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Eastern Ore Corporation Vs. the Commercial Tax Officer - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petitions Nos. 317, 318 and 2914 of 1970
Judge
Reported in[1974]33STC129(AP)
AppellantEastern Ore Corporation
RespondentThe Commercial Tax Officer
Appellant AdvocateP. Rama Rao ;and E. Satyanarayana, Advs. in W.P. Nos. 317 and 318 of 1970 ;and S. Dasarathrama Reddi, Adv. in W.P. No. 2914 of 1970
Respondent AdvocateFifth Government Pleader
Excerpt:
.....were not so made, the assessment orders were bad in law and have to be struck down. 14. (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 inquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer. (2) when making an assessment to the best of judgment under subsection (1), the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty as specified in..........and remitted the case to be decided in the light of the directions given by the high court. the assessing authority thereafter again assessed the petitioner to tax by an order dated 14th january, 1970.3. for the assessment year 1963-64, the petitioner was taxed by an order dated 21st january, 1970. for that year the petitioner had not submitted any return.4. these two assessment orders are questioned on the ground that the assessment should have been made within four years from the end of the assessment year according to section 14(3) of the andhra pradesh general sales tax act; since they were not so made, the assessment orders were bad in law and have to be struck down.5. it was, however, a common ground that as the assessment proceedings for both these years were initiated within.....
Judgment:

Gopal Rao Ekbote, C.J.

1. These writ petitions have come to us on a reference made by a Bench on 27th July, 1971. The learned Judges were of the view that the decision in Sayanna v. State I.L.R. (1971) A.P. 157, requires reconsideration.

2. The essential facts are that the petitioner for the assessment year 1959-60 was assessed to certain tax. Questioning the legality of the assessment order, the petitioner filed W.P. No. 1960 of 1964. The High Court by an order dated 25th February, 1969, quashed the assessment order and remitted the case to be decided in the light of the directions given by the High Court. The assessing authority thereafter again assessed the petitioner to tax by an order dated 14th January, 1970.

3. For the assessment year 1963-64, the petitioner was taxed by an order dated 21st January, 1970. For that year the petitioner had not submitted any return.

4. These two assessment orders are questioned on the ground that the assessment should have been made within four years from the end of the assessment year according to Section 14(3) of the Andhra Pradesh General Sales Tax Act; since they were not so made, the assessment orders were bad in law and have to be struck down.

5. It was, however, a common ground that as the assessment proceedings for both these years were initiated within six years from the end of the assessment years, the orders of assessment would be within time if it is held that Section 14(4) of the Act is applicable.

6. In W.P. No. 2914 of 1970 penalty proceedings were initiated on 14th January, 1969. Previous to that for the assessment year 1963-64, the petitioner was assessed to tax on a turnover of Rs. 11/2 lakhs by an order dated 30th March, 1965. On appeal, the turnover, however, was reduced to Rs. 50,000. The transactions between April to July of the relevant year were taken into account to arrive at a taxable turnover.

7. The penalty proceedings culminated in the imposition of a penalty of Rs. 15,000. After a lapse of more than one year, the petitioner now challenged the validity of the order imposing penalty mainly on the ground that the penalty proceedings which ought to have been initiated within four years from the end of the relevant assessment year were actually initiated beyond four years, but, admittedly, within six years. The main contention in this writ petition was also the same, i. e., whether Section 14(3) of the Act applies to the present case or it is only Section 14(4) that is applicable.

8. In W.P. Nos. 317 and 318, it was contended that since the assessee had not filed the return for both the assessment years, the Commercial Tax Officer could have issued notices and computed the assessments within a period of four years from the expiry of the assessment years concerned. As the notices were issued for both the years beyond four years, they are void and illegal. The Commercial Tax Officer had no jurisdiction to make the assessments in pursuance of those notices. The learned Judges were of the view that while Section 14(3) is a special provision and, whereas Section 14(4) is a general provision, in a case where no return had been filed it is Section 14(3) which provides for such a contingency that is applicable and not Section 14(4) which is a general provision.

9. They felt that Sub-section (3) of Section 14 applies to a case where no return had been filed, whereas Sub-section (4) of Section 14 applies to a case where an assessment has been made, but some turnover has escaped assessment. In that view of the position of law, their Lordships were of the view that Sayanna v. State I.L.R. (1971) A.P. 157, which holds a contrary view requires reconsideration.

10. In order to appreciate the said contention, it is necessary to read Section 14 in so far as it is relevant:

14. (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 inquiry 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.

(2) When making an assessment to the best of judgment under subsection (1), the assessing authority may also direct the dealer to pay in addition to the tax assessed, a penalty as specified in Sub-section (8) on the turnover that was not disclosed by the dealer in his return,

(3) If no return is submitted by any dealer liable to tax under this Act before the date prescribed in that behalf, the assessing authority may, at any time within a period of four years from the expiry of the year to which assessment relates, after issuing a notice to the dealer and after making such inquiry as he considers necessary, assess to the best 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) In any of the following events, namely, where the whole or any part of the turnover of business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or where the licence fee or registration fee has escaped levy or has been levied at a rate lower than the correct rate, the assessing authority may, after issuing a notice to the dealer and after making such inquiry as he considers necessary, assess the correct amount of tax payable or levy the correct amount of licence fee or registration fee-

(a) within a period of six years from the expiry of the year to which the tax, licence fee or registration fee 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 aforesaid, if any such event has occurred due to any other causes.

In a case falling under clause (a), the assessing authority may also direct the dealer to pay, in addition to the tax assessed as aforesaid, a penalty not exceeding one and a half times the amount of that tax.

Explanation. -- The expression 'assessing authority' occurring in this sub-section shall, in relation to licence fee or registration fee, be construed as referring to the licensing or registering authority, as the case may be, under this Act.

(4-A) An assessment or levy under Sub-section (4) shall be made-

(a) within a period of six years from the expiry of the year to which the tax, licence fee or registration fee relates, if the event that has occasioned such assessment or levy has occurred on account of the failure of the dealer to disclose the turnover or any of the particulars correctly; and

(b) within a period of four years from the expiry of the year aforesaid, if such event has occurred due to any other cause....

(8) The penalty leviable under Sub-section (2), Sub-section (3) or subsection (4) shall not exceed-

(a) five times the tax or the fee due, in a case where the assessing authority is satisfied that the failure of the dealer to disclose the whole or part of the turnover or any other particulars correctly, or to submit the return before the prescribed date, was wilful; and

(b) one-half of the tax, or the fee, due in a case where such failure was not wilful:

Provided that where such failure occurred due to a bona fide mistake on the part of the dealer, no such penalty shall be levied.

Explanation.-The expression 'assessing authority' occurring in this section shall, in relation to licence fee or registration fee, be construed as referring to the licensing or registering authority, as the case may be, under this Act.

11. A careful reading of Section 14 would disclose that Sub-section (1) enjoins upon the assessing authority to assess to the best of his judgment the amount of tax due from a dealer where it appears to the assessing authority that any return submitted under Section 13 is incorrect or incomplete.

12 Sub-section (2) is an incidental provision to Sub-section (1) and relates to the imposition of penalty with which we are not concerned.

13. Sub-section (3) empowers the assessing authority at any time within a period of four years from the expiry of the year to which the assessment relates, to assess to the best of his judgment, the amount of tax due from the dealer on his turnover for the year where no return is submitted by the dealer liable to be taxed within the time prescribed.

14. Between these two provisions, i. e., Sub-section (1) and Sub-section (3), all the possible cases of imposing tax appear to us to be exhausted in so far as the primary power of levy of tax is concerned. A case where incorrect or incomplete turnover is filed is covered by Sub-section (1) and a case where no return is filed at all is covered by Sub-section (3). It is also pertinent to note that in both the cases the assessing authority is empowered to assess to the best of his judgment. It is also relevant to note that the primary authority making such assessment is prescribed and is not the same as we would presently notice in a case coming under subsection (4).

15. We then turn to Sub-section (4) as it then stood. The first thing on a perusal of that sub-section which leaps to the eye is that the power under that sub-section is exercisable in cases which come under one or the other events mentioned in the Sub-section. The events mentioned are, firstly, where the whole or any part of the turnover of business of a dealer has escaped assessment to tax or, secondly, a dealer has been under-assessed or, thirdly, he has been assessed at a rate lower than the correct rate or, fourthly, where the licence fee or registration fee has escaped levy or, finally, the fee has been levied at a rate lower than the correct rate.

16.It is only when any of the aforesaid events happen that the assessing authority after making such enquiry as he considers necessary can assess the correct amount of tax payable or levy the correct amount of licence fee or registration fee.

17. What is to be examined then is whether, as argued, there is any conflict between Sub-section (3) and Sub-section (4) and whether Sub-section (3) is a special provision applicable in all cases where no return has been filed and would, therefore, apply in preference to Sub-section (4) which is a general provision, which includes the cases where no return is filed.

18. We fail to understand how these two mutually exclusive arguments can be advanced in the same breath. If there is a conflict between these provisions, then they must relate to the same legislative field, but provide two inconsistent solutions for the legislative problems covered by the two provisions. If, on the other hand, Sub-section (4) is considered as general, while Sub-section (3) is considered as a special provision, then, according to the well-accepted principle, the special provision covering a specific legislative problem prevails over the general provision which apart from other legislative problems provides also for a legislative problem impliedly covered by the special provision.

19. In either case, however, both the provisions must relate to a common legislative problem for which different legislative solutions are provided. Is there then a common legislative problem for which provision is made both in Sub-section (3) as well as in Sub-section (4).

20. In this connection it is useful to remember that when the Legislature has given its attention to a separate subject and made provision for it in Sub-sections (1) and (3), the presumption is that a subsequent general provision in Sub-section (4) separately made for a different subject is not intended to interfere with the special provision made in Sub-sections (1) and (3) unless it manifests that intention very clearly. The rule in each provision must be construed in that respect according to its own subject-matter and its own terms.

21. A comparative study of the two provisions would leave no one in doubt that there is nothing common between the two provisions. They postulate two different situations. While Sub-section (3) provides for a situation where a dealer liable to tax has not submitted any return. Only in such a situation that the assessing authority is empowered to assess to the best of his judgment, the amount of tax due from the dealer on his turnover for the relevant year. That provision has nothing to do with a situation envisaged by Sub-section (4), which relates to escapement of a whole or part of the turnover of business of a dealer or the dealer has been under-assessed or assessed at a rate lower than the correct rate. Sub-section (4) does not provide for the best of judgment assessment in a case where no return is filed. It applies to a case where the turnover has escaped the assessment to tax irrespective of the fact whether such a case for the purpose of primary assessment falls under Sub-section (1) or Sub-section (3). It provides for escapement of assessment to tax in either of the two cases.

22. It could not be doubted that in a case where no return is submitted by any dealer, an assessing authority can assess him nevertheless within four years from the expiry of the year to which the assessment relates on the best of its judgment under Sub-section (3). Nevertheless the assessing authority would have power to assess the dealer if it is found that the whole or any part of the turnover of the business had escaped assessment to tax or had been under-assessed or assessed at a rate lower than the correct rate under Sub-section (4) of the Act.

23. It could not similarly be disputed that in a case where it appears to the assessing authority that any return submitted under Section 13 is incorrect or incomplete, he can assess to the best of his judgment the amount of tax due from the dealer under Sub-section (1). Nevertheless the assessing authority finding that the whole or any part of the turnover of business of a dealer has escaped assessment to tax or has been under-assessed or assessed at a rate lower than the correct rate can assess the dealer to a correct tax under Sub-section (4).

24. When this position of law is not doubted or disputed, then, in either case, it would be incorrect to contend that Sub-section (1) and subsection (3) either are in conflict with Sub-section (4) or that they are special provisions, while Sub-section (4) is a general provision.

25. As Sub-section (4) permits the assessing authority in any of the events mentioned therein the exercise of the power it would include a case where no return is filed or a case where an incorrect or incomplete return is filed. Sub-section (4), it is seen, confers larger and general powers. Although thus for both these situations provisions are made in Sub-section (1) or (3) nevertheless a power to reach the escaped turnover and to bring it within the net of taxation is conferred by Sub-section (4). It was conceded that in a case where an incomplete or incorrect return was filed and a special power conferred by Sub-section (1) to assess such returns on best of judgment is exercised by the assessing authority, even then, the power under subsection (4) can nevertheless be exercised. It could not also be disputed that even though the special power conferred on the assessing authority to assess to the best of the judgment an incomplete or incorrect return is not exercised, even then the power under Sub-section (4) can be exercised if it is found that the turnover wholly or partly had escaped the assessment under subsection (1).

26. Similarly, in a case where the dealer who had not filed the return can be assessed to tax by a special power conferred on the assessing authority under Sub-section (3). In spite of such a power and irrespective of the fact whether such power is exercised or not by the assessing authority under Sub-section (3), the assessing authority can assess the dealer to a correct tax on his turnover if it appears to the assessing authority that the turnover has escaped the tax wholly or partly.

27. It will thus be seen that although to a superficial eye there may appear some overlapping between Sub-sections (1) and (3) on the one hand and subsection (4) on the other, the legislative situations envisaged by subsection (4) are entirely different than what are postulated by Sub-section (1) or Sub-section (3). They do not, therefore, cover the same legislative field. They cannot, therefore, be considered as either conflicting or contradictory provisions nor they can be said to be special and general provisions. They are directed to achieve different objectives. While the object of subsection (1) and Sub-section (3) is to assess the incomplete or incorrect return or assess the dealers who have failed to file any return to the best of the judgment of the assessing authority, the object of Sub-section (4) is to get into the net of taxation all the cases where the dealers have escaped the tax irrespective of the reason which led to such escapement. Thus, in cases of incomplete or incorrect filing of return and irrespective of the fact whether the power to assess to the best of his judgment is exercised or not by the assessing authority under Sub-section (1), power under Sub-section (4) is always available for exercise. Likewise, in a case where no return is filed by any dealer irrespective of the fact whether power under Sub-section (3) is exercised or not by the assessing authority, the power under Sub-section (4) is always available.

28. What must, therefore, follow is that Sub-section (3) and Sub-section (4) cover two different legislative problems and are intended to achieve two different ends. That is why we find that two different periods of limitations are provided for the exercise of powers under Sub-sections (1) and (3) on the one hand and Sub-section (4) on the other. We have already noticed that while Sub-sections (1) and (3) confer power on the assessing authority to assess to the best of his judgment incases coming within the purview of those provisions, Sub-section (4) does not empower the assessing authority to assess the dealer to the best of his judgment. That is the view taken in the two following cases: State of Andhra Pradesh v. Ravuri Narasimloo [1965] 16 S.T.C. 54, and Subramaniam Chettiar and Sons v. Joint Commercial Tax Officer [1966] 18 S.T.C. 357. We have also noticed that different authorities are conferred with powers under Sub-sections (1) and (3) on the one hand and the authority under Sub-section (4) on the other. See Rule 31 of the Rules made under the Act.

29. In these circumstances, it is difficult to agree with the contention that Sub-section (4) applies only to cases where an assessment order is made and some turnover has escaped assessment under Sub-section (3) and is not applicable to a case where no assessment was made under that Sub-section. Sub-section (4) is neither redundant nor otiose. Nor there is any warrant for an argument that Sub-section (3) is a special provision whereas subsection (4) is a general one regarding the same subject-matter. We can find no conflict between Sub-section (3) and Sub-section (4) as we find that they cover two different subject-matters.

30. In Sayanna v. State I.L.R. (1971) A.P. 157, the facts were that the dealer had failed to file the returns. A provisional assessment was made. Thereafter proceedings for the levy of penalty were initiated and the petitioner was directed to pay the penalty. The contention before the Bench was that the penalty proceedings were initiated after a period of four years. Therefore, the imposition of penalty was bad. Their Lordships observed:

The condition precedent for the exercise of this power [Sub-section (4) of Section 14] is that the turnover should have escaped assessment either wholly or partly, and this must have been noticed and the authority concerned must have issued a notice within six years of the assessment year. Once these two conditions are satisfied, there is no further impediment in the exercise of this power. The turnover may escape assessment either because of the failure of the dealer to file a return who is under an obligation to file a return or because the assessing authority for any reason comes to the conclusion that the turnover was under-assessed. Whatever the reason may be, when once the assessing authority finds that the whole or any part of the turnover has escaped assessment, this power can be exercised.

31. Their Lordships went on to hold:

The argument of the learned counsel for the petitioner that a case in which a dealer failed to file a return falls exclusively under subsection (3) of Section 14 of the Act and the assessing authority cannot act under Sub-section (4) of Section 14 cannot, therefore, be accepted.

32. For the reasons which we have given, we agree with the conclusion arrived at in the abovesaid Bench decision. We can find no reason for reaching any other conclusion.

33. Our concluded opinion, therefore, is that even in a case where no return is filed and no assessment under Sub-section (3) of Section 14 of the Act is made, even then the assessing authority can validly assess the dealer to a correct tax if it appears to him that the turnover of the dealer wholly or partly has escaped assessment to tax. This power, however, has to be exercised within six years of the expiry of the relevant assessment year.

34. In this view of ours and since in both the cases under consideration, proceedings for assessment in one case and the proceeding for imposing penalty in the other were initiated within six years of the expiry of the relevant assessment year, the petitioner in one case was rightly assessed to tax and in the other was correctly required to pay the penalty.

35. In W.P. No. 317 of 1970 no other argument was advanced.

36. In the other W.P. No. 2914 of 1970, it was, however, sought to be contended that as the assessment under Sub-section (3) was confined to the period from April to July, 1963, the amended Sub-section (4) prescribing 5 times penalty would not apply. During that period of assessment, according to the provision then prevailing, 11/2 times the amount of the tax can alone be levied. We do not find any substance in this contention. It is true that Sub-section (4) was inserted by a substitution in the place of the then existing Sub-section (4) by Section 15 (iii) of the Amendment Act, 1963, and took effect from 1st August, 1963, by virtue of Section 1(2) of the said Amendment Act. What is, however, ignored in advancing this argument is that the case for imposition of penalty can only arise when any one of the events mentioned in Sub-section (1) could arise. Such an event can be detected only when a case falls under clause (a) of Sub-section (4). Looked at from that point of view, the law which was prevailing at the time when any of the events mentioned in Sub-section (4) happens would be applicable and, therefore, that penalty becomes leviable. On the date of the initiation of the penalty proceedings, nay even on the date of the assessment order, the amended Sub-section (4) had already come into force. It was that provision therefore which was applicable. The contention that since the assessment was confined to the period April to July, 1963, the law regarding penalty prevailing during that period, that is to say, penalty of one and a half times the tax should have been levied is devoid of any substance. We, therefore, experience no difficulty in rejecting the same.

37. It is also relevant to note that the penalty order was passed by the Commercial Tax Officer on 14th January, 1969. The petitioner did not prefer any appeal. After a lapse of about one year and 5 months he filed the writ petition on 5th June, 1970. No reason is shown as to why the appeal was not filed and as to why the order of penalty was allowed to become final. No satisfactory explanation is offered for the enormous delay amounting to laches in filing the writ petition. On these grounds also, we think that the writ petition is liable to be dismissed.

38. We, accordingly, dismiss all the writ petitions with costs.

39. Advocate's fee Rs. 250 in each case.


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