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Gangadhar Ramchand Oil Mills Vs. Sales Tax Officer and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case Number Civil Misc. Writ Petition No. 398 of 1976
Judge
Reported in[1981]48STC356(All)
AppellantGangadhar Ramchand Oil Mills
RespondentSales Tax Officer and anr.
DispositionPetition dismissed
Cases ReferredMahendrakumar Ishwarlal and Co. v. Deputy Commercial Tax Officer
Excerpt:
.....in a case where the dealer does not submit a return for a particular month or quarter within time or where the sales tax officer comes to the conclusion that the return filed is incorrect or incomplete or that it contains wrong particulars, he is empowered to determine the turnover of the dealer for that period, after making such enquiries as he deems necessary, to the best of his judgment and to, on that basis, provisionally assess the amount to tax payable on that turnover. under this rule the sales tax officer is required to determine the turnover of the dealer for the last month or quarter of the assessment year as well. this clearly shows that the obligation of the sales tax officer, under this rule, to determine the turnover of a dealer for a particular period falling within a..........the time and in the manner specified therein.(4) deleted.(6) upon the expiry of the assessment year the sales tax officer shall, after such enquiry as he may deem necessary, determine the turnover of the assessment year and shall assess the tax thereon.(6) if the tax assessed differs from the total amount deposited or paid by cheque, the difference shall be realised or refunded by the sales tax officer, as the case may be.(7)...(8)...6. rule 41(3) contemplates that every dealer should file either monthly or quarterly return, as the case may be, of his turnover and to pay the tax due on such turnover. the sales tax officer is required to scrutinise the periodical returns as and when they are filed and to see that the tax due in respect of such turnover is paid by the dealer. in a case.....
Judgment:

H.N. Seth, J.

1. By this petition under Article 226 of the Constitution the petitioner impugns the validity of the proceedings for recovery of a sum of 2,26,500 which has been assessed as sales tax due from the petitioner for the first quarter of the assessment year 1970-71.

2. The petitioner, M/s. Gangadhar Ramchand, is a dealer registered under the U. P. Sales Tax Act, 1948. It did not file the return of its turnover for the first quarter of the assessment year 1970-71 (ending 30th June, 1970). On 14th September, 1970, the Sales Tax Officer, Agra, acting under Rule 41(3) of the Rules framed under the U. P. Sales Tax Act, passed two provisional assessment orders (one under the U. P. Sales Tax Act and the other under the Central Sales Tax Act), creating tax liability amounting to Rs. 2,52,500 (Rs. 2,02,600 under the U. P. Sales Tax Act and Rs. 50,000 under the Central Sales Tax Act) against the petitioner. Eventually, in revision the tax liability of the petitioner for the first quarter of the year 1970-71 was reduced to Rs. 2,36,450 (1,92,000 under the U. P. Sales Tax Act and Rs. 44,450 under the Central Sales. Tax Act). It appears that prior to the order passed in revision, the Sales Tax Officer initiated proceedings for final assessment of the sales tax dues from the petitioner for the year 1971 under Rule 41(5) of the Rules framed under the U. P. Sales Tax Act. However, due to certain reasons the proceedings for final assessment for the year 1970-71 under Rule 41(5) have remained stayed so far. In the month of June, 1976, the Sales Tax Officer initiated proceedings for recovering a sum of Rs. 2,26,500, the amount of sales tax for the first quarter of the year 1970-71, assessed against the petitioner. On 7th June, 1976, the petitioner made an application objecting to the recovery of the said amount. The Sales Tax Officer, vide his order dated 7th June, 1976, rejected the objection and declined to withdraw the recovery proceedings. Aggrieved, the petitioner has come up before this Court.

3. The learned counsel appearing for the petitioner contends that a provisional assessment order made under Rule 41(3) of the Rules framed under the U. P. Sales Tax Act ceases to be operative at the close of the assessment year in respect of which the order was made. In any case, it ceases to be effective when the proceedings under Rule 41(5) for regular assessment for the year in question are initiated. Accordingly, no proceedings for realisation of the amount provisionally assessed can be taken after the year in question is over and in any case it cannot be taken after the proceedings for the regular assessment in respect of the relevant year have been initiated.

4. According to the learned counsel, Section 3 of the U. P. Sales Tax Act is the charging section. It makes the dealer liable to pay sales tax on the turnover of each assessment year. In other words, it is a single integrated levy on the entire turnover of the year. The liability in that regard has to be assessed and satisfied in the manner laid down in Rule 41(5) of the Rules framed under the Act. He contends that there is no provision in the Sales Tax Act which makes the turnover of a part of the assessment year liable to sales tax. However, the legislature has, in its wisdom, provided that a dealer can, after the end of each quarter of the assessment year, be provisionally assessed to sales tax under Rule 41(3) of the Rules framed under the U. P. Sales Tax Act. In the very nature of things, the provisional assessment for different quarters of the assessment year does not lead to a separate and independent liability. This provision has been made with a view to collect a part of the sales tax that may become due for a particular assessment year from a dealer before the year is over and before the Sales Tax Officer is enabled to initiate proceedings for regular assessment for that year. In the circumstances the two liabilities, that is, the liability for sales tax in respect of each quarter of the assessment year and that for assessment of tax for the entire year, do not run concurrently and no question of making a provisional assessment or proceeding to recover any amount due under such provisional assessment arises when the Sales Tax Officer is in a position to make the final assessment for the year and to recover the sales tax so assessed in the normal way.

5. After giving our careful consideration to the submissions made by the learned counsel for the petitioner, we are unable to accept it. Section 3 of the U. P. Sales Tax Act is the charging section. It lays down that every dealer has to, subject to the provisions of the Act, pay for each assessment year, tax on the turnover of his sales, at the rates indicated therein. It means that the tax liability for the assessment year has to be determined or computed and met in the manner laid down in the Act. There is nothing in this section which indicates that the legislature did not contemplate making of the provision for determination of turnover of sales of a dealer for each assessment year in stages, to compute the tax payable on such turnover and to recover the same. According to Section 7, every dealer who is liable to pay tax under the Act has to file returns of his turnover at such interval, within such period and in such form, as may be prescribed. The dealer has to, along with the return, deposit, in such manner as may be prescribed, the amount of tax due on the turnover shown in such return. The section further empowers the Sales Tax Officer to, in a case where either the return is not submitted or where the return is submitted but it is found to be incorrect or incomplete, determine the turnover of the dealer to the best of his judgment and to assess the tax on the basis thereof. The manner of filing of returns showing the turnover of sales of a particular dealer and for assessment of tax payable by him in respect of a particular assessment year has been laid down in Rule 41 of the Rules framed under the Act which, at the relevant time, ran thus :

41. Submission of returns.-(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 turnover for the quarters ending June 30, September 30, December 31, and March 31, respectively in form IV....

(2) Before submitting the return under Sub-rule (1), the dealer shall deposit in the treasury the amount of tax calculated by him on the turnover shown in such return and shall submit the treasury chalan with the return or submit with the return a cheque for the amount so calculated....

(3)(a) If in respect of any one or more quarter or month, as the case may be-

(i) the return is not submitted within the prescribed time, or

(ii) in the opinion of the Sales Tax Officer, the return filed is incorrect or incomplete or contains wrong particulars, or

(iii) the return is submitted without payment of tax in the manner prescribed in Rule 48, the Sales Tax Officer shall, after making such enquiries as he considers necessary, determine the turnover to the best of his judgment and provisionally assess the tax payable for that period.

(b) If in respect of any one/or more quarter or month, as the case may be,-

(i) the tax payable shown in the return appears to the Sales Tax Officer to be incorrect, or

(ii) the tax paid according to Rule 48 is less than the amount of tax shown as payable in the return, the Sales Tax Officer shall provisionally assess the tax payable on the turnover shown in the return submitted for that period at the rate specified under the Act.

(c) The Sales Tax Officer shall issue a notice to the dealer in form XI along with the assessment order passed under Clause (a) or (b) and the dealer shall pay the sum demanded in the said notice within the time and in the manner specified therein.

(4) Deleted.

(6) Upon the expiry of the assessment year the Sales Tax Officer shall, after such enquiry as he may deem necessary, determine the turnover of the assessment year and shall assess the tax thereon.

(6) If the tax assessed differs from the total amount deposited or paid by cheque, the difference shall be realised or refunded by the Sales Tax Officer, as the case may be.

(7)...

(8)...

6. Rule 41(3) contemplates that every dealer should file either monthly or quarterly return, as the case may be, of his turnover and to pay the tax due on such turnover. The Sales Tax Officer is required to scrutinise the periodical returns as and when they are filed and to see that the tax due in respect of such turnover is paid by the dealer. In a case where the dealer does not submit a return for a particular month or quarter within time or where the Sales Tax Officer comes to the conclusion that the return filed is incorrect or incomplete or that it contains wrong particulars, he is empowered to determine the turnover of the dealer for that period, after making such enquiries as he deems necessary, to the best of his judgment and to, on that basis, provisionally assess the amount to tax payable on that turnover. Under this rule the Sales Tax Officer is required to determine the turnover of the dealer for the last month or quarter of the assessment year as well. In the very nature of things, such determination has necessarily to be made after the assessment year is over. This clearly shows that the obligation of the Sales Tax Officer, under this rule, to determine the turnover of a dealer for a particular period falling within a particular assessment year does not come to an end at the close of the assessment year, and that the obligation has to be discharged even though the time for making assessment under Rule 41(5) might have arrived. It is significant to note that while providing that the assessment of the tax payable in respect of such a turnover would be provisional, the rule does not say that the turnover for the period, as determined by the Sales Tax Officer, shall also be provisional. Likewise, Sub-rule (3)(b)(i) provides that the tax payable shown in the return, if it appears to the Sales Tax Officer to be incorrect, he shall provisionally assess the tax payable on the turnover shown in the return submitted for that period at the rate specified in the Act. It merely enjoins upon the Sales Tax Officer to provisionally assess the amount of tax payable on the turnover as shown in the returns. Rule 41(5) of the Rules lays down that upon expiry of the assessment year the Sales Tax Officer shall, after making such enquiries as may be deemed necessary, determine the turnover of the assessment year and shall assess the tax thereon. In the context it appears to us that the legislature intended that before making an assessment under Rule 41(5) for the entire assessment year, there must be determination of the dealer's turnover for each quarter or month, as the case may be, under Rule 41(3) of the Rules, as also that of the tax payable by him on such turnover. The turnover and the tax payable for the entire assessment year is to be founded on the assessment for different parts of the assessment year made under Rule 41(3). There may be a case where the periodical returns filed by the dealer could not, for certain reasons, be scrutinised by the Sales Tax Officer as and when they were filed or that the Sales Tax Officer did not assess the tax after the close of the month or the quarter and the assessment year has come to an end. In such a case, while making the assessment under Rule 41(5), the Sales Tax Officer will have to first scrutinise the periodical returns if filed by the dealer and to determine the turnover of the dealer for each month or quarter of the assessment year, as the case may be, under Rule 41(3) and then to find out his turnover for the entire year on the basis of such determination, and to compute the tax payable by him accordingly.

7. The U.P. Sales Tax Act and the Rules framed thereunder clearly contemplate determination of the turnover of a particular year and computation of tax due on such turnover in stages. They also empower the Sales Tax Officer to recover the tax. assessed on the periodical turnovers, if the dealer fails to pay the same on demand. The provision in Rule 41(3)(a) and (3)(b) that the tax on the turnover of a particular year shall be provisionally assessed, in the context, merely means that even though such assessment of tax relates to a particular year, it is provisional in the sense that it is not the final determination of the amount payable by the dealer for the entire assessment year in question and that the amount of tax payable by him for the assessment year would be quantified after taking into consideration the turnover for the entire year. It is not provisional in the sense that the turnover for the period has been determined provisionally. In our opinion, the Rules do not contemplate determination of the turnover of a dealer for a particular period again and again, that is, once under Rule 41(3) and again under Rule 41(5). The rule contemplates that once the turnover for a particular period falling within a particular assessment year has been determined, the dealer has to pay the tax payable on such turnover and in case he does not pay the same, the Sales Tax Officer can recover it under Rule 41(6). Viewed in this light, the question of such determination of turnover and the liability for payment of tax thereon becoming ineffective on the assessment year coming to an end or because of initiation of proceedings for final assessment under Rule 41(5), does not arise. In support of his submission the learned counsel cited before us a decision of the Madras High Court in the case of Mahendrakumar Ishwarlal and Co. v. Deputy Commercial Tax Officer, Tirupattur [1971] 28 S.T.C. 551. In that case the assessee had filed return in form A-l. The assessing authority issued notice to the dealer stating that there were certain mistakes apparent in the return and if a revised return was not filed within seven days of the receipt of notice, he would provisionally assess the dealer and would also penalise him for wilfully submitting an untrue return. In a petition filed under Article 226 of the Constitution, a learned single Judge of the Madras High Court held that after the assessing authority had called upon the petitioner to file a correct return there was no occasion for it to say that it would assess and penalise the assessee provisionally. It appears that in view of the statutory provisions in force in Madras the point that after issuing a notice calling upon the assessee to file a revised return there was no question of making a provisional assessment was obvious to the learned Judge. Neither is there any mention of these provisions in the judgment nor have they been brought to our notice by the learned counsel for the petitioner. In these circumstances, it is not possible to find out as to whether the provisions of the Madras Sales Tax Act were, in this regard, similar to those contained in the U. P. Sales Tax Act and whether the line of reasoning adopted by us runs counter to or is inconsistent with those statutory provisions. We are accordingly of the opinion that the petitioner cannot derive any assistance from the aforesaid decision cited by his counsel.

8. In the result, this petition fails and is dismissed with costs.


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