2) in doing so he had made a best judgment assessment under section 15 of the said Act. It may be mentioned that an order of assignment of the case of the respondents for reassessing them under the said section 15 for the periods in question was made by the Deputy Commissioner of Sales Tax on 6th March, 1964, that is, after the issue of the notices under the said section 15 to the respondents on 24th February, 1964. It would appear that according to the Tribunal the issue of a valid notice to an assessee by an officer possessing jurisdiction in the matter was a condition precedent to the assumption of the exercise of jurisdiction to reassess by hat officer. The second ground on which the Tribunal held that the order of the Deputy Commissioner of Sales Tax should be set aside was that in reassessment proceedings no best judgment assessment could be made. So far as the first question is concerned, both learned counsel are agreed that the point has been decided by us in favour of the department in Commissioner of Sales Tax v. P. Ambalal and Co. [1976] 38 S.T.C. 333., in which we held that it was competent to an officer exercising powers of reassessment under section 15 of the said Act to make a best judgment assessment. Accordingly, question No. (1) will have to be answered in the negative.

5. So far as the second question is concerned, Mr. Sanghavi, learned counsel for the applicant, has submitted that this question lies within a very narrow compass and that this question is confined only to the point that reassessment can only be done by the officer who makes the original assessment. This clearly appears to be the case on a plain reading of the question as framed, and Mr. Joshi, learned counsel for the respondents, conceded this. It is not correct to say that in no event an officer other than the officer who made the original assessment could initiate proceedings under the said section 15. An officer other than the officer who made the original assessment can initiate reassessment proceedings provided he is clothed with authority under the statute to do so. The question as raised in this bald form at the instance of the applicant would, therefore, have to be answered accordingly. We may, however, make it clear that the actual decision of the Tribunal, as would appear from the passage quoted above, is not that in no event can an officer other than the officer who made the original assessment initiate reassessment proceedings. The ground on which the Tribunal has held that the Sales Tax Officer (VIII), Enforcement Branch, had no jurisdiction to initiate reassessment proceedings was that he had purported to initiate such proceedings without having the proceedings duly transferred to him. This part of the finding of the Tribunal has not been sought to be challenged by the applicant in these references. The applicant has not sought to raise any question as to whether the order of assignment was valid or not or whether otherwise even, without there being an order of transfer or assignment, the Sales Tax Officer (VIII), Enforcement Branch, could have validly initiated reassessment proceedings. This part of the judgment of the Tribunal, therefore, remains unchallenged and unobjected to, and the answers to the two questions submitted to us would make no difference to the ultimate result of the revision applications filed by the respondents before the Tribunal and, therefore, in a manner of speaking, since the judgment of the Tribunal that the Sales Tax Officer (VIII), Enforcement Branch, could not initiate reassessment proceedings under section 15 of the said Act, without having the proceedings duly transferred to his file, remains binding for the purposes of these revision applications, in a sense it may well be said that the questions referred to us in these references are insufficient to dispose of the case completely, but this is the way which the applicant himself has chosen to adopt, and we cannot help it.

6. For the reasons set out above, we answer the questions referred to us as follows :

Question No. (1) : In the negative.

Question No. (2) : The Tribunal was not correct in law in holding that the Sales Tax Officer (VIII), Enforcement Branch, Bombay, could not initiate proceedings under section 15 of the Bombay Sales Tax Act, 1953, merely on the ground that the original assessment under section 15 of the said Act was passed by the Sales Tax Officer, C Ward, Bombay. The Sales Tax Officer (VIII), Enforcement Branch, Bombay, could have initiated proceedings under section 15 of the said Act had he been validly clothed with jurisdiction or authority to do so. We may make it clear that the Tribunal's finding that he was not clothed with jurisdiction or authority has not been challenged before us and remains unaffected by our judgment.

7. There will be no order as to costs of both these references.

8. References answered accordingly.


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