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Bio-visual Products Vs. the State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revision Case Nos. 14 and 16 of 1983
Judge
Reported in[1986]63STC476(AP)
ActsAndhra Pradesh General Sales Tax Act; Central Sales Tax Act; Central Sales Tax (Andhra Pradesh) Rule - Rule 14-A(9)
AppellantBio-visual Products
RespondentThe State of Andhra Pradesh
Appellant AdvocateS. Dasaratharama Reddy, Adv.
Respondent AdvocateThe Government Pleader for Commercial Taxes
Excerpt:
.....tax act, central sales tax act and rule 14-a (9) of central sales tax (andhra pradesh) rules - commercial tax officer (cto) revoked concession granted to assessee and made reassessment on ground that buyer was not government - such reassessment challenged - concession granted on basis of certificate issued by purchaser - purchase made on behalf of government alone entitled for tax concession - purchase not made on behalf of government - cto entitled to order reassessment in case it found that assessable income had escaped from taxation - held, cto competent to order reassessment. - - 5. it may be noted that the sales tax appellate tribunal had found as a fact that the purchases made by the delhi buyers were by non-governmental institutions and that the dealer in these revision..........assessment years 1972-73 and 1975-76, the petitioner had sold certain goods in the course of inter-state sales to delhi dealers. the delhi dealers had issued d form certificates purporting to be under the provisions of the central sales tax act. sales effected in the course of inter-state transactions following the procedure prescribed by the central sales tax act and supported by appropriate declarations would suffer a lesser rate of tax. such sales were to be assessed with concessional rate of tax of 3 per cent. up to 1st july, 1975, and at 4 per cent. thereafter. 2. for the assessment years 1972-73 and 1975-76, the petitioner filed d forms which were obtained from the delhi buyers which were held to be educational institutions, for a total turnover of rs. 86,634 and rs. 74,143. the.....
Judgment:

P.A. Choudary, J.

1. The petitioner in these tax revision cases is a dealer within the meaning of the provisions of the Andhra Pradesh General Sales Tax Act. He was registered as a dealer under the provisions of the Central Sales Tax Act. For the assessment years 1972-73 and 1975-76, the petitioner had sold certain goods in the course of inter-State sales to Delhi dealers. The Delhi dealers had issued D form certificates purporting to be under the provisions of the Central Sales Tax Act. Sales effected in the course of inter-State transactions following the procedure prescribed by the Central Sales Tax Act and supported by appropriate declarations would suffer a lesser rate of tax. Such sales were to be assessed with concessional rate of tax of 3 per cent. up to 1st July, 1975, and at 4 per cent. thereafter.

2. For the assessment years 1972-73 and 1975-76, the petitioner filed D forms which were obtained from the Delhi buyers which were held to be educational institutions, for a total turnover of Rs. 86,634 and Rs. 74,143. The Commercial Tax Officer, Hyderabad, by his orders dated 29th October, 1973, relating to assessment year 1972-73 and by his orders dated 23rd June, 1976, relating to assessment year 1975-76, completed the assessment and levied tax at concessional rates accepting D forms submitted by the dealer.

3. 'D' form, which was prescribed by the Central Sales Tax Act and the Rules made under that Act, is a statutory certificate that can be issued by Government certifying that goods sold in inter-State sales are purchased by or on behalf of the Government. The buyers in this case, not being a State Government, obviously cannot use the D form certificates. The Delhi buyers are admittedly private parties. Yet they succeeded somehow to issue these certificates in D form, resulting in the assessment of the petitioner at a lower rate. The form of certificate which is required to be issued by a private dealer purchasing goods in inter-State sales is C form. That form should state the purpose for which the goods are being sold and in order to attract the concessional rate, should also mention the purchases to be for the purpose of this sale only. The issuance of a proper certificate in C form in this case is a mandatory requirement.

4. The Commercial Tax Officer, therefore, by his order dated 10th March, 1976, reopened the assessment for the year 1972-73 and subjected the turnover of Rs. 86,634 to tax of 10 per cent. taking the view that the buyers in Delhi were non-governmental institutions and that D forms issued by them were not valid. This order, which was set aside earlier, was re-made by the Commercial Tax Officer on 19th May, 1979, after notice to the dealer. For the assessment year 1975-76, the Commercial Tax Officer, by his order dated 19th May, 1979, levied tax at 10 per cent. on the turnover of the petitioner on the sum of Rs. 74,140 reasoning as above. On appeal, the Assistant Commissioner of Commercial Taxes by his order dated 27th November, 1979, confirmed the reassessment order. The Sales Tax Appellate Tribunal in its turn confirmed these orders dismissing the appeals filed by the petitioner-dealer. It is against these orders these two tax revision cases have been filed.

5. It may be noted that the Sales Tax Appellate Tribunal had found as a fact that the purchases made by the Delhi buyers were by non-governmental institutions and that the dealer in these revision cases had failed, although given sufficient opportunities, to prove that transactions were effected with governmental institutions. In those circumstances, the Tribunal, following the judgment of this Court reported in State of Andhra Pradesh v. Polireddi Satyanarayana [1972] 29 STC 512 and interpreting rule 14-A(9), ruled that the Commercial Tax Officer had jurisdiction to assess these sales to proper tax.

6. Sri Dasaratharama Reddy, the learned counsel for the petitioner, did not dispute the fact that on the findings recorded by the Appellate Tribunal D form certificates were invalidly issued and cannot, therefore, be the basis for the petitioner's claim for concessional rate of tax. But what the learned counsel says is that reopening of assessments in those two cases which have been completed earlier by the orders of the Commercial Tax Officer is illegal and without jurisdiction. This submission of the learned counsel is based upon an argument that reopening of assessments in these cases is the result of change of opinion of the materials which were before the Commercial Tax Officer both at the time when the dealer was first assessed and revised assessment was made. The learned counsel now says that merely on reassessment of these materials, an assessment which has become final, cannot be reopened. We find it exceedingly difficult to see any relevance of this submission to the facts of this case. In fact, we are of the clear opinion that the matter is one which does not attract the application of any such principle. Rule 14-A(9) of the Central Sales Tax (Andhra Pradesh) Rules, under the authority of which the assessing authority had reopened and reassessed these transactions, reads as follows :

'If, for any reason, any tax has been assessed at too low a rate in any year, the assessing authority may after issuing a notice to the dealer and after making such enquiry as he considers necessary, revise the assessment.'

7. The above can be paraphrased somewhat like this. If for any reason tax has been assessed at too low a rate, the assessing authority has the power to revise the assessment. The condition precedent for the operation of the rule conferring power on the assessing authority to revise the assessment already made is an objective fact. By the insertion of the words 'for any reason', all that is intended to be conveyed by the clause is that the power of the taxing authority to reassess is available under all circumstances where an earlier assessment had resulted in too low a rate. Whether such imposition was as a result of neglect of ignorance or an error of judgment of the assessing authority or the result of concealment practised or fraud played or honest error committed by the assessee, being of no consequence, the clause is based upon the theory that the taxes must be paid by the assessee in correct sum and must be collected by the statutory machinery. We should remember that clause (9) of rule 14-A merely provides for the machinery for the collection of tax which is imposed by the statute. It becomes the duty of this Court to liberally interpret the words used in clause (9) of rule 14-A so as to effectuate the intention of the law-making authority. In Associated Cement Co. Ltd. v. Commercial Tax Officer : [1982]1SCR563 , the Supreme Court observed :

'It is well-settled that a distinction has to be made by courts while interpreting the provisions of a taxing statute between charging provisions which impose the charge to tax and machinery provisions which provide the machinery for the quantification of the tax and the levying and collection of the tax so imposed. While charging provisions are construed strictly, machinery sections are not generally subject to a rigorous construction. The courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated.'

8. It cannot be denied that the earlier orders of assessment made accepting the D form certificates resulted in imposition of sales tax at too low a rate and that the assessing authority is, therefore, right to reopen the assessments already made. Nay, we say that it is its legal duty to reassess. Otherwise equality of statutory burdens as fixed by law cannot be maintained.

9. In State of Andhra Pradesh v. Polireddi Satyanarayana [1972] 29 STC 512 a Division Bench of this Court, interpreting the scope of section 14(4) of the Andhra Pradesh General Sales Tax Act, held that a reassessment can be made where the whole or any part of the turnover escapes the assessment of tax or if he fails to assess it correctly and makes under-assessment or assesses the turnover at a lower rate and not at the rate prescribed.

10. In the above discussion, we can hardly find any place for the importing of the concept of change of opinion and pressing an argument based upon that concept that would bar reopening of an assessment. There are no general laws which are applicable in these matters. The taxing authorities have to merely interpret the language used in the statue and see fairly whether reassessment is permissible and if so, subject to what conditions.

11. However, the learned counsel for the petitioner relied upon Sales Tax Officer, Ganjam v. Uttareswari Rice Mills : [1973]89ITR6(SC) to contend that the words 'for any reason' would operate as limitations on the exercise of the power of reassessment given to the assessing authority. It is not entirely necessary to deny the validity of this contention, although it is possible to argue that the power to reassess given by rule 14-A(9) is based upon the occurring of an objective fact which is imposition of tax at a lower rate. In this context the contention of the learned counsel for the petitioner can only mean that the assessing authority must first form an opinion that the earlier assessment was imposed at a lower rate. Now that that condition is fully satisfied in this case cannot be disputed and is not disputed. The petitioner was not entitled for being taxed at concessional rated on the basis of D form certificates. That is sufficient for the exercise of the powers of reassessment under rule 14-A(9) of the Central Sales Tax Rules.

12. In Sales Tax Officer, Ganjam v. Uttareswari Rice Mills : [1973]89ITR6(SC) on which the petitioner had relied, the Supreme Court, interpreting the language of section 12(8) of the Orissa Sales Tax Act, 1947, merely held that reassessment must be preceded by the formation of an opinion that tax had been imposed at a lower rate. The Supreme Court held that such an opinion need not even be communicated to the assessee and that it was enough if that opinion was capable of being sustained by the evidence in the records. In that case, the Supreme Court was negativing the contention of the sales tax-assessee, which was accepted by the Orissa High Court, that a reassessment cannot be made merely on the basis of change of opinion. We, therefore, find it difficult to see how this judgment of the Supreme Court can be cited in support of the petitioner's contention.

13. The petitioner then relied upon the judgment of the Supreme Court reported in Indian and Eastern Newspaper Society v. Commissioner of Income-tax, New Delhi : [1979]119ITR996(SC) . In that case, their Lordships of the Supreme Court were interpreting the language used in section 147(b) of the Income-tax Act. 1961. There, the language of section 147(b) imposed limitations on the power of the Income-tax Officer to assess or reassess the income escaped assessment. The relevant part of the section reads thus :

'If the Income-tax Officer has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment for any assessment year .....'

14. This section has been interpreted to impose two conditions on the power of the Income-tax Officer to reopen assessment : (1) that he must have reason to believe that income had escaped. (2) that reason to believe must be the consequence of information in his possession. It is in interpreting those limitations contained in the above section the Supreme Court observed that a reconsideration of the same material does not give the Income-tax Officer the power to reopen and reassess. The language of section 147(b) of the Income-tax Act is totally and completely different from the language of rule 14-A(9) of the Central Sales Tax Rules. The decision of the Supreme Court in Indian and Eastern Newspaper Society v. Commissioner of Income-tax, New Delhi : [1979]119ITR996(SC) interpreting the language of the Income-tax Act cannot and ought not to have been cited by the learned counsel. It is a wholly different statute couched in a totally different form. We, therefore, reject this main contention of the learned counsel for the petitioner.

15. The learned counsel for the petitioner has also argued, relying upon State of Madras v Radio and Electricals Ltd. : AIR1967SC234 , Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar Bros. [1962] 13 STC 686 (Mad.) and Deputy Commissioner of Commercial Taxes, Coimbatore Division, Coimbatore v. Stanes Motors (South India) Ltd., Coimbatore [1963] 14 STC 369 (Mad.) that the reopening of assessment and reimposition of correct assessment cannot be based on the ground that an invalid form like a certificate in D form had been accepted. His argument is that the form had been submitted by a Delhi dealer and he cannot be made liable to pay a higher tax. We notice that the above judgments have held that a seller in inter-State sales would not be liable to pay a higher rate of tax on the ground that the uses mentioned in C form certificate issued by an outside State buyer were not adhered to by the outsider State. In so holding, the abovementioned judgments ruled that a seller cannot be expected to have control over his outside State buyer in the matter of use to which the buyer had put those goods to. Strictly speaking, those cases have no relevance for our present purposes. Their citation can only add to the unnecessarily taking up of public time. We are here concerned with a mandatory requirement of law which requires that the seller cannot pay the concessional tax rate unless he is able to show that sales are in the course of inter-State transaction and were effected in accordance with the requirements of law. The cases cited by the petitioner deal with events subsequent to sales whereas our cases are concerned with the evidencing of inter-State sale itself by proper declaration. Accordingly we do not find that those decisions have any relevance to our case.

16. For the above reasons, we hold that these two tax revision cases should fail. Accordingly they are dismissed with costs. Advocate's fee Rs. 150 in each.

17. In view of the fact that a private dealer in Delhi was alleged to have used D form certificates under the Central Sales Tax Act, to the use of which he was not legally entitled, we direct a copy of this judgment to be sent to the office of the Lt. Governor, New Delhi, for taking appropriate civil and legal action against that dealer. We also direct a copy of this judgment to be sent to the Chief Secretary to the Government of Andhra Pradesh to initiate appropriate legal action against the concerned Commercial Tax Officer who had accepted the D form certificate under the Central Sales Tax Act from non-governmental institutions.

18. Petitions dismissed.


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