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G. Balaiah Setty Vs. the State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revision Case No. 2 of 1978
Judge
Reported in[1982]51STC335(AP)
ActsAndhra Pradesh General Sales Tax Act - Sections 5; Central Sales Tax Act - Sections 9; Income Tax Act, 1922 - Sections 34; Central Sales Tax (Andhra Pradesh) Rules, 1957 - Rule 14-A(8)
AppellantG. Balaiah Setty
RespondentThe State of Andhra Pradesh
Appellant AdvocateS. Dasaratharama Reddi, Adv.
Respondent AdvocateThe Government Pleader for Commercial Taxes
Excerpt:
.....refuse or to fail to disclose a transaction on the ground that, according to him, it is an intra-state sale and accordingly irrelevant for the purpose of assessment under the central act. 4. now coming to the facts of this case it is admitted by the petitioner that he failed to disclose the transaction in question (covered by bill no. but here the assessee has acted precisely in a contrary fashion. expressly requires a dealer to state all sales, both inter-state and intra-state, there is no reason why an assessee should fail to supply the said information and yet claim immunity when the matter is sought to be reopened under rule 14-a(8) of the rules. having failed to perform the statutory obligation to disclose all the inter-state and intra-state sales effected by him in the return to..........says that the goods were delivered at vijayawada railway station and that it is an intra-state sale. in the return filed under the andhra pradesh general sales tax act, hereinafter referred to as 'the state act', the petitioner disclosed the sale as an intra-state sale. on the basis of this statement he was held not liable to tax under the state act. so far as the return under the central sales tax act, hereinafter called as 'the central act', is concerned, it is admitted before us that the said transaction was not disclosed. the assessee explains that it was not so disclosed because it was not an inter-state sale, according to him. be that as it may, the fact remains that on the aforesaid transaction, the assessee neither paid the state tax nor the central tax. the matter was.....
Judgment:

Jeevan Reddy, J.

1. Rule 14-A(8) of the Central Sales Tax (Andhra Pradesh) Rules, 1957, empowers the assessing authority to reopen the assessment within a period of six years from the expiry of the year to which the tax relates, if such escapement has occurred on account of the failure of the dealer to disclose the turnover or any other particulars correctly, and within a period of four years if such escapement has occurred due to any other causes. It would be appropriate to set out sub-rule (8) :

'(8) If, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax or has been underassessed in any year, the assessing authority may after issuing a notice to the dealer and after making such inquiry as he considers necessary determine to the best of his judgment the correct turnover, and assess the tax payable on such turnover -

(a) within a period of six years from the expiry of the year to which the tax relates, if any such event has occurred on account of the failure of the dealer to disclose the turnover or any other particulars correctly;

(b) within a period of four years from the expiry of the year to which the tax relates, if any such event has occurred due to any other causes.'

2. The question in this tax revision case is whether in the facts and circumstances of this case the assessee can be said to have been guilty of non-disclosure so as to attract the action under clause (a) of sub-rule (8). The circumstances leading to this tax revision case may briefly be stated :

The assessee-petitioner is a dealer in 'ghee' which is taxable at the last point of purchase within the State (item 5 of the Second Schedule to the A.P. General Sales Tax Act). The petitioner purchased ghee and sold it to certain nonresident dealers within the State, which means dealers from outside the State. The petitioner says that the goods were delivered at Vijayawada Railway Station and that it is an intra-State sale. In the return filed under the Andhra Pradesh General Sales Tax Act, hereinafter referred to as 'the State Act', the petitioner disclosed the sale as an intra-State sale. On the basis of this statement he was held not liable to tax under the State Act. So far as the return under the Central Sales Tax Act, hereinafter called as 'the Central Act', is concerned, it is admitted before us that the said transaction was not disclosed. The assessee explains that it was not so disclosed because it was not an inter-State sale, according to him. Be that as it may, the fact remains that on the aforesaid transaction, the assessee neither paid the State Tax nor the Central Tax.

The matter was reopened under rule 14-A(8) by the Commercial Tax Officer who by his order dated 19th February, 1976, brought to tax a turnover of Rs. 3,95,367. On appeal, the Assistant Commissioner of Commercial Taxes, Guntur, allowed the appeal partly. So far as bill No. 20, the turnover whereof was in a sum of Rs. 53,528 is concerned, with which transaction alone, we are concerned in this T.R.C. - the Assistant Commissioner dismissed the appeal (In respect of certain other bills, he allowed the appeal and in respect of some others the matter was remanded). In so far as the Assistant Commissioner dismissed the appeal, i.e. with respect to bill No. 20, the assessee filed a further appeal to the Sales Tax Appellate Tribunal which was dismissed. Hence this revision.

3. The main contention urged by the learned counsel for the petitioner is that there has been no failure on the part of the dealer to disclose the turnover or any other particulars correctly within the meaning of clause (a) of sub-rule (8) to rule 14-A and hence the action of the Commercial Tax Officer in reopening the assessment under the said sub-rule is unsustainable in law. The counsel contended that even though these transactions are not disclosed in the return filed under the Central Act, these transactions were disclosed in the return filed under the State Act and since the assessing authority is identical under both the enactments and also because the returns under both the enactments were considered simultaneously, it must be held that there was a proper disclosure of the relevant primary facts. It is further contended that if the C.T.O. had failed to tax it under the proper Act, the fault lay with him which cannot be sought to be corrected by report to sub-rule (8) of rule 14-A. For answering this contention it is necessary to keep in mind the oft-repeated proposition that the question whether there has been a non-disclosure of material facts and particulars in a given case in essentially a question of fact, to be decided in the facts and circumstances of each case. It is not possible to lay down any hard and fast rules governing all situations. According to the sub-rule, if there is a failure to disclose the turnover or any other particulars relating to assessment correctly, the officer has the power to reopen the same within a period of six years. On this aspect, it is necessary to refer to form C.S.T. VI prescribed by the aforesaid Rules. Clause 1 of the return requires the assessee to state the 'gross amount received or receivable by the dealer during the period in respect of sale of goods' which means the total turnover of the dealer for the concerned period. From this he has to deduct (i) sales of goods outside the State through commission agents, (ii) sales of goods outside the State otherwise than through commission agents, (iii) sales of goods in the course of export outside India (as defined in Section 5 of the Act) and (iv) total value of the goods transferred to other States otherwise than as a result of sale. Clause 2 requires the dealer-assessee to state the turnover on inter-State sales and sales within the State and to deduct therefrom the turnover on sales within the State. Clause 3 requires the assessee to state the turnover on inter-State sales and deduct the turnover on inter-State sales exempt under section 6 being second or subsequent sales. Clause 4 then requires the assessee to state the turnover on inter-State sales liable to tax. Without a doubt - and this circumstance is admitted by both the counsels for the petitioner and the department - this form requires the assessee not only to mention the inter-State sales but also to mention the intra-State sales effected by him. The idea obviously is that the dealer must disclose all the sales effected by him, whether he calls them intra-State or inter-State, and it is for the authority to finally decide whether they are inter-State sales or inter-State sales. It is not open to a dealer to refuse or to fail to disclose a transaction on the ground that, according to him, it is an intra-State sale and accordingly irrelevant for the purpose of assessment under the Central Act. He must disclose the transaction and then claim exemption on the ground that it is an intra-State sale. The authority may accept his contention or may not. (The position is not different from that obtaining under the Income-tax Act. Even under the Income-tax Act an assessee is bound to disclose his total income including the income exempt from tax under the provisions of the Act and then deduct the exempted income). What is of relevance for our purpose is that the form, which is prescribed by the Rules, does expressly require the assessee-dealer to disclose not only inter-State sales but also intra-State sales.

4. Now coming to the facts of this case it is admitted by the petitioner that he failed to disclose the transaction in question (covered by bill No. 20) in the return filed under the Central Act. Thus apparently there is a non-disclosure. But what the counsel for the assessee argues is that the transaction was disclosed in the return filed under the State Act. It must however be remembered that even in the return filed under the State Act, the assessee did not disclose that he had sold the said ghee in the course of inter-State trade; he disclosed the transaction stating that it is an intra-State sale. It must be remembered that the point of enquiry under both the enactments is altogether different. The authority under the State Act would enquire whether a given transaction is the last purchase in the State. It may be the last purchase for many a reason, viz., it may be the last purchase because it was sold by the assessee in the course of inter-State trade; it may also be a last purchase because the ghee was utilised by the dealer-assessee for manufacturing or preparing certain other foods or goods. The authority under the State Act is not concerned with the question whether there has been an inter-State sale. That question will be gone into and examined by him while scrutinising the return under the Central enactment. When, therefore, the assessee has disclosed this transaction as an intra-State sale, it can hardly be said that the authority is put on notice that there has been a sale in the course of inter-State trade. Indeed the petitioner's contention that it is an intra-State sale was accepted by the assessing authority under the State Act. The counsel then contended that the assessee has disclosed that the sale was in favour of a non-resident dealer. But it cannot be presumed that each and every sale to a non-resident dealer is necessarily an intra-State sale. It need not be. There may probably have been some justification - we do not wish to express any final opinion on this aspect - if the assessee had at least disclosed in his return filed under the State Act that he was the last purchaser for the purpose of the State Act because the ghee was sold in the course of inter-State trade. Had he stated so, he would have been liable to tax under the State Act and the authority could also have been put on notice, for the purpose of the Central Act, that there is an inter-State sale attracting the Central tax. But here the assessee has acted precisely in a contrary fashion. He expressly claimed that it is an intra-State sale and therefore not liable to tax under the State Act. We are unable to see as to how the mere disclosure of the transaction in the return filed under the State Act, calling it an intra-State sale, can be said to be a disclosure for the purpose of assessment under the Central enactment. When the form C.S.T. expressly requires a dealer to state all sales, both inter-State and intra-State, there is no reason why an assessee should fail to supply the said information and yet claim immunity when the matter is sought to be reopened under rule 14-A(8) of the Rules. Maybe that by virtue of section 9 of the Central Act, the assessing authority under both the enactments is the same, but we must reiterate that both the enactments operate on different fields and govern different transactions. Indeed they are mutually exclusive. There can be no transaction which is taxable under both the enactments. A transaction is taxable under either of the Acts but not under both, which means that the goal and direction of enquiry of the assessing authority under both and enactments would naturally be different. As pointed out by us above, under the State Act in the case of ghee the assessing authority would only be concerned to find out whether it is a last purchase by the dealer within the State, whereas under the Central enactment he will examine whether there has been an inter-State sale as defined by the Act.

5. It is then argued that generally the assessments under both the enactments are taken up simultaneously and finalised at the same time. It is, therefore, argued that the authority ought to be careful and must examine each transaction to find out whether it is taxable and if so under which enactment We are afraid the argument is misplaced and misleading. Having failed to perform the statutory obligation to disclose all the inter-State and intra-State sales effected by him in the return to be filed by him in the prescribed form, the assessee cannot claim any immunity on the ground that there was certain remissness - assuming that there has been any such remissness on the part of the assessing authority in this case - and therefore the matter should not be reopened. The two obligations must be kept apart, namely, the obligation of the dealer to disclose all the material particulars correctly and truly and the obligation of the assessing authority to apply the law correctly to the facts of each case and to arrive at the correct tax payable. If the assessee performs his obligation and the remissness in on the part of the assessing authority the letter cannot rectify his error or omission by resorting to rule 14-A(8). But if there is a failure on the part of the assessee to perform his obligation, he cannot resist a proceeding under rule 14-A(8) on the ground of remissness or error, if any, on the part of the assessing authority.

6. The counsel for the petitioner strongly relied upon the judgment of a learned single Judge of this Court in Srinivasa & Co. v. Commercial Tax Officer [1979] 44 STC 309. We find that the facts in that case are substantially similar to the facts of the present case. Indeed there the assessee had not even filed a return under the Central Act. The learned single Judge quashed the notice under rule 14-A(8) on the ground that there was no non-disclosure on the part of the assessee inasmuch as in the return filed under the State Act, the sales were disclosed as intra-State sales and were so accepted by the assessing authority. The learned Judge accordingly held that it is a case where the turnover has escaped assessment not on account of any failure on the part of the petitioner to disclose the turnover or any other particulars correctly but on account of a change of opinion of the assessee authority with regard to the character of the said sales. With the greater respect to the learned Judge, we are unable to agree with the said reasoning for more than one reason indicated by us above. We find that the form prescribed for filing a return C.S.T. VI by the C.S.T. (A.P.) Rules was not brought to the notice of the learned single Judge and probably that is the reason why the learned Judge came to the said conclusion. So far as this case is concerned admittedly, there has been a non-disclosure of this sale in the return filed under the Central Act and manner in which it was disclosed in the return filed under the State Act, can never be treated as a disclosure of material particulars relevant under the Central enactment.

7. Reference must be made to two other decisions relied upon by the counsel for the assessee-petitioner, both of which are cases arising under the Income-tax Act. The first decision is in Commissioner of Income-tax v. Hemachandra Kar : [1970]77ITR1(SC) . That was a case where the Hindu undivided family consisting of six members and its five members were all assessed separately. During the relevant accounting period the Hindu undivided family had encashed high denomination notes of the value of Rs. 19,000 and the five members of the family had encashed notes of different values totalling Rs. 1,10,000. The Income-tax Officer reopened the assessments of the Hindu undivided family and the five members and included the amount of Rs. 19,000 in the assessment of the Hindu undivided family and Rs. 1,10,000 in the assessments of the five members in their appropriate extent. Two days later the Income-tax Officer issued another notice seeking to reopen the assessment and proposing to include the entire amount of Rs. 1,10,000 in the income of the Hindu undivided family, which was questioned by the assessee. When the matter came before the Supreme Court it held, following the decision in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta : [1961]41ITR191(SC) , that since the assessee had disclosed all the primary facts and the duty to draw the appropriate legal inference lies upon the Income tax Officer, the notice given under Section 34 of Income-tax Act, 1922, is unsustainable. We are unable to see any relevancy of the principle of the said case in the facts of the present case. Indeed in the case before the Supreme Court the proposal to reopen was a second proceeding and there was a disclosure of all the facts by the concerned assessee which cannot be said to be the case before us.

8. The next decision is of a learned single Judge of the Calcutta High Court in Dunlop Rubber Co. Ltd. v. Income-tax Officer : [1971]79ITR349(Cal) . Dunlop Rubber Company was a company incorporated in England. It had an Indian subsidiary called Dunlop Rubber Company (India) Limited. Certain amounts were being remitted by the Indian subsidiary to the parent company on account of what was described as 'liaison expenditure' - representing the Indian company's share in the amount expended on research and development by the parent company. The Indian company disclosed the said remittances but the parent company did not. The assessing authority sought to reopen the assessment of the parent company on the ground of non-disclosure which was questioned by a writ petition in the Calcutta High Court. The assessee's contention was that the same officer considered and finalised the assessment of both the parent company and the Indian subsidiary and that the fact of the said remittance was within the knowledge of the Income-tax Officer who made the assessment. This assertion of the assessee was not denied by the appropriate Income-tax Officer by filing a counter-affidavit. There was also the testimony on oath given by an officer of the company which represented the parent company in the assessment proceeding to the effect that this question was gone into by the Income-tax Officers at the time of the original assessments for all the years. This testimony remained unrebutted. It was in those circumstances it was held that since the facts were already within the knowledge of the concerned Income-tax Officers there was no non-disclosure. This case must be confined to the particular facts and circumstances of that case and cannot be treated as an authority for the proposition that a disclosure of the transaction in whatever form under the enactment is a proper and full disclosure for the purpose of another enactment as well, merely because the assessing authority happens to be the same.

9. For the above reasons the tax revision case fails and is dismissed, but in the circumstances without costs. Advocate's fee Rs. 250.

Petition dismissed.


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