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Chowdhary Punnamchand Hastimal Co. Vs. the Commercial Tax Officer - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case Number Writ Petition No. 4057 of 1969
Judge
Reported in[1972]29STC694(AP)
AppellantChowdhary Punnamchand Hastimal Co.
RespondentThe Commercial Tax Officer
Appellant Advocate T. Anantha Babu, Adv.
Respondent Advocate A. Mahadev, Adv. ;for Government Pleader for sales tax cases
Disposition Petition allowed
Excerpt:
.....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 enquiry as he may consider necessary, by order, setting out the grounds therefor- (a) determine to the best of his judgment the turnover that has escaped assessment and assess the turnover so determined ;4. in addition to the tax assessed or fee levied under this sub-section, the assessing authority may also direct the dealer to pay a penalty as specified in sub-section (8). (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 registr in such an event sub-section (4) empowers the assessing authority to..........on which it has been set aside should be excluded in computing the period of four years or six years limitation, as the case may be, for purposes of making any fresh assessment. the notice dated 1st march, 1969, proposing to assess on the escaped turnover is not as a result of any order of an appellate tribunal or court setting aside the assessment to say that that period between the date of assessment and the date of the order of the appellate court should be excluded. the proceedings initiated under sub-section (4) of section 14 should not be mixed up or confused with proceedings initiated afresh as a result of an assessment order being set aside by any court or other competent authority. sub-section (7) can be availed only when an assessment made has been set aside by any court or.....
Judgment:

Obul Reddi, J.

1. The petitioner has filed this writ petition challenging the notice dated 22nd October, 1969, issued by the Commercial Tax Officer, Cuddapah, proposing to levy a penalty of Rs. 40,725.18 on the petitioner on the ground that the action sought to be taken by the Commercial Tax Officer is barred by limitation inasmuch as the proceedings for penalty were not initiated within a period of four years or six years, as the case may be, from the expiry of the year of assessment. The facts are these :

The petitioner-firm submitted its returns for the assessment year 1962-63 disclosing a turnover of Rs. 13,79,666.19 and it was assessed under Section 14(1) of the Andhra Pradesh General Sales Tax Act (hereinafter referred to as the Act) on 3rd March, 1964. That assessment was set aside on appeal by an order dated 15th December, 1964, and a fresh best judgment assessment was made on 10th March, 1967. An appeal was preferred against that best judgment assessment and the Assistant Commissioner granted some relief. The further appeal preferred to the Tribunal is pending. Meanwhile, the Commercial Tax Officer issued a notice dated 1st March, 1969, proposing to reopen the assessment under Sub-section (4) of Section 14 of the Act and later on passed an assessment order on 8th July, 1969, and an appeal against that order is now pending before the Assistant Commissioner. No notice to show cause why penalty should not be levied on the escaped turnover was given to the petitioner along with the said notice dated 1st March, 1969, and for the first time on 22nd October, 1969, the Commercial Tax Officer chose to issue a notice to show cause why penalty should not be levied. It is this notice that is now challenged on the ground that it was issued beyond the period of limitation prescribed under Sub-section (4-A) of Section 14 of the Act. No counter has been filed by the respondent disputing the facts stated above. Pending disposal of this petition, the penalty as proposed has been levied as evidenced by the order of the Commercial Tax Officer dated 31st December, 1969, made available for our perusal by the department. The Government Pleader Of sales tax cases sought to contend relying upon Sub-section (7) of Section 14 of the Act that the penalty proceedings initiated by the Commercial Tax Officer are in time and not barred by limitation.

2. The question, therefore, is whether in computing the period of limitation on the facts of this case, the department is entitled to call in aid Sub-section (7) of Section 14 of the Act. We may, therefore, read the relevant provisions of Section 14 of the Act:

14. (4) In any of the following events, namely, where the whole or any part of the turnover of a 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 enquiry as he may consider necessary, by order, setting out the grounds therefor-

(a) determine to the best of his judgment the turnover that has escaped assessment and assess the turnover so determined ;....

4. In addition to the tax assessed or fee levied under this sub-section, the assessing authority may also direct the dealer to pay a penalty as specified in Sub-section (8).

(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.

(4-B)...

(4-C) The powers conferred by Sub-section (4) on the assessing authority may, subject to the same conditions as are applicable in the case of that authority, be exercised also by any of the authorities higher than the assessing authority including the Deputy Commissioner concerned.

(5) Where an assessment under this section has been deferred on account of any stay order granted by the High Court in any case, or by reason of the fact that an appeal or other proceeding is pending before the High Court or the Supreme Court involving a question of law having a direct bearing on the assessment in question, the period during which the stay order was in force or such appeal or proceeding was pending shall be excluded in computing the period of four years or six years, as the case may be, specified in this section for the purpose of making the assessment.

(6) It shall be lawful for the Board of Revenue to direct, by general or special order, any assessing authority to defer assessment in respect of any class of goods or any class of dealers pending clarification by it of any question referred to it if such question has a direct bearing on such assessment. The period between the date of such direction and the date on which such clarification has been received, shall be excluded in computing the period of four years or six years, as the case may be, specified in this section for the purpose of making the assessment.

(7) Where an assessment made under this section has been set aside by the Appellate Tribunal or the High Court or the Supreme Court for any reason, the period between the date of such assessment and the date on which it has been set aside shall be excluded in computing the period of four years or six years, as the case may be, specified in this section for the purpose of making any fresh assessment.

3. In this case notice was given to the petitioner on 1st March, 1969, as it appeared to the assessing authority that a part of the turnover of the business of the petitioner had escaped assessment to tax. In such an event Sub-section (4) empowers the assessing authority to determine to the best of his judgment the turnover that has escaped assessment to tax and assess the turnover so determined. The period of limitation fixed in a case where he makes a. best judgment assessment on the turnover that has escaped assessment is six years from the expiry of the year to which the tax relates. The limitation would be four years from the expiry of the year of assessment if it is for reasons other than those referred to in Clause (a) of Sub-section (4-A) of Section 14. Sub-section (4) of Section 14 also empowers the assessing authority to levy penalty in the manner specified in Sub-section (8) of the same section. No proceedings for levying penalty were admittedly initiated by the Commercial Tax Officer prior to 22nd October, 1969, i.e., till over a period of six years. Sub-section (7) which has been relied upon by the Government Pleader has absolutely no relevance to a case where an assessing authority or any authority superior to him including a Deputy Commissioner assesses a dealer on that part of the turnover which has escaped assessment to tax. It is significant that, in this case, the assessment made on the escaped turnover has not been set aside on appeal by any appellate authority so as to say that the period between the date of such assessment and the date on which it has been set aside should be excluded in computing the period of four years or six years limitation, as the case may be, for purposes of making any fresh assessment. The notice dated 1st March, 1969, proposing to assess on the escaped turnover is not as a result of any order of an Appellate Tribunal or court setting aside the assessment to say that that period between the date of assessment and the date of the order of the appellate court should be excluded. The proceedings initiated under Sub-section (4) of Section 14 should not be mixed up or confused with proceedings initiated afresh as a result of an assessment order being set aside by any court or other competent authority. Sub-section (7) can be availed only when an assessment made has been set aside by any court or other competent authority and not otherwise.

4. So far as an assessment made in exercise of the powers under Sub-section (4) of Section 14 is concerned, the period that could be excluded for the purpose of computing the period of limitation is provided in Sub-sections (5) and (6) of station 14. Unless there is a stay order by the High Court or by the Supreme Court by reason of the fact that an appeal or other proceeding is pending before them having a direct bearing on the assessment in question, the period for which the stay order was in force alone can be excluded in computing the period of limitation of four years or six years, as the case may be, but if no order is made by the High Court or the Supreme Court, then the fact that an appeal or other proceeding is pending before a High Court or the Supreme Court will not extend the period of limitation. Similarly, when the Board of Revenue, as provided under Sub-section (6) of Section 14 directs the assessing authority to defer assessment, then the period between the date of such direction and the date on which 'such clarification has been received' can be excluded in computing the period of limitation.

5. The penalty proceedings admittedly were not initiated within the period of six years from the expiry of the year of assessment, i.e., 1962-63. While it would have been open to the Commercial Tax Officer to issue a notice within the period of six years, i.e., on or before 31st March, 1969, it is not open to him to issue a notice and impose penalty after the expiry of the period of six years in view of what Sub-section (4) of Section 14 says that in addition to the tax assessed or fee levied under this sub-section [Sub-section (4)], the assessing authority may also direct a dealer to pay a penalty as specified in Sub-section (8).

6. It is clear from what is narrated above that penalty proceedings having regard to the period of limitation prescribed by Sub-section (4-A) of Section 14 of the Act must be initiated by the assessing authority within the period of four years or six years, as the case may be, from the assessment year. Sub-section (7) of Section 14 comes into play only when a fresh assessment is sought to be made as a result of the assessment having been set aside by a competent tribunal or a court of law and not as a result of an assessing authority or a superior authority as mentioned in Sub-section (4-C) of Section 14 discovering that a part of the turnover of the business of a dealer has escaped assessment to tax and assessing the dealer on that escaped turnover. The period of limitation in cases where action is taken under Sub-section (4) of Section 14 is prescribed in Sub-section (4-A) of Section 14.

7. In view of the fact that action was not taken by the Commercial Tax Officer within the period of limitation specified in Sub-section (4-A) of Section 14 of the Act, we are constrained to quash the impugned notice and the order made in pursuance thereof by him in P. R. No. 16/69-70 dated 31st December, 1969.

8. In the result, the writ petition is allowed with costs.

9. Advocate's fee Rs. 100.


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