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Liquor Enterprises Vs. the Commercial Tax Officer, Circle Iii, Hyderabad - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition Nos. 2729, 2804 and 6108 of 1980 and 4769 of 1982
Judge
Reported in[1986]62STC88(AP)
ActsAndhra Pradesh General Sales Tax Act, 1957 - Sections 2, 2(1), 9(1), 15, 15(1) and 15(3) ; Kerala General Sales Tax Act, 1963 - Sections 15, 18, 34, 39 and 41
AppellantLiquor Enterprises
RespondentThe Commercial Tax Officer, Circle Iii, Hyderabad
Appellant AdvocateS. Krishna, Adv.
Respondent AdvocateGovernment Pleader for Commercial Taxes
Excerpt:
.....sales tax act, 1963 - competence of assessing authority to make provisional assessment beyond assessing year - nothing in section 15 which prohibits assessing authority from making provisional assessment on monthly return filed in a-2 by assessee beyond assessing year - 'during year' provided in section 15 (1) should not be construed as 'within year' - if legislature intended assessing authority to complete such assessment within year it would have used term 'within year' instead of 'during year'. - - (5) after the close of the year for which returns have been submitted under sub-rule (1) or in the course of the year where a dealer has discontinued business, the assessing authority shall, if he is satisfied after such scrutiny of the accounts and making such enquiry as he..........payable. 6. there is no doubt or dispute that the provisional assessments were not made within the year of assessment in these cases. 7. the submission made on behalf of the petitioner-assessee is that sub-section (1) of section 15 empowers the assessing authority to make the provisional assessment in advance during the year, that the year as defined under clause (u) of section 2 is 12 months ending on the 31st day of march and as such the provisional assessments made by the assessing authority in respect of the monthly returns after 31st march of an assessment year, are in contravention of the provisions of section 15 of the act and any demand of the payment of the tax raised under form b-2 issued against the petitioners was illegal and without authority of law. the assessing authority,.....
Judgment:

Chennakesav Reddi, C.J.

1. Much ado is made again in these cases about the just and reasonable interpretation of the expression 'during the year', employed in sub-section (1) of section 15 of the Andhra Pradesh General Sales Tax Act (hereinafter referred to as the 'Act'). A Division Bench of this Court in Ramu & Co. v. State of Andhra Pradesh [1970] 43 STC 510 construing the scope of section 15(1) of the Act held that there was nothing in the language of section 15, which prohibits the assessing authority from making a provisional assessment on the monthly returns submitted in form A-2 as required under rule 17 of the Andhra Pradesh General Sales Tax Rules (hereinafter referred to as the 'Rules') beyond the assessment year. It was further held that the expression 'during the year' in section 15(1) is not to be understood is 'within the year' and if the legislature intended to injunct the assessing authority to complete the provisional assessment within the year, they would have used the words 'within the year' instead of the words 'during the year'. It was further observed that the word 'may' employed in sub-section (1) of section 15 gives discretion to the assessing authority to make the provisional assessments within the year and there is no obligation on the part of the assessing authority to complete the assessments within the year. The correctness of this decision was canvassed in Writ Petition Nos. 2729 and 2804 of 1980 before Kuppuswamy, Ag. C.J. (as he then was), and Seetharam Reddy, J., as contrary to the express language employed in section 15(1) of the Act. The learned Judges considered it proper to refer the cases for decision to a Full Bench for a more authoritative pronouncement on the question. Therefore, the cases are now placed before us.

2. To answer the question, it is necessary to read section 15 of the Act and rule 17 of the Rules. Section 15 reads :

'15. Provisional assessment of tax, - (1) The tax payable under this Act for each year may be provisionally assessed in advance during the year in monthly or other prescribed instalments on the basis of estimated or actual turnover of the dealer; and for that purpose a dealer may be required to submit a return or periodical returns of estimated or actual turnover in such manner as may be prescribed.

(2) If the assessing authority has reason to believe that the provisional assessment for any period was made on too low a turnover or at too low a rate or on too high a turnover or at too high a rate, he may enhance or reduce, as the case may be, such provisional assessment :

Provided that before making an enhancement of the provisional assessment as aforesaid the assessing authority shall, except where such enhancement is based on the turnover finally determined for the preceding year, issue a notice thereof to the dealer and make such inquiry as he considers necessary.

(3) The tax provisionally assessed may be levied and collected, either in advance during the year in monthly or other prescribed installments or at any time thereafter in one lump sum.'

Rule 17 reads :

'17. (1) Every dealer whose total turnover in a year exceeds Rs. 1,00,000 shall submit so as to reach the assessing authority on or before the 25th day of every month a return in form A-2 showing the total and net turnover for the preceding month. Along with the return he shall submit a receipt from the Government treasury or a crossed demand draft in favour of the assessing authority for the full amount of tax or taxes payable for the month to which the return relates under section 5, 5-A, 5-B, 6, 6-A, 6-B, or 11 or notified under sub-section (1) of section 9 :

Provided that in a case where a dealer intends to pay the tax through a crossed cheque, the cheque should be sent so as to reach the assessing authority on or before the 15th day of the month succeeding the month to which the tax relates.

(2) the returns so filed shall, subject to the provisions of sub-rules (3) and (4), be provisionally accepted.

(3) Where any dealer fails to submit a return in respect of any month before the date prescribed in that behalf or produces the accounts, registers and other documents after inspection or submits a return subsequent to the date of inspection, or if the return submitted appears to be incorrect or incomplete, the assessing authority shall after following the procedure prescribed in rule 12 determine the turnover to the best of his judgment and provisionally assess the tax or taxes and the surcharge payable for the month and shall serve upon the dealer a notice in form B-2 and the dealer shall pay the sum demanded within the time in the manner specified in the notice :

Provided that where the returns submitted by a dealer include the turnover or any of the particulars thereof which would not have been disclosed but for an inspection of accounts, registers or other documents of the dealer may by an officer under this Act before the submission of such returns, the assessing authority may after giving an opportunity to the dealer for making representation in this behalf treat such returns to be incorrect or incomplete returns and proceed to take action on that basis :

Provided further that if for any reason the determination of provisional assessment of tax or taxes and the surcharge payable for any month is not competed on or before the receipt of the return for the succeeding month or months the assessing authority may in his discretion provisionally assess in a single order the tax or taxes and the surcharge payable for all such months and serve upon the dealer a notice in form B-2 and the dealer shall pay the sum demanded within the time and in the manner specified in the notice :

(4) Where any dealer submits a return without a receipt or demand draft or fails to send a cheque for the full amount of tax and the surcharges payable, the assessing authority shall provisionally assess the taxes and the surcharge payable for the month and shall serve upon the dealer a notice in form B-2 for the tax and the surcharge due and the dealer shall pay the sum demanded within the time specified in the notice.

(5) After the close of the year for which returns have been submitted under sub-rule (1) or in the course of the year where a dealer has discontinued business, the assessing authority shall, if he is satisfied after such scrutiny of the accounts and making such enquiry as he considers necessary that the returns filed are correct and complete, finally assess in a single order on the basis of the returns, the tax or taxes and the surcharge payable under section 5, 5-A, 5-B, 6, 6-A, 6-B or 11 or notified under sub-section (1) of section 9 for the year to which the returns relate.

(6) Where any dealer fails to submit return or returns before the date prescribed in that behalf or produces the accounts, registers and other documents after inspection or submits the return or returns subsequent to the date of inspection, or if any return or returns submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall after following the procedure prescribed in rule 12 determine the turnover to the best of his judgment and finally assess in a single order the tax or taxes and the surcharge payable under section 5, 5-A, 5-B, 6, 6-A, 6-B or 11 notified under sub-section (1) of section 9 :

Provided that where the returns submitted by a dealer include the turnover or any other particulars thereof which would not have been disclosed but for an inspection or accounts, registers or other documents of the dealer made by on officer under Act before the submission of such returns, the assessing authority may after giving an opportunity to the dealer for making a representation in this behalf treat such returns to be incorrect and incomplete returns and proceed to take action on that basis.

(7) If on final assessment under sub-rule (5) or (6), any tax and the surcharge is found to be due from the dealer after deducting the tax or taxes and the surcharge paid by him towards the provisional assessment made by or under sub-rule (3) or (4), the assessing authority shall serve on the dealer a notice in form B-3 and the dealer shall pay the sum demand in the notice within such time and in such manner as specified therein. If, however, any refund of tax is found to be due to the dealer, the assessing authority shall serve on him a notice in form C.'

3. The definition of 'year' in section 2(u) of the Act may also be read :

'2. (u) 'year' means the twelve months ending on the 31st day of March.'

4. To begin with in the Madras General Sales Tax Act, 1939, there was no provision to make a provisional assessment. The provision was made for the first time by Andhra Amendment Act No. 6 of 1955 by introducing a new section as 9-A. The Madras General Sales Tax Act, 1939, and the Hyderabad General Sales Tax Act, 1950, were repealed and replaced by the Andhra Pradesh General Sales Tax Act, 1957. Section 15(1) provides for the provisional assessment in advance for each year in monthly or other prescribed instalments. Sub-section (3) of section 15 of the Act was substitute by Act 14 of 1978. The substitute sub-section (3) reads (sic) :

'(3) The tax provisionally assessed may be levied and collected in advance, during the year in monthly or other prescribed instalments.'

So prior to the amendment, the tax provisionally assessed could be levied and collected in advance during the year in monthly or other prescribed instalments. The defect was rectified by the amendment. After the amendment, sub-section (3) enables the assessing authority to levy and collect the tax provisionally assessed either in advance during the year in monthly or other prescribed instalments or at any time thereafter in one lump sum. The section is obviously intended to provide the machinery necessary for preventing evasion and securing the State the tax due and payable to it by the dealer.

5. Rule 17(1) of the Rules provides that every dealer whose total turnover in a year exceeds Rs. 1,00,000 shall submit so as to reach the assessing authority on or before the 25th day of every month a return in form A-2 showing the total and net turnover for the preceding month. Rule 17(2) provides that the return so filed shall, subject to the provisions of sub-rules (3) and (4) be provisionally accepted. Rule 17(3) deals with a case of dealer, who fails to submit a return in respect of any month before the date prescribed in that behalf, or produces the accounts, registers and other documents after inspection or submits a return subsequent to the date of inspection or if the return submitted is incorrect or incomplete, in which case, the assessing authority shall proceed to determine the turnover to the best of his judgment after following the procedure prescribed in rule 12 and provisionally assess the tax or taxes payable for the month and shall serve upon the dealer a notice in form B-2. The second proviso provides that if for any reason the determination of provisional assessment of tax or taxes payable for any month is not competed on or before the receipt of the return for the succeeding month or months, the assessing authority may in his discretion provisionally assess in a single order the tax or taxes payable for all such months and serve upon the dealer a notice in form B-2. Rule 17(5) provides that after the close of the year for which returns have been submitted under sub-rule (1) or in the course of the year where a dealer has discontinued business, the assessing authority shall, if he is satisfied after such scrutiny of the accounts and making such enquiry as he considers necessary that the returns filed are correct and complete, finally assess in a single order on the basis of the returns, the tax or taxes payable.

6. There is no doubt or dispute that the provisional assessments were not made within the year of assessment in these cases.

7. The submission made on behalf of the petitioner-assessee is that sub-section (1) of section 15 empowers the assessing authority to make the provisional assessment in advance during the year, that the year as defined under clause (u) of section 2 is 12 months ending on the 31st day of March and as such the provisional assessments made by the assessing authority in respect of the monthly returns after 31st March of an assessment year, are in contravention of the provisions of section 15 of the Act and any demand of the payment of the tax raised under form B-2 issued against the petitioners was illegal and without authority of law. The assessing authority, having failed to make the provisional assessment in advance within the year as contemplated by section 15(1), it is argued, had no power to make the provisional assessment after the expiry of the assessment year. Support is sought by the learned counsel for his submission from the decision of the Kerala High Court in Aboobacker v. Sales Tax Officer [1974] 33 STC 345. The learned Judges in that case were concerned with the question whether the levy and collection of the provisional assessment ought to be completed during the year under section 18 of the Kerala General Sales Tax Act, 1963. Section 18 of the Kerala General Sales Tax Act, which deals with the provisional assessment, provided that the tax for each year payable under any of the provisions of the Act may be assessed, levied and collected in advance during the year in monthly or other prescribed instalments ........ The learned Judges held, after referring to the earlier decision of Isaac, J., in O.P. No. 3583 of 1969, who held that the provisional assessment could only be made during the year to which the assessment relates, that to insist on not only the assessment, but even the levy and collection of the provisional assessment having to be completed during the year appears to be a practical impossibility, and would reduce the section to a mockery, especially when the learned Judges bear in mind the fact that against an order of provisional assessment, a right of appeal is provided under section 34 of the Act, of second appeal under section 39, and perhaps even a revision under section 41. The learned Judges observed :

'We are concerned with the stage of collection in the instant case, in view of the provisional assessment orders evidenced by exhibits P1 and P2. We are, therefore, of the opinion that in respect of the collection of tax provisionally assessed, the limit indicated by the earlier part of the section, namely, that it should be done during the financial year, cannot and does not apply.'

Thus the learned Judges were only concerned with collection and held that it could be done beyond the assessment year.

8. Yet another decision relied upon by the learned counsel in Mahendrakumar Ishwarlal & Co. v. Deputy Commercial Tax Officer [1971] 28 STC 551 (Mad). There, the learned Judges were concerned with the case of an assessee, who filed a return in form A-1 and the assessing authority issued a notice to the effect that there were certain mistakes apparent in the return and if a revised return was not filed within seven days of the receipt of the notice, he would provisionally assess him and levy a penalty for wilfully submitting an untrue return. Therefore, that decision is not relevant for the decision of the question.

9. Section 15(1) is an enabling provision. It is intended to check evasion and secure to the State levy and collection of tax in advance. The words 'may be provisionally assessed' merely confer capacity, power or authority on the assessing authority under the Act to make provisional assessment for each year in advance in monthly or other prescribed instalments on the basis of estimated or actual turnover of the dealer. It will always be presumed by the court that the legislature used the words in their natural and usual meaning unless such a meaning, however, leads to absurdity or great hardship or is clearly contrary for some other reason to the obvious intention of the legislature. Then, in such a case, words which are ordinarily directory are construed as mandatory or vice versa. To construe the words in section 15(1) as mandatory is to defeat the obvious object and intention of the legislature in enacting this provision which was absent in the repealed enactment.

10. Rule 17(1) prescribes that every dealer whose total turnover in a year exceeds Rs. 1,00,000 shall submit so as to reach assessing authority on or before the 25th day of every month a return in form A-2 showing the total and net turnover for the preceding month. If the contention of the learned counsel is to be accepted that the provisional assessment has to be completed before the close of the assessment year, that is, 31st of March, then there can be no provisional assessment for the month of March as the dealer has to submit the return only under rule 17(1) by 25th of April. Sub-section (1) of section 15 does not mandate that the provisional assessment shall be completed within the year. On the other hand, sub-section (3) makes the intention of the legislature very clear. Sub-section (3) provides that the tx provisionally assessed may be levied and collected, either in advance during the year in monthly or other prescribed instalments or at any time thereafter in one lump sum. Therefore, levy and collection under sub-section (3) may be made at any time after the close of the assessment year. The word 'levy', according to legal glossary, means impose or collect tax. It is wider in its import than the term 'assessment'. It may include both 'imposition' of a tax as well as assessment. It does not extend to 'collection'. The Supreme Court in Assistant Collector, Central Excise v. National Tobacco Company : 1978(2)ELT416(SC) dealing with the scope of the terms 'levy' observed :

'The term 'levy' appears to us to be wider in its import than the term 'assessment'. It may include both 'imposition' of a tax as well as 'assessment'.

11. The learned counsel for the petitioners, however, relying on the decision of the Supreme Court in Ramji Missar v. State of Bihar : AIR1963SC1088 submitted that the word 'may' in section 15 must be read as 'shall'. There, the Supreme Court was dealing with the nature and amount of discretion under section 11(1) of the Probation of Offenders Act, which is a beneficial provision of the universal type and held :

'..... the words in section 11(1) 'pass an order under the Act' are not to be construed so strictly and literally, but to be understood to mean 'to exercise the powers or jurisdiction conferred by the Act'. This wide interpretation might perhaps be justified by the scope and object of this section.'

12. On the other hand, the scope and object of the provision would be rendered fruitless and functionless if the word 'during the year' in section 15(1) should be read as 'within the year'. Section 15(1) and (3) must be read as a whole. If so read and it ought to be so read, there is no prohibition or injunction from making the provisional assessment and collection of the tax beyond the assessment year.

13. Section 15 is again only a machinery provision. It is well-settled that a distinction has to be drawn 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 Supreme Court in Associated Cement Co. Ltd. v. Commercial Tax Officer : [1982]1SCR563 observed :

'The courts are expected to construe the machinery sections in such a manner that a charge to tax is not defeated. It is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose having a full view of it. Wherever the intention to impose liability is clear the courts ought to have no hesitation in giving a common sense interpretation to the machinery sections so that the charge does not fail.'

14. We, therefore, affirm the vie expressed by the Division Bench of this Court in Ramu & Co. v. State of A.P. [1979] 43 STC 510 and hold that much ado made about the true meaning to be given to the words 'during the year' occurring in sub-section (1) of section 15 is not warranted either by the obvious object and intendment of the provision or on a reading of section 15 as a whole. The section does not forbid or prohibit the assessing authority from making a provisional assessment on the monthly returns submitted by a dealer in form A-2 and collecting the tax beyond the year of assessment.

15. In the result, the writ petitions fail and they are accordingly dismissed with costs. Advocate's fee Rs. 150 in each.

16. Petitions dismissed.


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