Skip to content


Rai Saheb Seth Gopikisan Agarwal Vs. Sales Tax Officer, Gondia and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application Nos. 401 and 402 of 1958
Judge
Reported in(1959)61BOMLR1517; [1960]11STC329(Bom)
ActsConstitution of India - Articles 226 and 227
AppellantRai Saheb Seth Gopikisan Agarwal
RespondentSales Tax Officer, Gondia and anr.
Appellant AdvocateS.W. Dhabe, Adv.
Respondent AdvocateN.L. Abhyankar, Special Government Pleader
Excerpt:
.....rr. 67, 19 - central provinces and' berar sales tax act (xxi of 1947), section 11(2) -- whether sales tax officer can transfer case to assistant commissioner -- validity of issue of notice under section 11(2} by sales tax officer when case transferred by him to assistant commissioner.;under the relevant rules framed under the central provinces and berar sales tax act, 1947, the sales tax officer or the assistant commissioner has jurisdiction in the first instance to deal with all the cases of registered dealers in the vidarbha region and scrutinize their returns, and it is only when he finds from the material on record or it is established that the gross turnover or taxable turnover of the assessee in the year preceding the year of assessment exceeds the pecuniary limit, he has to..........the approval of period of assessment does not exceed the assistant rs. 20 lakhs or whose taxable turnover commissioner of the year preceding the period of for imposition assessment does not exceed rs. 4 lakhs of penalty). or in respect of a dealer who has no 'year' preceding the period of assessment or in respect of any other dealer not falling in clause (a) or (c). ---------------------------------------------------------------------- 10. under the provisions of rule 19 the sales tax officer was competent to receive the returns filed by the petitioner before him, and looking to the 8th entry in rule 67 it is clear that the sales tax officer had jurisdiction to deal with all cases of the assessees in vidarbha whose gross turnover of the year preceding the year of assessment did not.....
Judgment:

Tambe, J.

1. This judgment in Special Civil Application No. 401 of 1958 shall also govern the decision of Special Civil Application No. 402 of 1958. Both these petitions arise out of the matter arising out of the Central Provinces and Berar Sales Tax Act, 1947. Petition No. 402 relates to the year 1952-53 and Petition No. 401 relates to the year 1953-54.

2. Rai Saheb Seth Gopikisan Agarwal, petitioner in both the cases, was a registered dealer at the material time within the meaning of the Sales Tax Act. The petitioner is a proprietor of the business known as Rai Saheb Gopikisan Agarwal, Mine Owners and Exporters, having his office at Tumsar, a place in the Vidarbha region. The petitioner's firm, according to him, carries on business of extracting manganese and exporting the ore outside India. The petitioner's accounting year is from Diwali to Diwali. The petitioner, therefore, has chosen this year for the purpose of the sales tax. Accordingly the year 1952-53 was for purposes of accounting from 19th October, 1952, to 6th November, 1953, and the year 1953-54 was from 7th November, 1953, to 26th October, 1954. During both these years the petitioner filed before the Sales Tax Officer, Gondia Circle, (respondent No. 1 in both the petitions), quarterly returns, but those returns were blank, as according to the petitioner no sale having taken place within the Vidarbha region he was not liable to pay any amount by way of sales tax under the Act. It appears that both these cases were taken together by the Sales Tax Officer though separate orders in each case were passed. On 20th July, 1955, the Sales Tax Officer issued two notices in respect of the two years under sub-section (2) of section 11 of the Act to the petitioner calling upon him :-

'(i) to produce evidence or have it produced in support of the returns;

(ii) to produce or cause to be produced accounts, registers, cash memoranda, or other documents out of those shown in the appended list'.

3. The cases were then heard and it appears that on 23rd December, 1955, Mr. S. N. Agarwal, agent of the petitioner, made a statement before the Sales Tax Officer, in the case relating to the year 1953-54, that for the year under assessment the gross turnover was more than Rs. 20,00,000. On the basis of the statement it appears the Sales Tax Officer transferred both the cases to the Assistant Commissioner, Sales Tax, for necessary action. The Assistant Commissioner later on gave notice on 25th September, 1957, to the petitioner. A copy of the notice filed by the petitioner in Special Civil Application No. 401 of 1958 (Annexure B) shows that it was a notice under sub-section (3) of section 10 of the Act. It appears that the Assistant Commissioner treated the blank returns filed by the petitioner as failure on his part to furnish the returns. By this notice, therefore, the Assistant Commissioner called upon the petitioner to show cause why action should not be taken against him. The proceedings continued before the Sales Tax Commissioner for some time and under the order of the Commissioner of date 23rd May, 1958, both these cases were transferred back to the Sales Tax Officer. On 4th July 1958, the Sales Tax Officer issued a notice under sub-section (2) of section 11 against the petitioner in respect of the year 1952-53, and he issued another notice on the same day, purported to be one under sub-section (3) of section 10, sub-sections (4)(a) and (5) of section 11 and sub-section (1) of section 22-C of the Central Provinces and Berar Sales Tax Act, 1947. By both these notices the petitioner was called upon to appear on 24th July, 1958, in both the cases.

4. The petitioner appeared in response to the notices and it appears that the cases were not taken up on 24th July, 1958, but were taken up on 26th August, 1958. On behalf of the petitioner an objection was raised that the notices dated 4th July, 1958, having been issued after the expiry of a period of three years for which it was proposed to make the assessment, were bad in law and, therefore, no action could be taken against the petitioner. This objection of the petitioner was overruled by the Sales Tax Officer by his order dated 27th August, 1958, on the ground that the notice under section 11(2) of the Act was first issued to the petitioner on 20th July, 1955. This notice was within the period of three years and hence the proceedings against the petitioner were tenable. It is these two orders of 27th August, 1958, against which these two petitions are filed.

5. Mr. Dhabe, learned counsel for the petitioner, contends that the notices of dated 20th July, 1955, have to validity in the eye of law. Admittedly, the Sales Tax Officer himself held that he had no jurisdiction to deal with the cases and has transferred the cases to the Assistant Commissioner on 23rd December, 1955. The notices of 20th July, 1955, given by the Sales Tax Officer have, therefore, no legal validity and no proceedings could be founded on the basis of those notices. The only notices which are legal and valid, according to Mr. Dhabe, are the notices of 4th July, 1958. Those notices were given after a period of three years, are therefore bad in law and no proceedings could be founded on the strength of those notices. Reliance is placed in support of this contention on a Full Bench decision of this Court reported in Bisesar House v. State of Bombay [1958] 9 S.T.C. 654; 60 Bom. L.R. 1395.

6. Mr. Abhyankar for the respondents contends that the notices of date 20th July, 1955, are valid. The Sales Tax Officer had jurisdiction to deal with the cases. It has not been shown by the petitioner that the Sales Tax Officer was incompetent on 20th July, 1955, to deal with the cases. The action and the proceedings could be founded, therefore, on the basis of those notices. The proceedings commenced on the basis of those notices are, therefore, valid. In the alternative Mr. Abhyankar contends that even if it is held that the only valid notices in these cases are of dated 4th July, 1958, then the effect of the aforesaid decision of this Court is taken away by virtue of section 6 of the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959 (Act XXII of 1959) which came into force on 18th April, 1959.

7. The first question that arises is whether the notices issued by the Sales Tax Officer under sub-section (2) of section 11 of the Sales Tax Act on 20th July, 1955, were valid notices. As already stated, the petitioner is a registered dealer. The petitioner had in fact filed returns for both the years 1952-53 and 1953-54 though the returns were blank. Section 11 reads :

'11. (1) If the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete he shall assess the dealer on them.

(2) If the Commissioner is not satisfied he shall serve the dealer with a notice appointing a place and day and directing him -

(i) to appear in person or by an agent entitled to appear in accordance with the provisions of section 11-B;

(ii) to produce evidence or have it produced in support of the returns; or

(iii) to produce or cause to be produced any accounts, registers, cash memoranda or other documents as may be considered necessary by the Commissioner for the purpose.'

8. Sub-section (3) section 11 provides that after hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub-section (2) and such further evidence as the Commissioner may require, the Commissioner shall assess him to tax. Section 11 when read together with the provisions of section 3 and the rules makes it clear that the powers conferred by section 11 could also be exercised by other Sales Tax Officers to the extent they are conferred on them by the State Government. It is not in dispute that the Sales Tax Officer is one of such persons appointed under the Sales Tax Act. It is to be seen whether on 20th July, 1955, the Sales Tax Officer was an authority competent to deal with the cases of the petitioner and issued the notices of that date. Sub-section (2) of section 3 provides that persons appointed under sub-section (1) (the Sales Tax Officer is one of such persons), shall, within such areas as the State Government may specify, exercise such powers as may be conferred and perform such duties as may be imposed, by or under the Act.

9. In exercise of these powers certain rules have been framed. Clause (1) of rule 19 provides that every registered dealer shall furnish to the appropriate Sales Tax Officer quarterly returns in the prescribed form within one calendar month from the expiry of the quarter to which the return relates. Rule 67 prescribes the powers which could be exercised by the various persons appointed by the State Government under sub-section (1) of section 3. The entry relevant to this case is entry No. 8. The relevant part thereof, as it then stood, reads as follows :-

---------------------------------------------------------------------- Designation of Sr. Section Description of power officer and No. conditions of delegation. ---------------------------------------------------------------------- 8. 11, 11-A, To make an assessment or 12 and re-assessment of tax or penalty or 12-A to fix a date for payment or to extend the date for payment of such tax or penalty or to allow the payment of tax or penalty by instalments and to exercise all other powers under these sections -

(a) in respect of a dealer other than Assistant a dealer having no place of business Commissioner in Vidarbha region whose gross (with the turnover of the year preceding the previous period of assessment exceeds Rs. 20 approval of lakhs or taxable turnover of the year the preceding the period of assessment Commissioner exceeds Rs. 4 lakhs. for imposition of penalty).

(b) In respect of a dealer other than Sales Tax a dealer having no place of business Officer (with in Vidarbha region whose gross the previous turnover of the year preceding the approval of period of assessment does not exceed the Assistant Rs. 20 lakhs or whose taxable turnover Commissioner of the year preceding the period of for imposition assessment does not exceed Rs. 4 lakhs of penalty). or in respect of a dealer who has no 'year' preceding the period of assessment or in respect of any other dealer not falling in clause (a) or (c). ----------------------------------------------------------------------

10. Under the provisions of rule 19 the Sales Tax Officer was competent to receive the returns filed by the petitioner before him, and looking to the 8th entry in rule 67 it is clear that the Sales Tax Officer had jurisdiction to deal with all cases of the assessees in Vidarbha whose gross turnover of the year preceding the year of assessment did not exceed Rs. 20 lakhs or whose taxable turnover of the year preceding the period of assessment did not exceed Rs. 4 lakhs. Now, on 20th July, 1955, two notices were issued by the Sales Tax Officer under section 11(2) to the petitioner, one relating to the year 1952-53 and another relating to the year 1953-54. It has not been shown that there was any material on record to show that the gross turnover of the year preceding these relevant years exceeded Rs. 20 lakhs. In has also not been averred that there was any material before the Sales Tax Officer at the time he issued notices, from which it was possible for him to ascertain that the gross turnover or the taxable turnover of the year preceding exceeded Rs. 20 lakhs or Rs. 4 lakhs respectively. It is no doubt true that on 23rd December, 1955, the agent of the petitioner for the first time stated before the Sales Tax Officer that the sales during the year 1953-54 were more than Rs. 20 lakhs, but this statement can hardly have any bearing in considering the position obtaining on the material on record on 20th July, 1955. Further, this is only a statement of an agent made in the case. It does not mean that it is true. In these circumstances and on these facts, in our opinion, the Sales Tax Officer had jurisdiction to deal with the petitioner's case and issue notices under section 11(2) to him on 20th July, 1955. Proceedings initiated on those notices were, therefore, validly stated. These notices were issued within a period of three years. The petitioner was made aware within a period of three years that the Sales Tax Officer was not satisfied with the returns filed by him and that he would have to satisfy the Sales Tax Officer about the correctness of the returns or otherwise would have to pay tax in respect of the taxable turnover during those years. The petitioner was thus proceeded against within three years of the expiry of the periods for which he is being assessed. The Full Bench decision, in our opinion, has therefore no application to the facts of the case.

11. Mr. Dhabe then argues that the Sales Tax Officer having transferred the cases to the Assistant Commissioner of Sales Tax on 23rd December, 1955, on the basis of the petitioner's agent's statement that the sales during the year under assessment were more than Rs. 20 lakhs, all that was done by the Sales Tax Officer prior to the date was wiped out and, therefore, the notices issued by the Sales Tax Officer on 20th July, 1955, lapsed.

12. We find it difficult to accept this contention. The Sales Tax Officer on the view he took transferred these two cases pending before him to the Assistant Commissioner. True, there is no express provision enabling the Sales Tax Officer to transfer a case to the Assistant Commissioner, but it is inherent in the relevant provisions of the rules made under the Act. The relevant provisions are that all the returns filed by registered dealers are received first by the Sales Tax Officer, but the cases of registered dealers in the Vidarbha region get dealt with either by the Sales Tax Officer or the Assistant Commissioner depending on the amount of gross turnover or taxable turnover of the assessee in the year preceding the year of assessment. By necessary implication it follows that the Sales Tax Officer has jurisdiction in the first instance to deal with all the cases of registered dealers in the Vidarbha region and scrutinize their returns, and it is only when he finds from the material on record or it is established that the gross turnover or taxable turnover of the assessee in the year preceding the year of assessment exceeds the pecuniary limit, he has to transfer the case to the Assistant Commissioner. As already stated, it has not been established or even pleaded that there was any material on record before the Sales Tax Officer on 20th July, 1955, when he issued notices under section 11(2) from which he could infer that the petitioner's gross turnover or taxable turnover in the respective preceding years was above the aforesaid pecuniary limit. He was, therefore, acting within his powers in issuing the said notices dated 20th July, 1955.

13. The Sales Tax Officer is an officer appointed under the Act and owes existence to the Act. The Act has by necessary implications conferred jurisdiction on him to determine what are the cases which fall within his jurisdiction. It, therefore, cannot be said that whatever he does up to that stage is done by him without jurisdiction, even when he reaches a conclusion that the case is triable by an Assistant Commissioner. In our opinion, therefore, the fact that the Sales Tax Officer transferred the cases of the petitioner to the Assistant Commissioner on 23rd December, 1955, cannot have the effect of rendering invalid what have been previously done by the Sales Tax Officer. The contention of Mr. Dhabe that the notices issued by the Sales Tax Officer on 20th July, 1955, under section 11(2) of the Act lapsed on 23rd December, 1955, must fail. In view of our finding on this question it is not necessary for us to consider the validity or otherwise of the notices of 4th July, 1958, in view of section 6 of the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959, which came into force on 18th April, 1959.

14. The position then that emerges is that the notices dated 20th July, 1955, under section 11(2) of the Act were validly given and they had at no time lapsed. The proceedings that are being taken against the petitioner were thus initiated under the said notices within three years of the expiry of the assessment periods. It, therefore, cannot be said that the proceedings that are being taken against the petitioner are bad in law or that the Sales Tax Officer has no jurisdiction to deal with them. Subsequent notices given on 4th July, 1958, cannot affect this position. They are not notices initiating the proceedings against the petitioner and, therefore, are not liable to be quashed.

15. In the result, both the petitions fail and are dismissed with costs. Only one set of costs is allowed.

16. Petitions dismissed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //