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Kamal Brothers and ors. Vs. the State of Uttar Pradesh and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ Petition Nos. 180, 191, 197, 203, 210, 277, 290 and 642 of 1980
Judge
Reported in[1983]54STC31(All)
AppellantKamal Brothers and ors.
RespondentThe State of Uttar Pradesh and anr.
Appellant AdvocateD. Prakash and ;J.N. Misra, Advs.
Respondent AdvocateStanding Counsel
DispositionAppeal dismissed
Cases ReferredL. Hirday Narain v. Income
Excerpt:
- .....of assessment years in which the period of three years had not expired and for other years he passed orders under rule 41, sub-rule (8). the result of these orders was to create a demand on the petitioners for payment of tax in respect of amounts which according to the sales tax officer had not been deposited in the treasury.2. the petitioners have challenged these orders passed under section 22 and rule 41(8) of the act by these petitions. on behalf of the department it is averred that the petitioners were given wrong credits for some amounts on the basis of fake treasury chalans and in fact the amounts had not been deposited by them in the treasury. in paragraph 5 of the counter-affidavit of munsi ram, sales tax officer (in w.p. no. 191 of 1980), it is averred that a daily.....
Judgment:

C.S.P. Singh, J.

1. These petitions can be disposed of by a common judgment as the facts and the question of law involved are identical. The petitioners in the present petitions are dealers registered under the U. P. Sales Tax Act and also the Central Sales Tax Act. They were assessed to tax under various orders both under the U. P. Act and also under the Central Sales Tax Act. While passing the assessment orders the Sales Tax Officer mentioned the amounts of tax paid by them and created demands for the remainder in cases where a balance was found to be due. The basis on which he mentioned the amount of tax paid were treasury chalans which were purported to have been received by him from the treasury. Subsequently, the Sales Tax Officer discovered that the treasury chalans on the basis of which the petitioners were given credit for tax were not found entered in the treasury records and neither in the register maintained by his office. He accordingly passed rectification orders under Section 22 in respect of assessment years in which the period of three years had not expired and for other years he passed orders under Rule 41, Sub-rule (8). The result of these orders was to create a demand on the petitioners for payment of tax in respect of amounts which according to the Sales Tax Officer had not been deposited in the treasury.

2. The petitioners have challenged these orders passed under Section 22 and Rule 41(8) of the Act by these petitions. On behalf of the department it is averred that the petitioners were given wrong credits for some amounts on the basis of fake treasury chalans and in fact the amounts had not been deposited by them in the treasury. In paragraph 5 of the counter-affidavit of Munsi Ram, Sales Tax Officer (in W.P. No. 191 of 1980), it is averred that a daily collection register is maintained in the office of the Sales Tax Officer. The entries in the register are made not on the basis of the treasury chalans submitted by the dealer at the time of filing of the return or subsequently thereafter, but on the basis of the departmental copy of the chalan received from the treasury which also contains a treasury schedule. It is stated that deposits are made through chalans in triplicate which are marked original, departmental copy and depositor's copy. The State Bank which receives the deposits returns the depositor's copy to the assessee and forwards the other two copies along with the bank schedule to the Treasury Officer, who keeps the original in his office and forwards the departmental copy to the Sales Tax Officer concerned along with a treasury schedule. The daily collection register is maintained in the sales tax office on the basis of the departmental copy and the treasury schedule. In these cases no original or departmental copies of the treasury chalans were submitted to the office. The register maintained by the department did not contain any entry of the chalans by which the petitioners are alleged to have made the deposits. It is also averred that action under Section 22 was taken when this mistake was discovered on a scrutiny of the registers maintained in the sales tax office. This fact was further confirmed by the enquiries made from the treasury and the bank. So far as the demand made for other years in which orders under Section 22 were not passed, the stand of the department is that as the tax had not been paid, action for demand and recovery of tax under Rule 41(8) and Section 8(8) of the Act was taken.

3. As the main dispute in these petitions was as to whether the payments alleged to have been made by the petitioners were in fact made, we directed the Sales Tax Officer to inquire into the matter and to submit a report. By his report dated 24th November, 1981, he has after inquiry from the State Bank and the treasury submitted a report to the effect that the disputed cash deposit had not been made in the treasury. Before we refer to the contention raised on behalf of the petitioners we might mention that although in the petition a large number of reliefs had been prayed for, the only question canvassed before us was the validity of the demands raised by orders passed under Section 22 and Rule 41(8). The counsel for the petitioners contended that the orders passed under Section 22 and Rule 41(8) of the Act are without jurisdiction. Now if the orders passed under Section 22 and Rule 41(8) are without jurisdiction the demand created on the strength of these provisions cannot obviously be enforced.

4. We will consider the question as to whether the Sales Tax Officer had jurisdiction to initiate proceedings under Section 22 of the Act and to pass order under Rule 41(8) read with Section 8(8). We will refrain from expressing any opinion on the correctness of the orders for reasons to be set out later.

5. Section 22 of the Act empowers the assessing, appellate or revising authority or the Tribunal on its own motion or on the application of a dealer or any other interested person to rectify any mistake in its order apparent on the record. This power, however, has to be exercised within a period of three years from the date of the order sought to be rectified. The word 'record' has not been defined in the Act. Section 22 of the Act is in pari materia with Section 35 of the Income-tax Act. In Mahendra Mills Ltd. v. P.B. Desai, Appellate Assistant Commissioner of Income-tax : [1975]99ITR135(SC) the Supreme Court while interpreting the meaning of the words 'record of the appeal' held that the record means not only the order of assessment but the whole evidence and the law applicable. Thus, the Sales Tax Officer, for purposes of finding out a mistake, can look into not only the assessment order passed by him, but the entire evidence on the assessment file. In the present case, in the counter-affidavit it has been averred that in the daily collection register maintained by the Sales Tax Officer, the treasury chalans on the basis of which the credit was given to the petitioners are not entered and further that the chalans on which the petitioners rely were not received by the Sales Tax Officer from the treasury. A perusal of this register would at once go to show that the credit given to the assessees for the disputed amount was incorrect. This fact would undoubtedly give jurisdiction to the Sales Tax Officer to initiate proceedings under Section 22 of the Act. Thus the Sales Tax Officer had initial jurisdiction to initiate proceedings under Section 22 of the Act. We are declining to express any opinion at this stage as to whether orders passed under Section 22 of the Act was justified or not. The position then that emerges is that an order under Section 22 of the Act could be passed. The question, however, arises as to whether we should examine the order under Section 22 on merits or relegate the petitioners to file an appeal as has been suggested by the learned Advocate-General, or a suit for claiming relief in respect of payments which the petitioners allege have already been made by them. The counsel for the petitioners urged that when a rectification is made under Section 22 of the Act no orders come into existence and therefore, no appeal under Section 9 can be filed. In support of this contention he has relied on a decision of this Court in the case of Karam Chand Thapar and Brothers Ltd., Moradabad v. State of Uttar Pradesh 1975 UPTC 11 where in paragraph 19 there is an observation that a right of appeal exists in respect of a rectified assessment, but no appeal is provided against the act of rectifying an order (popularly called rectification order). The Advocate-General appearing on behalf of the department, however, urged that when this very case went up in appeal before the Supreme Court being Karam Chand Thapar and Brothers Ltd. v. State of Uttar Pradesh 1976 UPTC 671 (SC) the Supreme Court has on page 680 of the report (UPTC) (page 604 of STC) impliedly held that a rectification order passed under Section 21 is appealable. The observations of the Supreme Court on appeal do seem to suggest that an order under Section 22 of the Act is appealable under Section 9. It is not necessary for us, however, in this case to express any final opinion in the matter, for assuming that the impugned orders are not orders as contemplated by the Act as has been contended for by the counsel for the petitioner, the petitioner can challenge those orders by way of a civil suit, for if they are not orders as contemplated by the Act, the bar of Section 17 of the Act as respects suits would not be operative. Since it is not possible for us to decide fairly as to whether the amounts in question have been paid or not and as there is a serious dispute on facts we think that the appropriate remedy for the petitioners would be either by filing a suit or by filing an appeal under Section 9 for challenging the orders.

6. The counsel for the petitioners urged that as the petitions have been admitted the petitions should not be thrown out on the ground of an alternative remedy at the stage of final hearing. In support of this contention he has relied upon the decision of the Supreme Court in the case of L. Hirday Narain v. Income-tax Officer, Bareilly : [1970]78ITR26(SC) . In this case it was held that where a petitioner had filed a writ petition instead of availing of his statutory remedy, the petition should not be thrown out on the ground that the statutory remedy was not availed of. We are in respectful agreement with this principle, but in the case which came up before the Supreme Court controversial question of facts as are involved in the present case did not require consideration. In proceedings under Article 226 of the Constitution, in majority of cases, a fair and just decision on disputed questions of fact is not possible and in such cases the petitioner can be asked to have resort to his alternative remedy even though the petitions may have been admitted for hearing. We feel that the present case is one; which cannot be fairly decided in a proceeding under Article 226 of the Constitution. This contention, therefore, fails.

7. Coming now to the orders passed under Rule 41(8), it was contended that an order under Rule 41(8) can be passed only during the course of assessment and inasmuch as such an order had already been passed earlier resort to the same provision cannot be had. We might extract Rule 41(8):

41. (8) If the tax assessed differs from the total amount deposited by the dealer, the difference shall be realised or, as the case may be, refunded by the Sales Tax Officer in accordance with the provisions of the Act and these Rules.

8. It will be noticed that Rule 41(8) comes into play after the assessment is made, for a tax can be realised or refunded only after an assessment order. The process of realisation is set into motion only after the assessment has been completed. This apart Section 8 of the Act gives power for realisation of tax which is payable to the State Government. In a case where tax is payable it can be realised either in the exercise of powers under Section 8(8) or Rule 41(8).

9. Before we part with this aspect of the matter it is necessary to dispose of a submission made on behalf of the petitioner. It was contended that inasmuch as the time for rectification under Section 22 had expired action under Rule 41(8) or Section 8(8) could not be taken. We have seen that the Sales Tax Officer in the present cases, after determining the turnover and assessing the tax thereof, made a calculation of the amount due from the assessees after deducting the deposits made by them from the assessed amount of tax. Assessment orders are passed under Section 7 read with Rule 41 of the Act. Section 7 talks of determination of turnover and assessment of tax. Section 7(2) and (3) requires the Sales Tax Officer to determine the turnover and assess the tax on it. Rule 41(5), (6) and (7) also requires the Sales Tax Officer to do the same. Thus, so far as the Act and the Rules are concerned all that they require the Sales Tax Officer to do is to determine the turnover and assess the tax thereon. After this has been done, Rule 41(8) comes into operation and in case there is a difference from the total amount of the tax deposited, the difference is realised from the dealer or refunded. Rule 45 contemplates a notice of demand being sent to a dealer in form XI after the assessment has been made and in this notice which is sent in form XI the amount of tax which according to the Sales Tax Officer is due from the dealer has to be mentioned. It will thus be seen that it is not necessary for the Sales Tax Officer to mention in the assessment order the amount of tax deposited by the dealer and to calculate the amount of tax due after deducting the amount of tax deposited from the amount assessed. The Act and the Rules, however, do not contain any bar to his doing so, but the validity of the demand made in cases where certain amounts of tax have been deposited depends upon the mathematical calculations which are made by the Sales Tax Officer under Rule 41(8) or while issuing the demand notice under Rule 45. This being so if a mistake has crept into the assessment order regarding the balance amount of tax due from an assessee, it is not necessary for him to correct that order, for the liability for the balance amount depends upon Rule 41(8) and the notice of demand issued under Rule 45. Thus even if limitation for rectification under Section 22 had expired the power under Rule 41(8) and Rule 45 as also under Section 8(8) is not affected.

10. This being so the impugned demands can be justified either by reference to Section 8(8) or Rule 41(8). As orders have been passed in respect of these demands, an appeal under Section 9(1) can be filed, for an appeal under Section 9 can be filed against every order of the Sales Tax Officer except orders passed under Section 10-A. The orders passed under Section 8(8) or Rule 41(8) are not orders which are referred under Section 10-A. This being so the petitioner has a right of appeal against these orders, under Section 9(1). We are not inclined to go into merits of the controversy in respect of these demands also, as in respect of these too highly disputed questions of fact have to be decided before granting relief to the petitioner. The counsel for the petitioner contended that in case the petitioner files an appeal now it would be time-barred. We can protect the petitioner from this calamity, for as we have entertained the petition and it has been pending in this Court for a long length of time, we issue a direction to the appellate authority to condone the delay in filing of appeals on account of pendency of the writ petitions in this Court. We accordingly dismiss the petition on the consideration that disputed questions of fact arise which cannot be satisfactorily decided in proceedings under Article 226 of the Constitution. In case the petitioner files an appeal against the impugned orders under Section 9 of the Act the appellate authority will not dismiss the appeals as being time-barred and will grant credit for the time spent in prosecuting the petitions here. The stay order is discharged. There shall be no order as to costs.


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