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Commissioner of Sales Tax Vs. Kakaram Magharam - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberSales Tax Reference No. 260 of 1966
Judge
Reported in[1970]26STC223(All)
AppellantCommissioner of Sales Tax
RespondentKakaram Magharam
Appellant AdvocateStanding Counsel
Respondent AdvocateS.N. Verma, Adv.
Excerpt:
- - it would include a proceeding upon an application under section 30 for reopening the assessment as well as a proceeding under section 22 for rectification of the assessment......of cloth and was ordinarily liable to assessment under the u.p. sales tax act by the sales tax officer, sector i, kanpur circle. assessment proceedings for the assessment year 1953-54 were pending under rule 41(5) of the u.p. sales tax rules, when the commissioner of sales tax transferred the case of the assessee to the sales tax officer, sector vi, in the same circle under rule 81 of the u.p. sales tax rules. the sales tax officer, sector vi, made an assessment order dated 23rd april, 1965, determining the turnover of imported cloth at 365 bales. subsequently, upon information received that the assessee had imported 4501/2 bales and not merely 365 bales, proceedings were initiated under section 21 of the act for assessing the escaped turnover. the reassessment, proceedings were.....
Judgment:

R.S. Pathak, J.

1. The assessee carried on business as a dealer of cloth and was ordinarily liable to assessment under the U.P. Sales Tax Act by the Sales Tax Officer, Sector I, Kanpur Circle. Assessment proceedings for the assessment year 1953-54 were pending under Rule 41(5) of the U.P. Sales Tax Rules, when the Commissioner of Sales Tax transferred the case of the assessee to the Sales Tax Officer, Sector VI, in the same circle under Rule 81 of the U.P. Sales Tax Rules. The Sales Tax Officer, Sector VI, made an assessment order dated 23rd April, 1965, determining the turnover of imported cloth at 365 bales. Subsequently, upon information received that the assessee had imported 4501/2 bales and not merely 365 bales, proceedings were initiated under Section 21 of the Act for assessing the escaped turnover. The reassessment, proceedings were taken by the Sales Tax Officer, Sector I. Against that assessment the assessee filed an appeal and contended that the case having been transferred to the Sales Tax Officer, Sector VI, there was no jurisdiction in the Sales Tax Officer, Sector I, to take assessment proceedings under Section 21 and reassess the turnover. The appeal was allowed by the Judge (Appeals) Sales Tax and upholding the contention of the assessee he annulled the reassessment. He pointed out that 'the record of the case shows that the case for the year 1953-54 was originally transferred to S.T.O. VI, Kanpur. It is evident that S.T.O. I had no jurisdiction after the transfer of the case.' The Commissioner of Sales Tax now applied in revision. The Judge (Revisions) Sales Tax, agreeing with the Judge (Appeals), dismissed the revision application. At the instance of the Commissioner, the Judge (Revisions) has referred the following question for the opinion of this court:

Whether under the circumstances of this case jurisdiction in proceedings under Section 21 vested with the Sales Tax Officer, Sector VI, to whom the assessment case for the year 1953-54 had been transferred or the Sales Tax Officer, Sector I, could have assumed jurisdiction

2. It will be noted that the question referred proceeds upon the basis that the case for the assessment year 1953-54 had been transferred by the Commissioner from the Sales Tax Officer, Sector I, to the Sales Tax Officer, Sector VI. The point in issue is whether the case so transferred compre hended the original assessment only or could in law embrace within it an assessment under Section 21 also.

3. Section 2(a) defines an 'assessing authority' as 'any person authorised by the State Government to make any assessment under this Act'. Rule 2(h) of the U.P. Sales Tax Rules defines a 'Sales Tax Officer' as the Sales Tax Officer of a circle appointed by the State Government to perform the duties and exercise the powers of an assessing authority in such circle. Rule 2(c) defines a 'circle' as a sales tax circle notified under Sub-rule (1) of Rule 3. Sub-rule (1) of Rule 3 empowers the State Government to fix the limits of a circle and to appoint officers to the circle. Sub-rule (3) of Rule 3 declares that where there are more than one Sales Tax Officer in a circle, the Commissioner of Sales Tax shall determine their respective jurisdictions within such circle. It is apparently in the exercise of that power that a circle has been divided into sectors and different Sales Tax Officers have been conferred exclusive jurisdiction in respect of different sectors. Rule 6 sets out a number of rules on the basis of which it can be determined whether an assessee falls within the jurisdiction of one Sales Tax Officer or the other. It is by reference to Rule 6 read with Rule 3(3) that the assessee was ordinarily liable to be assessed by the Sales Tax Officer, Sector I. Although an assessee may, by virtue of Rule 6, ordinarily be liable to assessment by a particular Sales Tax Officer, nevertheless the Commissioner of Sales Tax may transfer his case from that Sales Tax Officer to another Sales Tax Officer. That power is contained in Rule 81, which declares :

The Commissioner, Sales Tax, may transfer any case or class of cases at any stage from one assessing authority in a circle to another assessing authority or to any officer subordinate to him having the powers of the assessing authority in the same circle or in any other circle in Uttar Pradesh.

5. After the transfer of the case, the Sales Tax Officer, Sector VI, completed the assessment under Rule 41(5). When proceedings for reassessment under Section 21 were contemplated, could they be taken by the Sales Tax Officer, Sector1 Section 21 provides:

If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing notice to the dealer and making such enquiry as may be necessary, assess or reassess him to tax :

6. Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment, or full assess ment, as the case may be.

7. The 'assessing authority' contemplated by Section 21 is the assessing authority having jurisdiction to assess the dealer and the assessing authority empowered to assess the dealer was, upon transfer of the case, the Sales Tax Officer, Sector VI. The order transferring the case to him did not expressly limit his jurisdiction to the original assessment proceeding. Had that been so, the position would have been quite different. In the absence of any indication to that effect, the Sales Tax Officer, Sector VI, must be taken to be the assessing authority in respect of the dealer for all purposes under the Act. If he had jurisdiction to complete the original assessment proceeding he had also jurisdiction to reopen that proceeding and make a reassessment. It must not be forgotten that where an original assessment has already taken place and a proceeding has to be taken under Section 21 in respect of a turnover which has escaped assessment, the proceeding under Section 21 is in its true nature one of reassessment. The original assessment is reopened, as it were and the turnover is reassessed. Ordinarily, the Sales Tax Officer who had the jurisdiction to make the original assessment would have the jurisdiction to assess again. What was transferred to the Sales Tax Officer, Sector VI, was the case of the assessee for the assessment year 1953-54. In the absence of a specific definition specifying what a 'case' is under the U.P. Sales Tax Act, an assessment case would refer to a proceeding for determining the turnover of the dealer for a particular assessment year and computing the tax liability on such turnover. In that sense every proceeding taken, either initially or subsequently, by the Sales Tax Officer for determining the turnover and computing the tax liability of a dealer for that assessment year would be a proceeding in the case. It would include a proceeding upon an application under Section 30 for reopening the assessment as well as a proceeding under Section 22 for rectification of the assessment. There is no reason why a proceeding for reassessment under Section 21 should not also be a proceeding in the case.

8. In a case under the Indian Income-tax Act, 1922, upon provisions which are somewhat analogous to those under the U.P. Sales Tax Act, it has been held to include a reassessment of an assessee. In Govindarajulu Iyer v. Commissioner of Income-tax[1948] 16 I.T.R. 391, the Madras High Court observed:

Essentially the proceedings under Section 34, whether partially or totally, relate to the same proceeding which must be deemed to have com menced with the publication of the general notice under Section 22(1). In some respects and in some cases it may lead to a supplemental assessment. In other cases it may result in assessment for the first time, as in this case where there has not been any assessment before. We do not find, any justifica tion for the artificial separation of a proceeding under Section 34 from a proceed ing relating to the original assessment or to proceedings which started before a notice under Section 34, so long as they all relate to the same assessee and the same period.... (Emphasis mine)

9. The same view was adopted by the Patna High Court in Mukherjee v. Commissioner of Income-tax[1959] 37 I.T.R. 224, 228. In Commissioner of Income-tax v. Burmah Oil Co. Ltd.[1963] 47 I.T.R. 25, 41, the Calcutta High Court, after referring to the observations of the Bombay High Court in Madhavjee Damodar Thackersay v. Commissioner of Income-tax[1935] 3 I.T.R. 457 and its own observations in In re Satyendra Mohan Roy (1930) 4 I.T.C447, said :

But then subject to that limitation the whole purpose and object of assessment of escaped income under Section 34 show that it is one income for the same year of the same assessee which is being assessed....

10. And, further in the same case, after referring to its decision in Krishna Hydraulic Press Ltd. v. Commissioner of Income-tax[1943] 11 I.T.R. 504, it observed:

That shows that it is one assessment, the original and the escaped income being one. In fact, the escaped income is added back to the total income of the original assessment and then a new rate and a new slab of taxation are worked out.

11. Reference was also made to Govindarajulu Iyer [1948] 16 I.T.R. 391. Judgments in the aforesaid cases which were decided in relation to the provisions of the Indian Income-tax Act, 1922, apply with equal force to a case under the corresponding provisions of the U.P. Sales Tax Act. To my mind, ordinarily when an assessment case of a dealer in respect of a certain assessment year is transferred from one Sales Tax Officer to another, the latter enjoys the jurisdiction not only to make the original assessment but also, should the occasion arise, to reassess that dealer for the said assessment year and all the proceedings so taken must be considered as proceedings in that case.

12. In this view of the matter, the case of the assessee having been transferred from the Sales Tax Officer, Sector I, to the Sales Tax Officer, Sector VI, jurisdiction to take the proceedings under Section 21 vested in the Sales Tax Officer, Sector VI and not in the Sales Tax Officer, Sector I. I would answer the question referred accordingly.

13. The assessee is entitled to his costs which I assess at Rs. 100. Counsel's fee is assessed in the same figure.

R.L. Gulati, J.

14. I agree.


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