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Commissioner of Sales Tax Vs. Soubhagmal Ghasiram - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 163 of 1976
Judge
Reported in[1979]44STC182(MP)
AppellantCommissioner of Sales Tax
RespondentSoubhagmal Ghasiram
Appellant AdvocateK.L. Goyal, Government Adv.
Respondent AdvocateC.M. Mehta and S.C. Goyal, Advs.
Cases ReferredMaharaj Kumar KamalSingh v. Commissioner of Income
Excerpt:
.....any sale or purchase of goods chargeable totax under the act has been under-assessed or has escaped assessment orassessed at a lower rate or any deduction has been wrongly made therefrom. itis well-settled that when the words of a statute are clear, plain orunambiguous, the courts are bound to give effect to that meaning irrespectiveof consequences. the only limitation on the part of the sales tax officerwhile initiating proceedings under section 19(1) of the act is that he mustact in good faith as held by the privy council in commissioner of income-tax,bengal v. ) while considering asimilar provision under the indian income-tax act, 1922. in that case, theprivy council held that to enable the income-tax officer to initiateproceedings under section 34 of the indian income-tax act,..........under this act or any act repealed by section 52 during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the commissioner may, at any time within five calendar years from the date of order of assessment after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed, in such manner as may be prescribed, to reassess the tax payable by such dealer and the commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount: provided that in the case of an assessment made under any act repealed by section 52, the period for reassessment on the ground of.....
Judgment:

G.G. Sohani, J.

1. This is a reference under Section 44(1) of the M.P. General Sales Tax Act, 1958, hereinafter called the Act, made at the instance of the Commissioner of Sales Tax, M.P. The question of law referred to this Court is as follows:

Whether, in the facts and circumstances of the case, the assessment could be lawfully reopened under Section 19(1) of the M.P. General Sales Tax Act, 1958 ?

2. The material facts giving rise to this reference briefly are as follows: On 9th February, 1966, an assessment order was passed by the Sales Tax Officer determining the gross turnover at Rs. 4,18,429 though according to the return it was Rs. 5,09,027. According to the return, the taxable turnover was Rs. 5,60,600, but the Sales Tax Officer determined the taxable turnover at Rs. 2,51,398. Thus, the assessing authority determined the gross and taxable turnovers substantially less than the figures shown in the return filed by the assessee. Later on, the Sales Tax Officer issued a notice under Section 19(1) of the Act for reassessment. The explanation offered by the assessee was not accepted and the Sales Tax Officer reassessed the tax payable by the assessee. On appeal, the order passed by the Sales Tax Officer was set aside and the case was remanded by the Appellate Assistant Commissioner, Sales Tax, Ujjain, to the Sales Tax Officer, for reassessing the petitioner in the light of the observations made in his order dated 27th June, 1970. Aggrieved by that order, the assessee preferred an appeal before the Tribunal. It was urged before the Tribunal on behalf of the assessee that the assessing authority had no jurisdiction under Section 19(1) of the Act to reassess the petitioner. This contention was upheld and the Tribunal held that the ground contemplated by Section 19(1) of the Act for reassessment did not include perversity of the assessing authority. The Tribunal further held that as there was no bona fide mistake, the case was not covered by the provisions of Section 19(1) of the Act. In this view of the matter, the Tribunal allowed the appeal and quashed the proceedings under Section 19(1) of the Act. On an application made by the Commissioner, the Tribunal has referred the aforesaid question of law to this Court for its opinion.

3. The answer to the question referred to this Court turns on the true construction of Section 19(1) of the Act. That section reads as under:

Section 19. Assessment of turnover escaping assessment.--(1) Where an assessment has been made under this Act or any Act repealed by Section 52 and if for any reason any sale or purchase of goods chargeable to tax under this Act or any Act repealed by Section 52 during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within five calendar years from the date of order of assessment after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed, in such manner as may be prescribed, to reassess the tax payable by such dealer and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount:

Provided that in the case of an assessment made under any Act repealed by Section 52, the period for reassessment on the ground of under-assessment, escapement or wrong deduction shall be as provided in such Act notwithstanding the repeal thereof.

The short question for consideration is whether the provisions of Section19(1) of the Act are attracted only when a bona fide mistake has crept in theoriginal order or does Section 19(1) of the Act enable the Sales Tax Officerto initiate proceedings under that provision, within the time prescribed bythat provision, if, in good faith, he considers that he has good ground forbelieving that, for any reason, any sale or purchase of goods chargeable totax under the Act has been under-assessed or has escaped assessment orassessed at a lower rate or any deduction has been wrongly made therefrom. Itis well-settled that when the words of a statute are clear, plain orunambiguous, the courts are bound to give effect to that meaning irrespectiveof consequences. When the Act expressly uses the expression 'if for anyreason' it would not be permissible either for the Tribunal or for this Courtto curtail the scope of that expression and hold that the reason contemplatedby Section 19(1) of the Act must be a bona fide mistake on the part of theSales Tax Officer. The only limitation on the part of the Sales Tax Officerwhile initiating proceedings under Section 19(1) of the Act is that he mustact in good faith as held by the Privy Council in Commissioner of Income-tax,Bengal v. Mahaliram Ramjidas [1940] 8 I.T.R. 442 (P.C.) while considering asimilar provision under the Indian Income-tax Act, 1922. In that case, thePrivy Council held that to enable the Income-tax Officer to initiateproceedings under Section 34 of the Indian Income-tax Act, 1922, it was enoughthat the Income-tax Officer on the information which he had before him and ingood faith considered that he had good ground for believing that theassessee's profits had for some reason escaped assessment or had been assessedat too low a rate. The

Tribunal, therefore, erred, in our opinion, in holding that the provisionsof Section 19(1) could be invoked only if in the original order there could beshown some bona fide mistake. The scope of the expression 'escaped' occurringin Section 19(1) of the Act came up for consideration before us inCommissioner of Sales Tax, M.P. v. Jeewa Khan [1978] 42 S.T.C. 95. Afterreferring to the decision of the Supreme Court reported in Maharaj Kumar KamalSingh v. Commissioner of Income-tax, Bihar and Orissa [1959] 35 I.T.R. 1(S.C.), wherein the Supreme Court construed the scope of the expression'escaped' occurring in Section 34(1)(b) of the Indian Income-tax Act, 1922, werelied on the following observations made by the Supreme Court:

We see no justification for holding that cases of income escapingassessment must always be cases where income has not been assessed owing toinadvertence or oversight or owing to the fact that no return has beensubmitted. In our opinion, even in a case where a return has been submitted,if the Income-tax Officer erroneously fails to tax a part of the assessableincome, it is a case where the said part of the income has escaped assessment.The appellant's attempt to put a very narrow and artificial limitation on themeaning of the word 'escape' in Section 34(1)(b) cannot, therefore,succeed.

The Learned Counsel for the assessee contended that,in the instant case, the Sales Tax Officer had, after consideration of thematerial on record, passed the original order of assessment and, therefore, hehad no jurisdiction under Section 19(1) of the Act to initiate proceedings forreassessment. But, in view of the aforesaid observations of the Supreme Court,it must be held that if the Sales Tax Officer had erroneously failed to assessany sale or purchase of goods chargeable to tax under the Act, it is a case of'escaped assessment'. The Tribunal has not found that the action of the SalesTax Officer in initiating proceedings under Section 19(1) of the Act was notbona fide. In these circumstances, the view of the Tribunal that the assessingauthority had no jurisdiction to initiate proceedings for reassessment underthe provisions of Section 19(1) of the Act cannot be upheld.

4. For allthese reasons, our answer to the question referred to us for opinion is in theaffirmative and against the assessee. In the circumstances of the case,parties shall bear their own costs of this reference.


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