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Vimal Chand Prakash Chand Vs. Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberM.C.C. No. 236 of 1981
Judge
Reported in[1985]59STC263(MP)
AppellantVimal Chand Prakash Chand
RespondentCommissioner of Sales Tax
Appellant AdvocateG.M. Chaphekar and ;N.K. Jain, Advs.
Respondent AdvocateS.R. Joshi, Government Adv.
Cases ReferredManganese Ore (India) Ltd. v. Regional Assistant Commissioner of Sales Tax
Excerpt:
.....reduced to period undergone by appellant considering mental agony suffered by him - 12. in our opinion, the contention raised by the learned counsel for the assessee is well-founded......requisite tax. the assessing authority, taking into consideration the explanation of the assessee, imposed penalty of varying amounts in respect of different years under section 43 of the state act.5. the assessee preferred appeals against the order of the assessing authority imposing penalty under section 43 of the state act. the appellate authority held that the penalty under section 43 of the state act was unsustainable because the revised returns were filed prior to the passing of the assessment orders and the same were considered in making the assessments and further the original returns were already withdrawn by submitting revised returns and .therefore, there was no question of accepting or rejecting them.6. the deputy commissioner, however, imposed a penalty of varying amounts.....
Judgment:
ORDER

R.K. Vijayvargiya, J.

1. This Order shall also dispose of Misc. Civil Cases Nos. 237 of 1981, 238 of 1981, 239 of 1981, 240 of 1981, 242 of 1981 and 243 of 1981.

2. In all these references under Section 44(1) of the M.P. General Sales Tax Act, 1958 (hereinafter referred to as the State Act), the Board of Revenue, M.P., Gwalior, has referred the following questions of law for the opinion of this Court :

(1) Whether in the course of second appeal preferred by the assessee against the imposition of penalty under Section 17(3), the Tribunal has the power to initiate proceedings for penalty under Section 43(1) of the State Act suo motu or at the request of the Department ?

(2) Whether under the facts and circumstances of the case, when the lacuna in the fulfilment of the requirement of Rule 19(2) of the Rules, viz., that the revised return should be for each quarter and it should be accompanied by explanatory note, was duly cured by its admission and the revised return was considered for the purpose of assessment, it was still open to the Tribunal to hold that the assessment has not been made on the basis of the revised return ?

(3) Whether under the facts and circumstances of the case, imposition of penalty under Section 43 of the State Act in respect of the original return would be justified in the assessment for each year ?

(4) Whether under the facts and circumstances of the case penalty under Section 17(3) of the State Act was attracted in respect of the revised return in the assessment for each year ?

(5) Whether in view of the fact that proceedings for penalty under Section 43(1) of the State Act were initiated by the Tribunal and notice was issued by it, the Tribunal was justified in remanding the case to the Deputy Commissioner for passing order under that section ?

3. Shorn of details which are not necessary for the disposal of these references, the broad facts of the case are as follows :

The assessee is a partnership firm engaged in the business of cotton. The assessee filed returns for the Diwali years 1970-71, 1971-72, 1972-73 and 1973-74 showing its gross and taxable turnovers during the assessment years in question. During the course of assessment the assessee filed revised returns which showed increased amounts as gross and taxable turnovers. The additional tax which was payable was also paid by the assessee along with the revised returns. The assessments of the assessee were made on the basis of the revised returns.

4. While framing the assessments of the different years, the assessing authority considered the original returns as false and issued notice to the assessee why penalty under Section 43 of the State Act should not be imposed. The explanation of the assessee was that the sales were made on the understanding that declaration on forms XII and XII-A would be forthcoming, and the assessee did not recover sales tax on the said sales. However, the purchasing mills did not furnish the requisite declarations for certain firms. The assessee thereupon submitted revised returns and paid the requisite tax. The assessing authority, taking into consideration the explanation of the assessee, imposed penalty of varying amounts in respect of different years under Section 43 of the State Act.

5. The assessee preferred appeals against the order of the assessing authority imposing penalty under Section 43 of the State Act. The appellate authority held that the penalty under Section 43 of the State Act was unsustainable because the revised returns were filed prior to the passing of the assessment orders and the same were considered in making the assessments and further the original returns were already withdrawn by submitting revised returns and .therefore, there was no question of accepting or rejecting them.

6. The Deputy Commissioner, however, imposed a penalty of varying amounts upon the assessee under Section 17(3) of the State Act.

7. The assessee preferred second appeals before the Tribunal against the imposition of penalty by the first appellate authority under Section 17(3) of the Act. On behalf of the Department applications were made before the Tribunal that the penalty imposed by the first appellate authority under Section 17(3) of the State Act may be set aside and the penalty imposed by the assessing authority under Section 43(1) of the State Act may be restored. The Tribunal issued notices to the assessee to show cause why the penalty imposed by the assessing authority under Section 43 of the State Act should not be restored. The assessee showed cause. The Tribunal rejected the contention of the assessee that in the circumstances of the case penalty under Section 43 of the State Act could not be imposed by the Tribunal in second appeal. On merits the Tribunal held that the assessee had deliberately furnished inaccurate particulars of sales made by it in the original returns and that the revised returns were not valid because they did not fulfil the mandatory requirements of Rule 19(2) of the Rules and the assessment was not based on the returns but on the account books of the assessee. The Tribunal remitted the cases to the Deputy Commissioner of Sales Tax for fresh disposal of the appeals preferred by the assessee and for determining whether the penalty imposed on the assessee by the assessing authority was reasonable and justified.

8. The assessee submitted applications to the Tribunal for referring questions of law arising out of the orders of the Tribunal and it is at the instance of the assessee that the aforesaid questions of law have been referred by the Tribunal for the opinion of this Court.

9. We have heard the learned Counsel for the parties.

10. Re : Question No. (1) : The learned Counsel for the parties agreed that the question framed is too wide and that it has to be restricted to the facts of the present case. Question No. (1) is, therefore, reframed as follows, as agreed to by the learned Counsel for the parties:

Whether on the facts and in the circumstances of the case the first appellate authority having set aside the penalty imposed by the assessing authority under Section 43(1) of the State Act, the Tribunal had the power to initiate proceedings for imposition of such penalty in the course of second appeal preferred by the assessee against the imposition of penalty by the first appellate authority under Section 17(3) of the State Act, suo motu or at the request of the Department

11. The learned Counsel for the assessee contended that the appeals preferred by the assessee under Section 38 of the State Act against the orders of the assessing authority imposing penalty under Section 43 of the State Act were allowed by the first appellate authority and the said penalty was set aside. However, the first appellate authority imposed penalty on the assessee under Section 17(3) of the State Act. This part of the orders of the first appellate authority was assailed by the assessee by preferring second appeals before the Tribunal under Section 38(2) of the State Act. The orders of the first appellate authority setting aside the penalty under Section 43(1) of the State Act became final under Section 38(6) of the State Act and therefore, the Tribunal had no power to reopen the same and to remand the cases to the first appellate authority for determination of the fact whether the penalty imposed by the assessing authority under Section 43(1) of the State Act was reasonable and justified. Section 43 of the State Act did not confer such power on the Tribunal. The learned Government Advocate appearing for the Department contended that the language of Section 43 of the State Act is sufficiently wide to empower the Tribunal to impose penalty. He contended that the appeals preferred by the assessee against the order of the first appellate authority imposing penalty under Section 17(3) of the State Act were pending before the Tribunal and in the course of the said proceedings the Tribunal had the power to initiate penalty proceedings if the conditions specified in Section 43 of the State Act existed.

12. In our opinion, the contention raised by the learned Counsel for the assessee is well-founded. The penalty imposed by the assessing authority under Section 43 of the Act was set aside by the first appellate authority. The said orders became final under Section 38(6) of the State Act which reads as follows :

38. (6) In the case of an order passed in first appeal under this section against which an application for revision is filed to the Commissioner under Sub-section (1) of Section 39, the order passed in revision shall be final and in the case of every other order passed in first appeal or second appeal under this section such order shall, subject to the provisions of this section, Section 39 or Section 44, as the case may be, be final.

The Department had no right to prefer appeals against the orders passed by the first appellate authority setting aside the penalty imposed by the assessing authority under Section 43 of the State Act. The assessee preferred appeals against the orders of the first appellate authority in so far as they related to the imposition of penalty under Section 17(3) of the State Act. The defaults for which penalty was imposed under Section 17(3) of the State Act are quite different from those for which penalty is imposable under Section 43 of the Act. The only question for consideration before the Tribunal in second appeals was whether the orders of the first appellate authority imposing penalty under Section 17(3) of the State Act were justified. The orders of the first appellate authority setting aside the penalty imposed by the assessing authority under Section 43 of the State Act, having become final it was not open to the Tribunal in second appeals to reopen the said matter. There is no force in the contention of the learned Government Advocate appearing for the Department that the language of Section 43 is sufficiently wide to empower the Tribunal to initiate proceedings for imposition of penalty in the circumstances of the case because the appeals preferred by the assessee before the Tribunal come within the purview of proceedings pending before it and therefore, it had the power to initiate proceedings for imposition of penalty. As stated above the orders of the first appellate authority setting aside the imposition of penalty under Section 43 of the State Act become final under Section 38(6) of the State Act. That sub-section is made subject only to the provisions of Sections 38, 39 and 44 of the State Act and not to Section 43 thereof.

13. Section 38(6) of the State Act, reproduced as above, may be analysed as follows :

(a) If a revision is submitted under Section 39(1) of the State Act, or if the Commissioner exercises power thereunder suo motu the order sought to be revised, does not become final and finality is attached to the order passed in revision subject to the other provisions of Section 39 and Section 44 of the State Act.

(b) In the case of every other order passed by the first appellate authority if the order is in favour of the assessee it becomes final because the Department has no right to prefer appeal against the order passed by the first appellate authority.

(c) If the order passed by the first appellate authority is against the assessee and he does not prefer appeal against that order, the order becomes final.

(d) If the order passed by the first appellate authority is against the assessee and he prefers further appeal before the Tribunal the order of the first appellate authority does not become final and finality is attached to the order passed in second appeal subject to the provisions of Section 44 of the State Act which provides for referring questions of law for the opinion of this Court.

14. Section 38(6), as stated above, is not made subject to the provisions of Section 43 of the State Act and therefore, even if the language of that section is wide, it does not confer power on the Tribunal to reopen a matter which has become final under Section 38(6) of the State Act. In the present case as stated above the orders passed by the first appellate authority setting aside the penalty under Section 43 of the State Act became final and the appeals preferred by the assessee before the Tribunal were restricted to that part of the orders of the first appellate authority which related to the imposition of penalty by that authority under Section 17(3) of the State Act. In the circumstances the Tribunal had no power to initiate proceedings for imposition of penalty under Section 43(1) of the Act in the course of second appeals preferred by the assessee against the imposition of the penalty by the first appellate authority under Section 17(3) of the State Act, suo motu or at the request of the Department.

15. The decision in Manganese Ore (India) Ltd. v. Regional Assistant Commissioner of Sales Tax, Jabalpur [1981] 14 VKN 171, relied upon by the learned Government Advocate is not helpful to the Department and is distinguishable on facts.

16. Our answer to question No. (1), as reframed by us, therefore, is in the negative and in favour of the assessee.

17. Re : Questions Nos. (2), (3) and (5) : In view of our answer to question No. (1) as reframed by us, the learned Counsel for the parties agreed that it is not necessary to answer questions Nos. (2), (3) and (5). We, therefore, decline to answer questions Nos. (2), (3) and (5).

18. Re: Question No. 4: The learned Counsel for the assessee contended that the assessee in second appeals had assailed the orders of the first appellate authority imposing penalty under Section 17(3) of the State Act. However, the Tribunal has not given any finding on the question whether on the facts and in the circumstances of the case penalty under Section 17(3) of the State Act was imposable on the assessee or not and therefore, question No. (4) does not arise out of the order of the Tribunal. The stand taken by the learned Counsel for the assessee seems to be correct. It does not appear from the orders of the Tribunal that it has recorded a finding on the question whether the penalty under Section 17(3) of the State Act was imposable on the assessee. In the circumstances question No. (4) does not arise out of the orders of the Tribunal. We, therefore, decline to answer the said question.

19. Reference is answered accordingly. In the circumstances the parties shall bear their own costs of these references.


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