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Nav Swadeshi Oil Mills Vs. the State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revision Case No. 23 of 1978
Judge
Reported in[1983]54STC149(AP)
ActsAndhra Pradesh General Sales Tax Act, 1957 - Sections 13, 14, 14(1), 14(3) and 22(1); Central Sales Tax Act, 1956 - Sections 9(2) and 9(3)
AppellantNav Swadeshi Oil Mills
RespondentThe State of Andhra Pradesh
Appellant AdvocateP. Venkatarama Reddy, Adv.
Respondent AdvocateGovernment Pleader for Commercial Taxes
Excerpt:
.....held that an assessment made on the basis of a voluntary return filed after the expiry of the period prescribed by the act is an original assessment as per section 14(1) of the act and such an assessment can hardly be said to be a best judgment assessment. commissioner, income-tax, punjab [1956]29itr607(sc) ,wherein the supreme court dealing with an appeal preferred under section 30(1) of the income-tax act observed :it is well-established that rules of limitation pertain to the domain of adjectival law, and that they operate only to bar the remedy but not to extinguish the right. the assessment is not made on the basis of best judgment of the assessing authority. jayaraj nadar & sons [1972]1scr751 ,observed :where account books are accepted along with other records, there can be no..........the rules framed thereunder governed the levy and assessment of the tax in the matter of inter-state sales. 20. a division bench of this court in an unreported decision in t.r.c. no. 58 of 1966 dated 28th january, 1970 (k.c.p. ltd. v. state of andhra pradesh 1971, tax lr 326.) 'in view of what is stated in section 9(2) of the central sales tax act, 1956, and having regard to the limitation prescribed under section 14(1), it will be futile to contend on behalf of the state that section 9(2) empower the authorities under the andhra pradesh general sales tax act to make an assessment invoking the provisions of the central sales tax act without regard to the period of limitation prescribed under section 14(1).' 21. again, another division bench of this court in mohd. akhalaq ahmed v......
Judgment:

Chennakesav Reddi, J.

1. This tax revision case preferred under section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957, (hereinafter referred to as 'the Act'), raises the question relating to the relative scope and applicability of section 14(1) and section 14(3) of the Act.

2. The petitioners are the assessees. They are dealers in oil and oilcakes. The relevant assessment year is 1968-69. The assessees submitted the return relating to the quarter ending 31st March, 1969, on 7th August, 1969. The due date for the submission of the quarterly return was 24th August, 1969. On the basis of the admitted turnover and other particulars furnished in the return, the assessees were assessed under the Central Sales Tax Act on a turnover of Rs. 18,25,410.72, and were called upon to pay a tax of Rs. 45,424.48. The assessment was completed by an order dated 2nd August, 1973, of the Commercial Tax Officer, Mahaboobnagar, under the Central Sales Tax Act, 1956 (hereinafter referred to as 'the Central Act'). Against the said order of assessment, the assessees preferred an appeal before the Assistant Commissioner of Commercial Taxes, Warangal. The assessees mainly contended before the appellate authority that the assessment, having not been made before the expiry of four years from the year to which the assessment related as provided under section 14(1) of the Act, was clearly barred by limitation. The appellate authority held that since the assessee failed to submit the return within the prescribed date, the assessment could be completed under section 14(3) of the Act read with section 9(2) of the Central Sales Tax Act within six years, i.e., before 31st March, 1975, and the assessment in question having been made on 2nd August, 1973, was not barred by limitation. Consequently, the appeal was dismissed. The assesses carried the matter in appeal before the Sales Tax Appellate Tribunal. The only point urged before the Appellate Tribunal was that the assessment in question was barred by limitation prescribed in the statute and therefore the assessment was invalid and unenforceable. The Tribunal also agreed with the appellate authority and held that the assessees had not submitted the complete and correct return on the basis of which the assessing authority could assess under section 44(1) of the said Act and that it was a case of assessment under section 14(3) of the Act and therefore the assessment could be completed within six years. Consequently it held that the assessment was valid and was not barred by limitation. The appeal was accordingly dismissed by the Tribunal. The assessees have now come up by way of revision to this Court.

3. The issue that has been unceasingly churned by the learned counsel from every conceivable angle is whether on a proper appreciation of the facts and in the circumstances of the case the assessment in question is one falling within the provisions of section 14(1) or section 14(3) of the Act. If the assessment is one made under section 14(1) of the Act, it is barred by limitation. If on the other hand, it is one made under section 14(3) of the Act, it is valid and enforceable and is not barred by limitation. In other words, what is the real and relative scope and applicability of section 14(1) and section 14(3) of the Act. What are the circumstances in which these provisions can be called in aid Let us, therefore, now look at section 14(1) and (3) of the Act.

'14. Assessment of tax. - (1) If the assessing authority is satisfied that any return submitted under section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such enquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer. An assessment under this section shall be made only within a period of four years from the expiry of the year to which the assessment relates.

(1-A) ..........................

(2) ............................

(3) Where any dealer liable to tax under this Act -

(i) fails to submit return before the date prescribed in that behalf, or

(ii) produces the accounts, registers and other documents after inspection, or

(iii) submits a return subsequent to the date of inspection, the assessing authority may, at any time within a period of six years from the expiry of the year to which assessment relates, after issuing a notice to the dealer and after making such enquiry as he considers necessary, assess to the beat of his judgment the amount of tax due from the dealer on his turnover for that year, and may direct the dealer to pay in addition to the tax so assessed, a penalty as specified in sub-section (8).'

4. An assessment is to be made under section 14(1) when the assessing authority is satisfied that the return submitted by the dealer is correct and complete. In case he is not satisfied about the correctness and completeness of the return he may make the assessment to the best of his judgment under section 14(1) after giving a fair opportunity to the dealer to prove the correctness and completeness of the return and making such enquiry as he deems necessary. In either case, the assessment shall be made under section 14(1) within a period of 4 years from the expiry of the year to which the assessment relates. To attract the provisions of sub-section (3), (i) a dealer must have failed to submit the return before the date prescribed in that behalf or (ii) produced the accounts, registers and other documents after inspection or (iii) submitted a return subsequent to the date of inspection. In such a situation, the assessing authority may assess to the best of his judgment the amount of tax due from the dealer on his turnover after giving a notice to the dealer and after such enquiry as he considers necessary. The assessment under sub-section (3) can be completed within a period of six years from the year to which the assessment relates.

5. The real question, therefore, is whether the dealer failed to submit a return and the assessment was made by the assessing authority to the best of his judgment under section 14(3) of the Act. In this case, undisputedly, the assessees submitted a return. It was no doubt not submitted within the due date. Can a belated return be treated as a case of no return or, in other words, a case where the dealer failed to submit the return We do not think it can be said that there is no return at all when a return is submitted even after the prescribed time. There is no provision in the statute which forbids the filing of a return after a prescribed time or which forbids a return filed belatedly being considered by the assessing officer.

6. In State of Andhra Pradesh v. Pyarelal Malhotra [1962] 13 STC 946, this Court held that an assessment made on the basis of a voluntary return filed after the expiry of the period prescribed by the Act is an original assessment as per section 14(1) of the Act and such an assessment can hardly be said to be a best judgment assessment.

7. The Madras High Court in Bata Shoe Company Private Limited v. Joint Commercial Tax Officer, Harbour Division II, Madras [1968] 21 STC 135, held that there is no provision in the Madras General Sales Tax Act, 1959, which forbids the filing of a return after a prescribed time or which forbids a return filed belatedly being considered by the assessing officer in the assessment proceedings.

8. It would be apposite at this stage to refer to the decision of the Supreme Court in Mela Ram & Sons v. Commissioner, Income-tax, Punjab : [1956]29ITR607(SC) , wherein the Supreme Court dealing with an appeal preferred under section 30(1) of the Income-tax Act observed :

'It is well-established that rules of limitation pertain to the domain of adjectival law, and that they operate only to bar the remedy but not to extinguish the right. An appeal preferred in accordance with section 30(1) must, therefore be an appeal in the eye of law, though having been presented beyond the period mentioned in section 30(2), it is liable to be dismissed in limine.'

9. It was, below down, further observed :

'On the principles laid down in these decisions, it must be held that an appeal presented out of time is an appeal, and an order dismissing it as time-barred is one passed in appeal.'

10. It must therefore be held that a return submitted after the prescribed time is as much a return as one submitted within the prescribed time under section 14(1) of the Act, unless the return is rejected and not acted upon. Further, in this case, the return is accepted as correct and complete and assessed on the basis of the return submitted by the dealer. The assessment is not made on the basis of best judgment of the assessing authority. Therefore, we have no hesitation in holding that the assessment in this case was passed under section 14(1) of the Act and not under section 14(3) of the Act and the order of the assessment passed, as it is beyond the period of four years, is invalid and unenforceable.

11. The Supreme Court in State of Madras v. S. G. Jayaraj Nadar & Sons : [1972]1SCR751 , observed :

'Where account books are accepted along with other records, there can be no ground for making a best judgment assessment.'

12. Indeed in this case it is clear from the impugned order of the Commercial Tax Officer dated 2nd August, 1973, that the books of account produced by the assessee were accepted. He submitted a return of turnover of Rs. 18,25,410.72 and the assessment was made on the said turnover. In other words, the return submitted by the assessee was accepted as complete and correct. The provisions of sub-section (3) of section 14 were not invoked. Assessment was not made on the basis of best judgment. Therefore, the period of limitation of six years prescribed for assessments under section 14(3) is inapplicable to this case.

13. The learned Government Pleader, however, submits that no period of limitation having been prescribed in respect of assessments made under rules 14-A(5) of the Central Sales Tax (Andhra Pradesh) Rules, 1957, no period of limitation can be imported by the application of section 14(1) of the Act. He submits that the Rules advisedly prescribed a period of limitation only in certain matters. According to him under sub-rules (8) and (9), in cases of escaped assessment or in cases where assessment has been done at a lower rate, a period of limitation is prescribed and no such period of limitation in respect of assessments made either under sub-rule (5) on the basis of correct and complete return or under sub-rule (6) in cases where the assessing authority proceeds to determine the turnover to the best of his judgment, is prescribed. He invited our attention to sub-rules (5), (6), (8) and (9) of rule 14-A of the Central Sales Tax (Andhra Pradesh) Rules 1957, which read :

'14-A. (5) After the close of the year for which the 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 after such enquiry as he considers necessary, that the return or returns filed are correct and complete, finally assess in a single order on the basis of the returns the tax or taxes payable under the Act.

(6) If no return or returns have been submitted by the dealer as required by sub-rules (1) and (2) or if any return or returns submitted by him appears to the assessing authority to be incorrect or incomplete the assessing authority shall after making such enquiry as he considers necessary and after giving the dealer on opportunity of proving the correctness and completeness of the return or returns submitted by him determine the turnover to the best of his judgment and finally assess in a single order the tax or taxes payable under the Act.

(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 under-assessed in any year, the assessing authority may after issuing a notice to the dealer and after making such enquiry 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.

(9) 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 -

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

14. Based on these rules and laying emphasis on rule 14-A(5) which provides no period of limitation for making an assessment on the basis of true and correct and complete returns filed by the dealer, the learned counsel submits that the assessment made is not barred by limitation. He relied upon section 9(2) of the Central Act which provides that subject to the other provisions of the Act and the Rules made thereunder, the authorities for the time-being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or penalty payable under the general sales tax law of the State. He submits that the powers of the assessing authority under section 9(2) are those conferred by the State law but there is a restriction for the exercise of power by the assessing authority subject to the provisions of the Act and Rules made under the Central Act and rule 14-A(5) and (6) of the Central Sales Tax (Andhra Pradesh) Rules prescribes no limitation for the assessment made under those rules. Consequently, it is submitted, the period of limitation prescribed under section 14(1) of the State Act is not applicable in respect of the assessments made under the Central Sales Tax Act read with the Rules made thereunder. He relied upon two decisions of the Supreme Court in State of Tamil Nadu v. K. A. Ramudu Chettiar & Co. : AIR1973SC2230 and Indian Aluminium Cables Ltd. v. Excise and Taxation Officer : [1977]1SCR716 . In the first of the two cases, the Supreme Court observed that :

'The powers conferred under section 9(2) of the Central Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969, embrace all the powers that the assessing authority had under the sales tax law of the State of force during the relevant assessment year.'

15. We are unable to appreciate how the contention of the revenue is supported by this decision. In the latter case, the Supreme Court dealing with the scope of section 11 of the Punjab General Sales Tax Act, 1948, observed :

'But the legislature advisedly did not fix any period of limitation for taking up of the steps or the passing of the assessment order under any of the sub-sections (1), (2) or (3). The reason is obvious. Best judgment assessments in the circumstances mentioned in ay of the sub-sections (4), (5) or (6) could not be allowed to be made after the expiry of a certain reasonable time which the legislature thought was three years previously but made it five years by Punjab Act 28 of 1965. But where a registered dealer has filed the return the Assessing Authority can pass the assessment order under sub-section (1) and accept the return filed by the dealer as correct and complete. In such a case the formality of passing an order of assessment is to be completed without any further demand of tax from the dealer. For the issuance of a notice under sub-section (2) no time-limit has been fixed, but the Assessing Authority must remain on its guard of taking the steps and completing the assessment as soon as it may be possible to do so. Otherwise, the risk involved may just be pointed out ......'

16. There the Supreme Court was dealing with a statute where certain period of limitation is prescribed for passing an order of assessment on the basis of best judgment, while no such period is prescribed for accepting a return filed by the dealer which is correct and complete. But in this case, section 14(1) prescribes a period of limitation even for accepting a complete and correct return submitted by a dealer.

17. Section 9(2) specifically empowers the State authorities to act on behalf of the Central Government for the purposes of making assessments, reassessments, collection and enforcement of payment of tax including any penalty as if the tax or penalty is payable under the general sales tax law of the State. Section 9(2) further makes applicable the provisions of the State law including the provisions relating to returns, provisional assessment, etc. It is true that the entire procedure is subject to the provisions of the Act and the Rules made thereunder. But we are unable to see any repugnancy or inconsistency between sub-rule (5) of rule 14-A of the Central Sales Tax (Andhra Pradesh) Rules and section 14(1) of the Act. Section 9(2) clearly makes the State law including the Rules of procedure applicable in the matter of assessments and collection of tax including penalty. A statute is intended to be workable and the interpretation thereof by a court must be to secure that object. It would create uncertainty and confusion in the working of the Act if the period of limitation prescribed under section 14(1) of the Act is found to be inapplicable to assessments under the Central Act.

18. The Supreme Court in State of Kerala v. P. P. Joseph and Co. [1970] 25 STC 483 (SC) observed at page 488 :

'By section 9(2) of the Central Sales Tax Act as modified it is enacted that the authorities empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the State shall be entitled, on behalf of the Government of India, to assess, reassess, collect and enforce payment of tax by a dealer under the Act as if the tax payable by such a dealer under the Act was tax payable under the general sales tax law of the State, and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State.'

19. The Supreme Court again in State of Kerala v. Pothan Joseph & Sons [1970] 25 STC 147 (SC) also expressed the same view, viz., that the general sales tax law of the State which would include the Rules framed thereunder governed the levy and assessment of the tax in the matter of inter-State sales.

20. A Division Bench of this Court in an unreported decision in T.R.C. No. 58 of 1966 dated 28th January, 1970 (K.C.P. Ltd. v. State of Andhra Pradesh 1971, Tax LR 326.)

'In view of what is stated in section 9(2) of the Central Sales Tax Act, 1956, and having regard to the limitation prescribed under section 14(1), it will be futile to contend on behalf of the State that section 9(2) empower the authorities under the Andhra Pradesh General Sales Tax Act to make an assessment invoking the provisions of the Central Sales Tax Act without regard to the period of limitation prescribed under section 14(1).'

21. Again, another Division Bench of this Court in Mohd. Akhalaq Ahmed v. State of Andhra Pradesh [1969] 23 STC 204 observed that under the provisions of section 9(3) of the Central Sales Tax Act not only the procedural provisions but also the substantive provisions of the local sales tax law were made applicable. Therefore, we have no hesitation in holding that the limitation prescribed under section 14(1) of the State Act is attracted to assessments made under the Central Sales Tax Act. The assessment having not been admittedly completed as required by section 14(1) within 4 years from the expiry of the year to which the assessment relates, the assessment is invalid and unenforceable.

22. Accordingly, the revision case is allowed and the impugned assessment order is set aside. There shall be no order as to costs. Advocate's fee Rs. 150.


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