1. This is a reference made by the Sales Tax Tribunal, Bombay, under section 34(1) of the Bombay Sales Tax Act, 1953, at the instance of the department.
2. The facts, which have given rise to this reference, are that the respondents who were carrying on business in coal-ash at Ahmednagar, had not got themselves registered as dealers under the said Act even though their turnover had exceeded the limit for registration prescribed by section 5 of the said Act. On coming to learn this fact, the Sales Tax Officer, Ahmednagar, served a notice upon the respondents on 8th April, 1964, to show cause why they should not be assessed under section 14(6) of the said Act. Though the respondents appeared pursuant to the said notice, they did not produce any books of account on the ground that they did not keep any books. The Sales Tax Officer, after hearing them, assessed the respondents as processors and fixed their liability to pay tax under the said Act from 1st April, 1957, under section 5(1)(b)(iii) of the said Act and levied a penalty of Rs. 1,500 under section 14(7) of the said Act. The respondents thereupon preferred an appeal to the Assistant Commissioner of Sales Tax which appeal was partly allowed. The respondents then filed a revision application to the Deputy Commissioner of Sales Tax, who partly modified the order of the lower authorities. The respondents then approached the Tribunal in further revision. At the hearing of this revision application, the Tribunal fixed the liability of the respondents with effect from 1st April, 1958, on the basis of the judgment of the Supreme Court in Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, Sales Tax Officer, Nagpur : 1SCR661 . The Tribunal also reduced the penalty imposed upon the respondents to 20 per cent of the amount of tax payable by them. At the instance of the department, the following three questions have been referred by the Tribunal to the High Court :
'(1) Whether the Tribunal was justified in law in holding that even though grounds or points of law are withdrawn or given up by the assessee before the lower authorities, it was still the duty of the authorities to adjudicate upon the said grounds according to law
(2) Whether the Tribunal was justified in law in considering the grounds which were actually withdrawn and given up before the Deputy Commissioner of Sales Tax by the opponent-assessee and in adjudicating upon the same and granting relief to the respondents by such adjudication and decision
(3) Whether the Tribunal was justified in law in fixing the liability of the opponent-assessee from 1st April, 1958, instead of 1st April, 1957, and reducing the penalty to 20 per cent of the tax assessed and payable by the respondents ?'
3. It is obvious that the third question is really a rolled up question and consists of two entirely separate questions. We accordingly split up question No. (3) into the following two questions :
'(3) Whether the Tribunal was justified in law in fixing the liability of the respondents from 1st April, 1958, instead of 1st April, 1957
(4) Whether the Tribunal was justified in law in reducing the penalty to 20 per cent of the amount of tax assessed and payable by the respondents ?'
4. At the hearing of this reference, Mr. Phadkar, the learned counsel for the applicant, stated that the applicant does not press questions Nos. (1), (2) and (4), but only desires this Court to determine question No. (3). We will, therefore, confine ourselves to a discussion of this question only.
5. In order to appreciate why the Tribunal fixed the liability of the respondents from 1st April, 1958, instead of 1st April, 1957, it is necessary to understand certain relevant provisions of the Bombay Sales Tax Act, 1953. Under section 5 of the Act, every dealer whose turnover exceeds the limit prescribed in the said section is liable to pay tax under the Act and under section 11, every such dealer is bound to get himself registered as a dealer under the Act. Section 14 of the said Act deals with assessment of taxes payable by a dealer. Section 14(6) deals with assessment of dealers who were liable to pay tax in respect of any period but had failed to apply for registration. That sub-section is as follows :
'If upon information which has come into his possession, the Collector is satisfied that any dealer has been liable to pay the tax in respect of any period but has failed to apply for registration, the Collector shall, after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of the tax, if any, due from the dealer in respect of such period and all subsequent periods.'
6. Section 15(1) deals with assessment of turnover which has either escaped assessment in any year or has been under-assessed or assessed at a lower rate, and for its assessment under section 15(1) or, as it is popularly called, a reassessment, a period of limitation has been provided, namely, five years of the end of the year in respect of which the assessment is to be made, that is, a notice to show cause why such a reassessment should not be made should be served upon the dealer within five years of the end of that particular year in respect of which the reassessment is proposed to be made. There was a similar section providing for reassessment in the C.P. and Berar Sales Tax Act, 1947, viz., section 11A, with this difference that the period of limitation therein was three years instead of five years as in the Bombay Act.
7. Section 11(4) of the C.P. and Berar Act, inter alia, provided that if a registered dealer did not furnish returns in respect of any period by the prescribed date, the Commissioner of Sales Tax should in the prescribed manner assess the dealer to the best of his judgment. These two provisions of the C.P. and Berar Act came up for consideration before the Supreme Court in the case, Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, Sales Tax Officer, Nagpur : 1SCR661 . In that case, the appellant was a registered dealer but had failed to furnish his returns. He was sought to be assessed under section 11(4) of the said C.P. and Berar Act. He thereupon filed a writ petition challenging the validity of the said section 11(4) and on the writ petition being dismissed, went in appeal to the Supreme Court. The Supreme Court held that section 11(4)(a) was discriminatory in view of section 11A(3) because it was open to an assessing authority to proceed against the appellant under any one of these two sections and, if the appellant was proceeded against under section 11(4)(a), the appellant could not have the benefit of the period of limitation prescribed under section 11(4)(1). Accordingly, the Supreme Court struck down section 11(4)(a) as being violative of article 14 of the Constitution. The Supreme Court also held that the notice issued in that case should be treated as a notice issued under section 11A(1). It was on the basis of this judgment that the Tribunal, applying the period of limitation of five years provided under section 15(1) of the Bombay Sales Tax Act, held that the liability of the respondents should be fixed with effect from 1st April, 1958, and not from 1st April, 1957.
8. In applying the ratio of the decision in Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare : 1SCR661 to the present case, the Tribunal overlooked a crucial fact, viz., that both section 11(4) and section 11A(1) of the C.P. and Berar Act applied to registered dealers, while section 14(6) the Bombay Sales Tax Act applies only to unregistered dealers.
9. The Constitutionality of section 14(6) of the Bombay Act came to be considered by the Supreme Court in State of Gujarat v. Patel Ramjibhai Danabhai : 3SCR788 . It was contended before the Supreme Court in that case that section 14(6) of the Bombay Sales Tax Act, 1953, and the corresponding section, viz., section 33(6) of the present Sales Tax Act, viz., the Bombay Sales Tax Act, 1959, prior to its amendment by Maharashtra Act 32 of 1972, were void as contravening article 14 of the Constitution because they did not provide for a period of limitation while section 15(1) of the 1953 Act and section 35 of the 1959 Act provided for a period of limitation. Reliance was placed on behalf of the respondents in that case upon the earlier decision of the Supreme Court in Anandji Haridas and Co. (P.) Ltd. : 1SCR661 . The Supreme Court held that there was no discriminatory treatment as contended for because section 14(6) of the 1953 Act and the corresponding section 33(6) of the 1959 Act applied to unregistered dealers, while section 15(1) of the 1953 Act and the corresponding section 35 of the 1959 Act applied to registered dealers only. The Supreme Court further held that putting unregistered dealers who, though liable to pay tax, failed to get themselves registered and did not pay any tax, in a separate class, to be dealt with under section 33(6) or 14(6), as the case may be, differently from other dealers falling under section 35 or 15(1), rested on an intelligible differentia having a rational nexus with the object of preventing tax evasion. The Supreme Court further pointed out that the reason why no limitation was provided either under section 14(6) or under section 33(6) was that tax evasion by unregistered dealers by reason of the clandestine modus operandi adopted by them and wholesale disregard of the law, was more contumacious in character, more sinister in its effect, both on the law-abiding tax payers and the collection of public revenue, and more difficult to detect than tax evasion by a registered dealer. In view of this judgment of the Supreme Court, the Tribunal was in error in importing the period of limitation provided in section 15(1) of the 1953 Act into an assessment made under section 14(6) of the said Act.
10. We, accordingly, answer question No. (3) in the negative, that is, in favour of the department and against the assessee.
11. There will be no order as to costs of this reference.
12. Reference answered accordingly.