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Shree Gopal Motors Vs. Commissioner, Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberS.T.R. No. 769 of 1975
Judge
Reported in[1979]43STC379(All)
AppellantShree Gopal Motors
RespondentCommissioner, Sales Tax
Appellant Advocate R.K. Gulati, Adv.
Respondent Advocate The Standing Counsel
Cases ReferredWest Bengal v. Sri Keshab Chandra Mandal
Excerpt:
.....to file returns. -(1) if the assessing authority is satisfied that any dealer- (b) has concealed the particulars of his turnover or deliberately furnished inaccurate particulars of such turnover; ..do hereby declare and verify that, to the best of my knowledge and belief, all the statements and figures given in this return are true and complete and nothing has been wilfully omitted or wrongly stated. gulati appearing for the assessee contended that form iv clearly indicates that the return has to be signed by a proprietor or partner of a firm and not by his agent. singh contended that wherever it was intended that the partner or proprietor of the business should himself sign the forms, it was clearly so indicated. ..and shall be signed by the appellant or his lawyer or his duly..........meaning of this section.4. this provision makes it clear that in the case of a reconstitution of a firm, penalty may be assessed and determined as if no reconstitution had taken place, and every partner is treated as a dealer for purposes of such assessment. thus, the penalty proceedings were validly taken.5. turning to the first question, the penalty has been imposed on the assessee by recourse to section 15-a(1)(b) of the act. section 15-a(1)(b) of the act at the relevant time ran as under :15-a. penalty for failure to file returns.-(1) if the assessing authority is satisfied that any dealer-(b) has concealed the particulars of his turnover or deliberately furnished inaccurate particulars of such turnover; or(c) ... he may direct that such dealer shall pay, by way of penalty....6. in.....
Judgment:

C.S.P. Singh, J.

1. The Revising Authority, Aligarh, has referred the following questions of law for the opinion of this Court:

(1) Whether, in the facts and circumstances of the case, the return for the fourth quarter of 1967-68 signed and filed on 30th May, 1968, by Sri L. N. Gupta, counsel of the assessee, cannot be deemed to be validly filed on behalf of the assessee in view of the provisions of Section 7 of the U. P. Sales Tax Act even though the assessee himself issued a cheque for the amount of tax due on the turnover as shown in the return ?

(2) If the answer to the above is in favour of the assessee whether the order imposing penalty is valid in view of the fact that the assessee filed a revised return on 21st April, 1970, correct in all particulars?

(3) Whether, under the facts and circumstances of the case, the order dated 1st February, 1973, imposing penalty for the fourth quarter of the assessment year 1967-68 was not valid in view of the fact that the assessee-firm had been reconstituted with effect from 19th October, 1968, on account of the death of one of the partners, namely, Sri I. D. Goswami, who was substituted by his wife in the reconstituted firm, notwithstanding that the fact of reconstitution of the firm was not brought on record by the assessee at any time up to the date of the order imposing penalty ?

2. The assessee filed quarterly returns for the first three quarters for the assessment year 1967-68. It did not file its return for the fourth quarter within time. Time was taken, and a return was filed under the signature of its counsel, Sri Laxmi Narain Gupta, Advocate. In the return, taxable turnover was mentioned at Rs. 1,20,590. During the assessment proceedings, however, the assessee filed a revised return showing its taxable turnover for the fourth quarter at Rs. 10,05,791.43. 'This return was signed by the assessee. The assessment order was passed on 23rd April, 1970, and the revised return was accepted. Subsequently, a penalty notice under Section 15-A(1)(b) was issued to the assessee. The explanation of the assessee was not accepted and a penalty of Rs. 70,000 was imposed. In appeal, the penalty was reduced to Rs. 40,000. Two revisions were filed, one by the assessee and the other by the State. The assessee's contention was that the return filed by Sri Laxmi Narain Gupta, Advocate, was not a valid return and, as such, no proceedings under Section 15-A(1)(b) could be taken on its basis. It was also urged that as Sri I. D. Goswami, one of the partners had died, there was a reconstitution of the firm and, as such, no penalty could be imposed on the dissolved firm. The revising authority took the view that the return filed under the signature of Sri Laxmi Narain Gupta, Advocate, was a valid return and, as such, the penalty proceedings were rightly taken. As regards the argument that the penalty was imposed on the dissolved firm, he held that the penalty proceedings had been taken against the old firm, i.e., the old surviving partners, who reconstituted that firm and, as such, were not invalid. He, however, reduced the penalty. The revision filed by the State was dismissed.

3. It will be convenient to take up the third question first as it can be disposed of shortly. As respects this question, it will be seen that the Judge (Revisions) has given a finding that the penalty proceedings were taken against the old firm, viz., consisting of the old surviving partners, who reconstituted the firm later. In such circumstances, Section 3-C of the Act affords a complete answer. The relevant part of Section 3-C is to the following effect:

3-C. Liability of tax of a dissolved firm, etc.-(1) Where a dealer is a firm or association of persons or a joint Hindu family, and such firm, association or family has discontinued business-

(a) tax including penalty, if any, payable under this Act by such firm, association or family up to the date of such continuance had taken place, and

(b) every person who was at the time of such discontinuance a partner of such firm or a member of such association or family shall, notwithstanding such discontinuance, be liable severally and jointly for the payment of the tax assessed and penalty imposed and payable by such firm, association or family whether such assessment is made or penalty is imposed prior to or after such discontinuance, and, subject as aforesaid, the provisions of this Act shall apply as if every such person or partner were himself a dealer....

Explanation.-The dissolution or reconstitution of a firm or association of persons or transfer by a dealer of his business or partition of a joint Hindu family shall be deemed to be discontinuance of business within the meaning of this section.

4. This provision makes it clear that in the case of a reconstitution of a firm, penalty may be assessed and determined as if no reconstitution had taken place, and every partner is treated as a dealer for purposes of such assessment. Thus, the penalty proceedings were validly taken.

5. Turning to the first question, the penalty has been imposed on the assessee by recourse to Section 15-A(1)(b) of the Act. Section 15-A(1)(b) of the Act at the relevant time ran as under :

15-A. Penalty for failure to file returns.-(1) If the assessing authority is satisfied that any dealer-

(b) has concealed the particulars of his turnover or deliberately furnished inaccurate particulars of such turnover; or

(c) ... he may direct that such dealer shall pay, by way of penalty....

6. In the present case, the penalty has been imposed on the footing that as the dealer in his first return had shown a smaller turnover as compared to the turnover shown in the revised return, which was accepted, he fell within the clutches of Section 15-A(1)(b) of the Act. The penalty order, in the circumstances, stands or falls on the answer to the question as to whether the return filed under the signature of Sri Laxmi Narain Gupta, Advocate, was a return filed by the dealer under Section 7 of the Act. For, if the return filed under the signature of Sri Laxmi Narain Gupta, Advocate, was not a return as envisaged by Section 7, the only return would be the second return filed under the signature of the dealer and, in that eventuality, Section 15-A(1)(b) could not be attracted, for the reason that the concealment and the deliberate furnishing of inaccurate particulars of the turnover has been established by a comparison of the turnover figures given in the first and the Second returns.

7. It now becomes necessary to refer to the relevant statutory provisions of the Act relating to returns. Section 7(1) requires a dealer to file returns. The relevant part of Section 7(1) is to the following effect:

7. Determination of turnover and assessment of tax.-(1) Every dealer who is liable to pay tax under this Act shall submit... as may be prescribed...

8. Rule 41(1) prescribed the form in which the return is to be filed. The relevant part of this rule may be extracted :

41. Submission of returns and assessment.-(1) Every dealer who is liable to pay tax under the Act shall, before the last day of July, October, January and April, submit to the Sales Tax Officer a return of his gross turnover for the quarters ending June 30, September 30, December 31, and March 31, respectively in form IV.

9. Form IV details the particulars which have to be set out in the return. It also contains a provision for a declaration by the assessee. The form in which a declaration is to be given is :

I...being the...(status, i.e., proprietor, partner, director, etc.) of the business known as...do hereby declare and verify that, to the best of my knowledge and belief, all the statements and figures given in this return are true and complete and nothing has been wilfully omitted or wrongly stated.

Signature :

Status:

Apart from this provision requiring the person filing the return to declare his status, item of form IV also requires this to be disclosed, item 3 being to the following effect :

3. Name and status (proprietor, partner, director, etc.) of the person submitting the return.

10. Mr. Gulati appearing for the assessee contended that form IV clearly indicates that the return has to be signed by a proprietor or partner of a firm and not by his agent. In this connection he referred form VII-D and form VII-F, which permit the forms to be signed by the authorised agent of the assessee. Form VII-D is a certificate issued under Rule 27B for commodities exported out of India. This certificate can be issued either by the exporter or his authorised agent. Form VII-F is a certificate of consumption and permits the certificate to be signed either by the consumer or his authorised agent. It was urged that as form IV does not specifically authorise the authorised agent to sign the return, the return is to be signed by the partner or proprietor of the business. On the other hand, Sri V. D. Singh, the standing counsel, invited my attention to form V and form VII. Form V is the form in which the application for exemption has to be given. This form indicates that the form has to be signed either by the proprietor, partner or director. Form VII is the form in which application for rebate under Section 5 of the Act has to be given. This form indicates that it has to be signed by the applicant. Sri V. D. Singh contended that wherever it was intended that the partner or proprietor of the business should himself sign the forms, it was clearly so indicated. The contention was that inasmuch as form IV mentions the word 'etc.' both in the declaration part and item 3 of the particulars, not only the proprietor, partner or director can file a return, but any other person duly authorised to do so can submit the return. Reliance was placed on Rule 77-A of the Rules, on behalf of the department, for the contention that the lawyer of the assessee could sign the return.

11. Reference to the other forms framed under the Rules is necessary only in case there is ambiguity in form IV. In the case of ambiguity, it would be permissible to refer to the other forms in order to determine the legislative pattern adopted in framing the forms. Scrutiny of form IV leaves little doubt that the form must be signed by a person, who is connected with the business. This is apparent from the declaration clause which has to be signed by the person submitting the form. Although, in the bracketed portion of the declaration clause after mentioning persons, holding the position of proprietor, partner or director, the word 'etc.' is also used, it is obvious that it has reference only to such persons, who are integrally connected with the business, as after the bracketed portion, the words 'of the business' indicate that the person signing the form has a connection with the business, in respect of which the return is being filed. Item 3 of form IV, which again uses the words 'proprietor, partner, director, etc.', has to be read in the context of the declaration clause and the word 'etc.' cannot possibly mean any person even though distantly connected with the business. The word 'etc.' used in item 3 and the declaration clause has to be read in the context in which it occurs. It surely cannot embrace each and every person, who may somehow or other have acquired knowledge of the business of the assessee. This conclusion is strengthened by a perusal of Rule 41, Rule 66 and Rule 69 of the Rules. Rule 41 has already been extracted and it contemplates that the dealer should file the return. In the case of a firm, it obviously refers to the partners constituting the firm. In case it was permissible for any other person but the partners to file the return, Rule 41(1) should have expressly stated to that effect. Rule 66 and Rule 69 respectively dealing with appeals and revisions make clear provisions for the memorandum of appeal and the application for revision being signed by persons other than the assessee. Rule 66(1) runs thus :

66. Contents of memorandum of appeal.-(1) The memorandum of appeal shall specify the name and address of the appellant...and shall be signed by the appellant or his lawyer or his duly authorised agent and verified in the form given below :

the appellantI ........................ ________________________ do hereby declareon behalf of the appellantthat the contents of this memorandum are true to the best of my knowledge and belief.

12. Rule 69(1) is to the following effect:

69. Appearance of parties before the Judge (Revisions) or Additional Judge (Revisions).-(1) An application for revision of any order of the Sales Tax Officer...be presented by the applicant, or his duly authorised agent, or lawyer....

13. Thus, while Rule 41(1) permits only a dealer to submit the return, the appeal and the revision to be filed by the dealer may be signed by other authorised persons in that behalf. This discussion really concludes the point, but we may also refer to the forms relied upon by the counsel for parties, which further corroborates this view. Form VII-D, which is a certificate of export out of India can be signed either by the exporter or his authorised agent. Similar is the position with form VII-F, which is a certificate of consumption. Forms V and VII, which relate respectively to application for exemption and application for rebate, only indicate that they have to be signed by the person making the application, who must in the first place be either the proprietor, partner or director, and in the second place, apart from these three entities, must be either the manager or the karta of the family. These forms do not suggest the conclusion that form IV can be signed by a person other than one who is integrally connected with the business. The omission of the word 'etc.' in these forms is not very relevant, for it has been seen that the word 'etc.' used in form IV has to be read in the context of that form and means only such a person who is integrally connected with the business of the firm. A lawyer engaged by a firm for assessment proceeding is an agent of the firm for conducting the assessment proceedings alone, and is not a person, who is in any way integrally connected with the business of the firm. Thus, the first return was not a valid return, as it was not filed in -the prescribed manner.

14. The residuary contention made by Sri V. D. Singh, the standing counsel, based on Rule 77-A may now be considered. The relevant part of Rule 77-A is in the following terms :

77-A. Unless otherwise provided in the Act or the Rules, anything which is by the Act or the Rules required or permitted to be done by a dealer, except when he is required to attend personally for examination on oath or affirmation, may be done by a lawyer, an accountant or an authorised agent appointed by the dealer in writing in this behalf....

15. In the first place, there is nothing on the record to indicate that the firm had authorised its lawyer in writing to file the return. Thus, one of the conditions essential for the applicability of Rule 77-A is absent in this case. Secondly, Rule 77-A only embodies the common law rule qui facit per alium facit per se, which can be displaced by the express or necessary intendment of the statute. The opening words of Rule 77-A 'unless otherwise provided in the Act or the Rules...' bring in this consideration. Section 7, Rule 41(1), read along with rules 66 and 69, indicate that the statutory intent was that returns should be filed under the signature of the dealer. In a closely parallel situation, the Supreme Court in the case of Commissioner of Agricultural Income-tax, West Bengal v. Sri Keshab Chandra Mandal [1950] 18 I.T.R. 569 (S.C.) held likewise.

16. The issuance of a cheque by the assessee for the amount of tax due under the first return does not salvage the position, as it could not convert the first return into a return as required by Section 7(1) and Rule 41(1).

17. The result is that the first return filed by Sri Laxmi Narain Gupta, Advocate, was not a valid return.

18. The answer to the second question is obvious, once the first question has been answered in favour of the assessee. The basis of the penalty under Section 15-A(1)(b) is the concealment or inaccuracy detected on a comparison of the first return and second return, and once the first return is out of the way, the second return truly reflects the turnover of the assessee and no penalty can be imposed on its basis.

19. The first question is accordingly answered in the affirmative, in favour of the assessee, and the second and third questions in the negative. As the questions referred have substantially been answered in favour of the assessee, it is entitled to its costs, which is assessed at Rs. 200.


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