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Kailash Oil Mills Vs. Shri N.R. Goel and Assistant Excise and Taxation Commissioner and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petition No. 208 of 1980
Judge
Reported in[1982]50STC157(P& H)
AppellantKailash Oil Mills
RespondentShri N.R. Goel and Assistant Excise and Taxation Commissioner and ors.
Advocates: D.S. Nehra and Arun Nehra, Advs.;
DispositionPetition dismissed
Cases ReferredPahar Chand and Sons v. State of Punjab
Excerpt:
- - if you fail to avail of the opportunity afforded to you and ensure your unwillingness to counter the statement of the purchasing dealers, which will be confronted to you on 10th september, 1979, the undersigned perforce shall proceed with according to the data available on the record. [1955] 6 stc 318 (fb) was 'whether the powers of revision under rule 14(2) can be exercised in cases to which rule 17 relating to escaped assessment is applicable ?' the full bench answered the question posed with the following observations :no doubt in a general sense both rule 14(2) as well as rule 17(1) serve a common purpose, viz. they would include the assessment order as well as the other files of the assessing authority which would furnish the basis upon which the assessment order is passed. if.....d.s. tewatia, j.1. the petitioner-firm, m/s. kailash oil mills, batala (hereinafter referred to as 'the petitioner'), engaged in the business of manufacturing/extracting oil from oil-seeds at batala in district gurdaspur, is registered as a dealer under the punjab general sales tax act, 1948 (hereinafter referred to as 'the act'), its registration certificate number being grd-iv-7734. it is alleged that on or about 1st september, 1979, two notices for reassessment, annexures p-l and p-2, without date, for the years 1974-75 and 1975-76 respectively, under section 11a(1) of the act, in form s.t.-xix issued by shri k.k. hans, respondent no. 3, for reopening the assessment, were pasted outside the office of the petitioner requiring it to appear before him at gurdaspur on 5th september, 1979......
Judgment:

D.S. Tewatia, J.

1. The petitioner-firm, M/s. Kailash Oil Mills, Batala (hereinafter referred to as 'the petitioner'), engaged in the business of manufacturing/extracting oil from oil-seeds at Batala in District Gurdaspur, is registered as a dealer under the Punjab General Sales Tax Act, 1948 (hereinafter referred to as 'the Act'), its registration certificate number being GRD-IV-7734. It is alleged that on or about 1st September, 1979, two notices for reassessment, annexures P-l and P-2, without date, for the years 1974-75 and 1975-76 respectively, under Section 11A(1) of the Act, in form S.T.-XIX issued by Shri K.K. Hans, respondent No. 3, for reopening the assessment, were pasted outside the office of the petitioner requiring it to appear before him at Gurdaspur on 5th September, 1979. Annexure P-3, in respect of the year 1976-77, was issued by respondent No. 2, Shri Gurbachan Singh, Assessing Authority/Excise and Taxation Officer, Batala, in form S.T.-XIX, requiring the petitioner to appear before him on 11th June, 1979. The reasons for the issuance of the notices in question, that the deductions claimed under Section 5(2)(a)(ii) of the Act had been found to be ungenuine/fictitious, were mentioned in each notice. The petitioner on 3rd September, 1979, sent a letter, annexure P-5, containing its objections contesting the validity of the notices on various grounds. Respondent No. 2 on 5th September, 1979, sent letters, annexures P-6, P-7 and P-8, to the petitioner replying. The petitioner, instead of appearing before respondent No. 2 as required by him, filed the present petition in this Court praying, inter alia, that the notices, annexures P-l, P-2 and P-3, be quashed. It has sought the quashing of the impugned notices and the proceedings taken by respondent No. 2 on the following grounds :

(i) That the notices, annexures P-l and P-2, were issued by Shri K.K. Hans, respondent No. 3, in August, 1979, when he had no jurisdiction over the petitioner-concern, the case of the petitioner having been transferred to Shri Gurbachan Singh, respondent No. 2, by the Assistant Excise and Taxation Commissioner, Gurdaspur, vide his order dated 22nd June, 1979, annexure P-4.

(ii) That the impugned notices were vague as no grounds for reopening the assessment under Section 11A of the Act had been mentioned therein as also for the reason that the names of the purchasing dealers, who had made the statements of denial, had not been mentioned in the notices.

(iii) That there was no definite information in the possession of the Assessing Authority at the time of issuance of the notices.

(iv) That respondent No. 2 was posted at Batala and his jurisdiction extended only over Batala tehsil. The impugned notices requiring the petitioner to appear at Gurdaspur, i. e., outside the limits of the jurisdiction of the Assessing Authority, were illegal.

(v) That, in order to harass the petitioner, very short adjournments were given by respondent No. 2 without acceding to the request of the petitioner for the supply of certified copies of the statements of denial made by the concerned purchasing dealers.

(vi) That respondent No. 2, under the instructions of respondent No. 1, had lodged an F. I. R. against one of the partners of the petitioner firm on false allegations and, therefore, he would not have an unbiased approach to the case.

(vii) That the Assessing Authority in its order dated 10th May, 1976, for the assessment year 1974-75 and the one dated 9th August, 1977, for the assessment year 1975-76 had observed that deductions under Section 5(2)(a)(ii) of the Act had been allowed after checking Sales Tax-XXII forms and finding them to be correct and that once a dealer proves to the satisfaction of the Assessing Authority that the S. T.-XXII forms had been signed by the purchasing dealer, then he would be legally entitled to the deduction under Section 5(2)(a)(ii) of the Act notwithstanding the subsequent denial or statement that the purchasing dealer had not made any such purchases.

(viii) That the provisions of Section 11A of the Act authorise the Assessing Authority to reopen the assessment of a dealer only when he comes to the conclusion that the turnover of his business had been under assessed or escaped assessment. The present case is not a case of under-assessment or escaping of assessment of the dealer's business turnover.

(ix) That even if it is accepted that certain purchasing dealers had denied that they had effected any purchases, then what would follow is that there had been no such sales by the petitioner and consequently, there had been no turnover which could be said to have escaped assessment.

2. Before proceeding with the consideration of the submissions advanced on the basis of grounds above-noted, it is necessary to take notice of the notices (annexures P-l, P-2 and P-3) served upon the petitioner by the Assessing Authority, the letter (annexure P-5) of the petitioner in reply thereto, and the replies (annexures P-6, P-7 and P-8) of the Assessing Authority. Since the notices, annexures P-l and P-2, are identical except that they relate to two different years, only annexure P-l by way of sample is being reproduced ; and since the replies, annexures P-6, P-7 and P-8, are identical except that they relate to three different years, only annexure P-6 by way of sample is being reproduced :

Annexure P-l:

To

M/s. Kailash Oil Mills,

Dera Road, Batala, GRD-IV-7734.

Whereas in consequence of definite information in my possession I have reasons to believe that the turnover of your business assessable to sales tax for the year ending the 31st March, 1975, has been under-assessed/escaped levy of the appropriate fee. I, therefore, propose to reassess the said turnover that has been under-assessed/escaped levy of the appropriate fee.

I hereby require you to show cause on 5th September, 1979, at 11 A. M. of the service of this notice on you why the contemplated action should not be taken in your case. You should appear on the said date in the office of the A. E. T. C, Gurdaspur.

Sd/-...

Assessing Authority.

Deductions claimed under Section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948, have been found to beungenuine/fictitious.

Annexure P-3 :

Whereas, in consequence of definite information in my possession, I have reasons to believe that the turnover of your business assessable to sales tax for the year ending the 31st March, 1977, has been under-assessed/escaped levy of the appropriate fee. I, therefore, propose to reassess the said turnover that has been under assessed/escaped levy of the appropriate fee.

I hereby require you to show cause on 11th June, 1979, of the service of this notice on you why the contemplated action should not be taken in your case.

Annexure P-5:

Regarding reassessment proceedings in case of M/s. Kailash Oil Mills, D.S.N. Road, Batala, GRD-IV-7734, for the year 1974-75.

Kindly refer to the notice in form S.T. XIX for the year 1974-75, served by effecting substituted service by pasting them, directing us to appear on 5th September, 1979, in the office of the Assistant Excise and Taxation Commissioner, Gurdaspur. It is submitted that the notice is invalid, illegal, unjudicious and mala fide ab initio, in view of the following preliminary objections and arguments :

1. The notice fails to indicate the name of the Assessing Authority, Gurdaspur, before whom we are required to appear, at Gurdaspur. The name cannot be made out from the signatures.

2. Our case falls in the territorial jurisdiction of Shri K. K. Hans, Assessing Authority, Batala. So, the notice issued by the unknown Assessing Authority, Gurdaspur, is without jurisdiction.

3. No doubt the Assistant Excise and Taxation Commissioner, for lack of confidence in the Assessing Authority having jurisdiction over the case, or for some other reason, can transfer the case to the file of another Assessing Authority. But such orders cannot be passed at the back of the assessee and without affording an opportunity to the dealer to ascertain whether the transfer orders are prejudicial to him or not. In absence of issue of such notice by the Assistant Excise and Taxation Commissioner to the assessee, it can safely be presumed that no such orders of transfer of case have been passed. Thus the said notice in form S. T. XIX is absolutely without jurisdiction.

4. The fixation of office of the Excise and Taxation Commissioner, Gurdas-pur, as venue of hearing of reassessment case, is mala fide especially when,-

(a) the Assessing Authority having jurisdiction in the case is having his office at Batala.

(b) the assessee is resident at Batala, and

(c) the counsel is also having his office at Batala.

It will not be undue harassment to the assessee alone but also undue inconvenience to the counsel who will have to appear at Gurdaspur, not only in this case, but also in cases of reassessments of sister concerns, at the cost of his local work at Batala, where his work-load is much greater. . If the Assistant Excise and Taxation Commissioner has no faith in the Assessing Authority having jurisdiction in the case he could transfer the case to the file of any other Assessing Authority in Batala, and it cannot be said that all the Assessing Authorities in Batala are undependable.

Even if the case is transferred to the file of an Assessing Authority outside Batala, the hearing must take place at Batala, the place of business of the assessee and the office of the counsel.

5. The notice is too short.

6. Substituted service of the notice in form S. T. XIX was effected in spite of the fact that the assessee is generally available at Batala. The past record does not show any instance to justify the mode of service now adopted. The undue haste and the mode of service smacks of vindictiveness. If an assessee is out of station for a couple of days for domestic or business affairs it cannot be presumed that he is avoiding service.

7. Section 11A(1) has wrongly been invoked. It is settled law that the turnover which was before the Assessing Authority at the time of original assessment, considered and dealt with in the assessment order is not 'escaped turnover' for the purpose of Section 11A(1). We have been granted deductions under Section 5(2)(a)(ii) in the original assessment order after verification, and the allegation that the same are ungenuine or fictitious is a mere change of opinion which does not call for action under Section 11A(1).

The above preliminary objections may be dealt with first and interim order passed. An application for the copy of the order shall be promptly made and we expect that the same shall be supplied promptly. Afterwards if it be held that the proceedings are to continue then the list of purchasing dealers denying the purchases together with details thereof may be communicated in order to enable us to know the case we are required to meet with and also to obtain the certified copies of the statements of denial which are sought to be used against us. If there be some other evidence sought to be used against us that may also be communicated to us in order to enable us to rebut the same. It may be brought to your notice that the Punjab and Haryana High Court has held in the case of Arjan Radio House v. State of Punjab [1978] 41 STC 360 that:

When the authorities under the Punjab General Sales Tax Act, 1948, themselves wish to take any action against a dealer on the basis of certain documents, the dealer is, as a matter of law, entitled to receive copies of those documents. If reassessment proceedings are initiated against a dealer on the basis of statements made by certain persons, it is the duty of the department to produce such persons before the Assessing Authority to enable the dealer to cross-examine them.

We hope the Assessing Authority concerned shall pay due heed to the above submissions and shall not drive us to unnecessary litigation, submitted.

Annexure P-3 :

Subject : Reassessment proceedings for the year 1974-75.

Reference : Your letter dated 3rd September, 1979.

This is brought to your notice that your assessment records for the year 1974-75 has been transferred to the undersigned under Rule 39 of the Punjab General Sales Tax Rules, 1949, by the Assistant Excise and Taxation Commissioner, in-charge of Gurdaspur District, by his order dated 22nd June, 1979. Consequently, reassessment proceedings have been initiated by the undersigned. The question of invalid jurisdiction does not arise. The action by the Assistant Excise and Taxation Commissioner, Gurdaspur, has been taken under Rule 39 of the Punjab General Sales Tax Rules, 1949; no question affording an opportunity does arise since the file remains in the same district.

2. The issuing of the notice in form S. T. XIX was necessitated in view of the statements of the purchasing dealers who denied to have made purchases to the extent claimed by you. The names of the dealers are as under :-

(i) M/s. Madan Lal Kishan Lal, Phagwara.

(ii) M/s. Rattan Lal Parshotam Lal, Phagwara.

(iii) M/s. Hira Lal Ramesh Chander, Jullundur.

3. By this notice I afford another opportunity to furnish accounts and other documentary evidence in support of your sales-version to the above-mentioned registered dealers. If you fail to avail of the opportunity afforded to you and ensure your unwillingness to counter the statement of the purchasing dealers, which will be confronted to you on 10th September, 1979, the undersigned perforce shall proceed with according to the data available on the record.

There is no illegality in fixation of the case at Gurdaspur, the district headquarters.

3. It is the contention based on ground No. (viii) that has been primarily pressed for consideration and with some vehemence by Mr. D. S. Nehra and, therefore, it is apt to deal with it first, though it involves deviation from the sequence in which the grounds have been noted above. The point pressed, in substance, by Mr. D.S. Nehra is that Section 11A of the Act envisages reopening of the assessment of a given assessment year by the Assessing Authority only if any port ion of the business turnover of an assessee had escaped assessment and not for the purpose of seeing as to whether deductions earlier allowed from the gross turnover of the assessee were or were not correctly allowed. It has been forcefully contended that it is for the revising authority, in exercise of its jurisdiction under Section 21 of the Act and not the Assessing Authority under Section 11A of the Act, to bring to tax such deductions as ought not to have been allowed by including them in the taxable turnover. Reliance has been placed in support of the above submission by Mr. Nehra primarily on State of Madras v. Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) and Hari Chand Rattan Chand and Company v. Deputy Excise and Taxation Commissioner (Additional), Punjab [1969] 24 STC 258 (FB), and additionally on State of Kerala v. M. Appukutty [1963] 14 STC 242 (SC), State of Kerala v. K.M. Cheria Abdulla and Company [1965] 16 STC 875 (SC), Swastik Oil Mills Ltd. v. H. B. Munshi, Deputy Commissioner of Sales Tax, Bombay [1968] 21 STC 383 (SC), Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Dhanalakshmi Vilas Cashew Company [1969] 24 STC 491 (SC), State of Kerala v. K. E. Nainan [1970] 26 STC 251 (SC) and 0. Kassim Kannu v. State of Kerala [1970] 26 STC 530.

4. In our opinion, the ratio of none of these decisions is applicable to the facts of the present case and these decisions can be of no avail to the petitioner. Before dealing with the contention aforesaid and embarking upon an analysis of the ratio of the decisions primarily relied upon, it would be desirable to notice at this very stage the relevant provisions, which define 'turnover' and 'taxable turnover' and of Section s 11A and 21 of the Act :

2. In this Act, unless there is anything repugnant in the subject or context,-

* * *(i) 'turnover' includes-

(i) the aggregate of the amounts of sales and purchases and parts of sales and purchases actually made by any dealer during the given period less any sum allowed as cash discount according to ordinary trade practice, but including any sum charged for anything done by the dealer in respect of the goods at the time of, or before, delivery thereof. * * *

5. (2) In this Act the expression 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom-

(a) his turnover during that period on-

* * *(ii) sales to a registered dealer of goods other than sales of goods liable to tax at the first stage under Sub-section (1-A) declared by him in a prescribed form 'as being intended for resale in the State of Punjab or sale in the course of inter-State trade or commerce or sale in the course of export of goods out of the territory of India or of goods specified in his certificate of registration for use by him in the manufacture in Punjab of any goods, other than goods declared tax-free under Section 6, for sale in Punjab or sale in the course of inter-State trade or commerce or sale in the course of export of goods out of the territory of India and on sales to a registered dealer of containers or other materials for the packing of such goods :

Provided that in case of such sales, a declaration duly filled up and signed by the registered dealer to whom the goods are sold and containing prescribed particulars on a prescribed form obtained from the prescribed authority is furnished by the dealer who sells the goods. * * *

11A. (1) If in consequence of definite information which has come into his possession, the Assessing Authority discovers that the turnover of the business of a dealer has been under-assessed, or escaped assessment in any year, the Assessing Authority may, at any time within five years following the close of the year for which the turnover is proposed to be reassessed, and after giving the dealer a reasonable opportunity, in the prescribed manner of being heard, proceed to reassess the tax payable on the turnover which has been underassessed or has escaped assessment.

* * *

21. (1) The Commissioner may of his own motion call for the record of any proceedings which are pending before, or have been disposed of by, any authority subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein and may pass such order in relation thereto as he may think fit.

* * *

5. In the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) the Full Bench decided many petitions, and for our purpose, reference to the facts of only one (C.C.C.A. No. 137 of 1951) of the cases dealt therein would suffice. Therein, the Deputy Commercial Tax Officer, Harbour Division, vide order dated 26th March, 1946, had determined the turnover of the assessee at Rs. 2,02,26,736-0-0 for the assessment year 1944-45. The assessee preferred an appeal to the Commercial Tax Officer which was dismissed on 25th March, 1947. On 5th March, 1948, the Commercial Tax Officer (revising authority) issued notice to the assessee to show cause why the assessment for the year 1944-45 should not be revised by including in the turnover a sum of Rs. 7,45,593-11-0. The assessee appeared and denied the jurisdiction of the revising authority. The Commercial Tax Officer, disagreeing with the assessee, proceeded with the case and by his order dated 1st December, 1948, increased the turnover by the addition of the sum mentioned earlier and the assessee was required to pay the tax due according to the revised assessment.

6. It has to be noticed that in the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) what was under challenge was the jurisdiction of the revising authority to reopen the assessment and bring to tax the escaped turnover. The relevant provisions that came up for construction before the Full Bench for testing the jurisdiction of the revising authority were Rules 14(2), 14-A and 17(1) of the Madras General Sales Tax Rules framed by the State Government under Section 19(1) of the Madras General Sales Tax Act, which are in the following terms :

14. (2) The Commercial Tax Officer may, in his discretion, at any time, either suo motu or on application, call for and examine the record of any order passed or any proceedings recorded under the Act by an Assistant or Deputy Commercial Tax Officer working under him, for the purpose of satisfying himself as to the legality or propriety of such order or as to the regularity of such proceedings and may pass such order in reference thereto as he thinks fit.

14-A. Where the tax as determined by the initial assessing authority appears to the appellate or revising authority to be less than the correct amount of the tax payable by the dealer, the appellate or revising authority shall, before passing orders, determine the correct amount of tax payable by the dealer after issuing a notice to the dealer and after making such enquiry as such appellate or revising authority considers necessary.

* * *17. (1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority, as the case may be, may at any time within the year or the year next succeeding that to which the tax or licence fee relates, assess the tax payable on the turnover which has escaped assessment or levy the licence fee, after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary.

7. The question that is relevant for our purpose and which was formulated in the order of reference for the consideration of the Full Bench in the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) was 'whether the powers of revision under Rule 14(2) can be exercised in cases to which Rule 17 relating to escaped assessment is applicable ?' The Full Bench answered the question posed with the following observations :

No doubt in a general sense both Rule 14(2) as well as Rule 17(1) serve a common purpose, viz., to gather revenue which has improperly escaped but while Rule 14(2) is directed to the correction of improper or illegal assessment orders which have levied less or more tax than justified, Rule 17(1) lays emphasis on escaped turnover. The distinction between the two provisions might be expressed by saying that Rule 14(2) deals with escaped assessments and 17(1) with escaped turnovers, notwithstanding that the latter also would mean that a lesser amount of tax has been levied. So understood the two provisions would be completely reconcilable and the two jurisdictions-to revise assessments and to reopen them-would each be assigned to the proper authority.

The language of Rule 17(1) is consistent with this construction. The 'escape' that serves as the foundation of the jurisdiction to reopen an assessment is that of 'turnover' and not, be it noted, an assessment. 'Turnover' escapes when it is not noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer the turnover though in the books has not been taken notice of. This would be the natural and normal meaning of the expression 'turnover which has escaped' in Rule 17(1).

A close examination of Rule 14(2) also supports this view of the scope of the two rules which are intended to be mutually exclusive. This rule empowers the Commercial Tax Officer 'to call for and examine the record of any order passed or any proceedings recorded by the Deputy Commercial Tax Officer'.

Now what exactly is the meaning to be attached to the expression 'the record of any order passed'. The records which the revising authority calls for are the records of the assessment. They would include the assessment order as well as the other files of the assessing authority which would furnish the basis upon which the assessment order is passed. If in the assessment order the turnover which a dealer has returned or which has been gathered from his books is treated as not taxable or subject to any exemption and the revising authority is of the opinion that the order in this behalf is erroneous, the Commercial Tax Officer 'would have satisfied himself that such an order was not legal or proper'. Up to this there could not be any room for controversy as regards the competency of the revising authority to revise an assessment order which in its opinion is 'not legal or proper'....

It remains to consider the intermediate case between a truly escaped turnover as we have indicated above and a case where the turnover has not escaped-only it has escaped assessment by reason of some error on the part of the assessing officer. We have in mind cases where the entire turnover is before the assessing officer but he fails to levy tax upon the whole or any part of it either because in his view it could not be included in the taxable turnover of the assessee or because of deductions allowed by him but fails to make a specific reference to these matters in the assessment order, in other words, where only the final result is reflected in the order without the details as how the computation was made being specifically noted in it. In this class of cases if by the record were meant only the assessment order, there may not be any reference to the particular transaction or turnover though as a fact this has been considered by the assessing authority though omitted to be referred to in the assessment order. We are of the opinion that the expression 'record' would include not merely the assessment order but the entire assessment file and in the intermediate cases also if from a perusal of the record or the assessment files the revising authority can find that the turnover was before the assessing officer it is competent for it to pronounce upon the legality or propriety of the assessment order under Rule 14(2). We are of the opinion that the construction which we have placed upon the relative content of Rules 14(2) and 17(1) gives proper effect to both the provisions and assigns to each the rule which it was designed to accomplish.

8. As already observed, in the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) what was under challenge was the jurisdiction of the revising authority to bring to tax the escaped turnover while exercising powers under Rule 14(2) of the Madras General Sales Tax Rules and it was in that context that a reference to the provisions of Rule 17(1) thereof was made only to point out that in a case of escaped turnover, jurisdiction lay with the assessing authority to reopen the assessment and not with the revising authority. The revising authority under Rule 14(2) has to accept the turnover as recorded in the order of the assessing authority and if it finds that any part of such accepted turnover escaped assessment as a result of illegal exemptions or deductions, then it can rectify the mistake in the assessment order. In the present case before us what we are concerned is with the jurisdiction of the Assessing Authority under Section 11A of the Act to bring to tax that portion of the assessee's disclosed turnover as escaped tax on account of exemption or deduction which in the light of the later information ought not to have been exempted or deducted. On the basis of the interpretation of Rule 17(1) in the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB), the learned counsel for the petitioner, Mr. D.S. Nehra, is not on firm footing in requiring us to hold that Section 11A of the Act too warrants reopening of the assessment by the Assessing Authority only if escaped turnover in the sense it has been understood in the case pf Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) is sought to be taxed as a result of some definite information received by the Assessing Authority.

9. Even a cursory comparison of the provisions of Section 11A of the Act and Rule 17(1) of the Madras General Sales Tax Rules would leave no manner of doubt that the two provisions are not in pan materia in any sense of the term. Section 11A of the Act envisages two situations, (1) where the turnover escapes assessment, and (2) where the turnover is under-assessed. The situation where the turnover escapes assessment can be said to be identical with the situation envisaged in Rule 17(1) of the Madras General Sales Tax Rules. However, the situation where the turnover is under-assessed is not envisaged in Rule 17(1) ibid at all. The question, therefore, that 'arises for consideration is as to what do we mean by 'turnover being under-assessed'.

10. Mr. D.S. Nehra, the learned counsel for the petitioner, urged that the expression 'assess' must have been used by the legislature in the sense of its ordinary dictionary meaning, and therefore, the expression 'assess' should be taken as synonymous with the expression 'determine'.

11. We are unable to accept the view canvassed by Mr. Nehra. The expression 'assess', when used in the context of a taxing statute, has a definite meaning and not the ordinary dictionary meaning. Hence, the expression ''assess' or 'assessment' cannot be considered to be synonymous with the expression 'determine' or 'determination' respectively. The incongruity would be apparent the moment these latter two expressions are substituted for the expressions 'assess' and 'assessment' occurring in Section 11A of the Act. When so substituted, the relevant expression in Section 11A of the Act would read : 'the turnover of the business of a dealer has been under-determined or escaped determination in any year'. There is no such thing as 'under-determined' or 'escaping determination'. As already observed, the expression 'assess' in the taxing context has only one meaning which is synonymous with the expression 'tax'. (A business turnover thus can be under-taxed or can escape taxation). On taking the expression 'assess' as synonymous with the expression 'tax', the situation that emerges is that the Assessing Authority shall be entitled to reopen an assessment of a given year if on the basis of definite information on being received by it, it transpires that the business turnover disclosed by the assessee had been under-taxed, that is, the tax that ought to have been levied on such a disclosed turnover had not been levied. One of the reasons for disclosed turnover being under-taxed could be that some portion of it was not brought to tax for the reasons that the assessee had claimed exemption or deduction of that portion of the turnover which exemption or deduction when seen in the light of the later information was illegally claimed and illegally given by the Assessing Authority. If as a result of definite information received by the Assessing Authority, such exemption or deduction is to be withdrawn and the portion of the disclosed turnover, to which exemption or deduction related, is brought to tax, then there would be no accretion to the gross turnover which was the turnover as disclosed by the assessee, the accretion would be to the taxable turnover.

12. In the light of the above analysis of the provisions of Section 11A of the Act, there is no escape from the conclusion that Section 11A(1) envisages the reopening of the assessment by the Assessing Authority on the basis of the definite information received by it for bringing to tax not only the escaped turnover, but also bringing to tax such portion of disclosed turnover or gross turnover as escaped tax on account of illegal or wrong exemption or deduction allowed by the Assessing Authority.

13. As in the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB) and likewise in the other cases, on which reliance has been placed on behalf of the petitioner, what came up for consideration was the challenge to the jurisdiction of the revising authority either to bring to tax the escaped turnover or to disallow the exemptions or deductions allowed by the Assessing Authority, and for the purpose of doing so, to its right to embark upon an enquiry. In these cases it has been held that if on the basis of the record of the proceedings before the Assessing Authority it comes to the conclusion that the order of the Assessing Authority 'suffers from illegality or impropriety or irregularity, then it can make fresh enquiry into .the matter or have the matter enquired into by any authority subordinate to it, but it has been cautioned that such additional enquiry shall be for the purpose of enabling the revisional authority to discharge its function as a revising authority and it cannot, as a result of the said additional enquiry, do which strictly lay within the jurisdiction of the Assessing Authority in terms of the provisions of the statutes and rules relevant to the concerned cases, and therefore, we do not wish to go into details of these cases except that of the Full Bench of this Court in the case of Hari Chand Rattan Chand and Company [1969] 24 STC 258 (FB) and suffice it 'to say, as already observed, that the ratio of these cases is not attracted to the facts of the present case, as the relevant provisions of statutes or rules giving powers to the Assessing Authority and the revisional authority in those cases (which came up for construction in those cases) and the provisions of Section 11A of the Act are not at all in pari materia, as we have shown in the case of Louis Dreyfus and Company Ltd. [1955] 6 STC 318 (FB).

14. In Hari Chand Rattan Chand's case [1969] 24 STC 258 (FB) the competence of the Commissioner under revisional jurisdiction under Section 21(1) of the Act when he sought to disallow certain deductions, which had been allowed by the Assessing Authority, was challenged on the ground that it being a case of escapement of turnover and the requisite peroid for reassessing envisaged under Section 11A of the Act having expired, he was not competent to bring to assessment the escaped turnover. Repelling the contention, it was observed that it was not a case of escaped turnover. It was a case of pure and simple correction of an order which suffered from illegality, impropriety and irregularity in allowing the deductions which ought not to have been allowed. The ratio of this case is not attracted to the facts of the present case. In that case, a distinction was clearly made between the power to correct an illegality, impropriety and irregularity of an order under Section 21(1) of the Act and the power to bring to assessment the turnover that was under-taxed or escaped assessment. It was held that while exercising his jurisdiction under Section 21(1) of the Act, the Commissioner had to confine himself to the material on the record as the illegality, impropriety or irregularity of an order could be considered on the basis of the material which was on the record of the Assessing Authority and not on the basis of any material which was not there before the Assessing Authority and which, for the first time, came to the knowledge of the appellate or the revisional authority. If the appellate or the revisional authority found the order to be illegal, improper or irregular on the basis of the material already on record and then disallowed certain deductions, then the order would be within its jurisdiction. But if it was to disallow deductions on the basis of information which was not available on the record of the Assessing Authority but which the revisional authority received on its own, then the order would be in the nature of an order under Section 11A of the Act and the same could not be passed by the revisional authority after the expiry of the period mentioned in this section.

15. It was further held that if the period of limitation envisaged under Section 11A of the Act had not expired, then the revisional authority was competent to exercise the powers of the Assessing Authority and bring to assessment that part of the gross turnover which escaped assessment as a result of deductions allowed by the Assessing Authority in ignorance of true facts which came to light after the assessment had been originally finalised. The true ratio of the aforesaid decision of this Court is not what the learned counsel for the petitioner has sought to make out, that is, that the modification of taxable turnover by disallowing deductions on the basis of the definite information received by the Assessing Authority was only within the powers of the revisional authority under Section 21(1) of the Act, as it is not a case which is covered by Section 11A of the Act. On the contrary, it has been held that the provisions of Section 21 of the Act are not attracted to a case where an order passed by the Assessing Authority is sought to be revised on the basis of some definite information received by the revisional authority which was not available on the record of the Assessing Authority when it finalised the assessment in the first instance, after the period of limitation envisaged in Section 11A of the Act has expired. It clearly shows that Section 11A envisages reassessment by bringing to assessment not only that part of the turnover which was not disclosed by an assessee but also that part of the gross turnover which escaped assessment as a result of deductions which the definite information later on received by the Assessing Authority revealed was not legally justified.

16. So far as the first ground that the notices, annexures P-l and P-2, had been issued by Shri K. K. Hans, respondent No. 3, who had been left with no jurisdiction as a result of the order dated 22nd June, 1979, annexure P-4, passed by the Assistant Excise and Taxation Commissioner, Gurdaspur, respondent No. 1, is concerned, it may be observed that in para 2 of the letter dated 3rd September, 1979, annexure P-5, which the petitioner had addressed to Shri Gurbachan Singh (Excise and Taxation Officer, Gurdaspur), it challenged the validity of notice, annexure P-l, in form S. T. XIX, for the assessment year 1974-75 (which in the petition, as already pointed out, the petitioner has alleged that it had been issued by Shri K. K. Hans) on the ground that their case fell in the territorial jurisdiction of Shri K. K. Hans, Assessing Authority, Batala. So, the notice issued by some unknown authority at Gurdaspur was without jurisdiction. If the unknown Assessing Authority is Shri K. K. Hans, then, according to the petitioner itself, in its letter annexure P-5 it was admitted that he had the necessary jurisdiction. However, Shri Gurbachan Singh, respondent No. 2, in his letter dated 5th September, 1979, annexure P-6, in reply to the petitioner's letter dated 3rd September, 1979, annexure P-5, made it clear to the petitioner that its assessment record for the year 1974-75 had been transferred to him under Rule 39 of the Punjab General Sales Tax Rules, 1949 (hereinafter referred to as 'the Rules'), by the Assistant Excise and Taxation Commissioner in-charge of Gurdaspur District, by his order dated 22nd June, 1979, and that it was he (respondent No. 2) who had initiated reassessment proceedings. He mentioned that the alleged purchasing dealers, i. e., M/s. Madan Lal Kishan Lal, Phagwara, M/s. Rattan Lal Parshotam Lal, Phagwara, and M/s. Hira Lal Ramesh Chander, Jullundur, had denied that they had made purchases from the petitioner to the extent claimed by the petitioner. Respondent No. 2, in regard to reassessments for the years 1975-76 and 1976-77, conveyed to the petitioner his reply, an-nexures P-7 and P-8 respectively, taking the same stand as was taken in his letter, annexure P-6. Only the names of the purchasing dealers varied. In view of the above, it cannot be said that the impugned notices were invalid on account of the same being issued by an authority which had no jurisdiction in the matter.

17. There is no merit in the contention based on ground No. (ii) that the impugned notices were vague as no grounds for reopening the assessment under Section 11A of the Act had been mentioned therein. In the impugned notices, it was clearly mentioned that deductions claimed under Section 5(2)(a)(ii) of the Act had been found to be ungenuine/fictitious.

18. As regards ground No. (iii), it may be observed that the question whether the Assessing Authority was or was not possessed of definite information before the issuance of the impugned notices is a question of fact on which the Assessing Authority had to give its finding after the evidence in that regard was furnished on the record in the form of statements of purchasing dealers in question who could be cross-examined by the petitioner in regard to the fact as to when they had given their statements to the Assessing Authority as also regarding the factum of their having or having not effected the purchases from the petitioner-firm. The petitioner cannot presume that the Assessing Authority had no definite information before issuing the impugned notices and consequently decline to appear before the Assessing Authority. The petitioner could show cause before the Assessing Authority that it had no definite information before issuing the impugned notices, and therefore, it could not proceed with the case and if that authority had passed a wrong order, then the petitioner could have challenged that order before the higher authority. And in any case, it cannot agitate the matter in the High Court on the writ side even before any such order on facts had been passed by the Assessing Authority.

19. The learned counsel for the petitioner was not able, by referring to any rule or statutory provision, to substantiate his contention based on ground No. (iv) that the petitioner could not have been required by respondent No. 2 to appear before him at Gurdaspur.

20. The contention based on ground No. (v) that the petitioner had not been supplied with certified copies of the statements of the purchasing dealers, and that very short adjournments were given, even if accepted to be true, would have no bearing on the legality and validity of the impugned notices.

21. Similarly, the fact that respondent No. 2 had lodged the F. I. R. against one of the partners of the petitioner-firm would have no bearing on, and relevancy to, the legality and validity of the impugned notices.

22. On being enquired, the learned counsel for the petitioner disclosed that the F.I.R. was in regard to the stealing of certain documents from the custody of respondent No. 2, which the petitioner-firm had earlier furnished for the assessment years, the assessment regarding which was being reopened. Surely, none also but respondent No. 2 alone could file the F.I.R. But in this case, there was nothing personal and in the circumstances no bias on the part of respondent No. 2 against the petitioner can be inferred.

23. The contention that the Assessing Authority, which originally assessed the business turnover of the petitioner in respect of the assessment years in question, had accepted the S.T. XXII forms, is of no consequence. Such acceptance is valid till such time the Assessing Authority does not receive a definite information that the business turnover of the assessee of a given year has either been under-assessed or had escaped assessment. Once such information is received, then the Assessing Authority is competent to reassess and the order of original assessments cannot operate as judicata.

24. Now, the last contention that if certain purchasing dealers denied that they had effected any purchases from the assessee, then such sales as were shown by the assessee to have been effected in favour of such purchasing dealers be taken as having not taken place, and therefore, the question of any turnover as represented by such sales having escaped assessment would not arise. Support for this was sought from a Division Bench decision of this Court rendered in Pahar Chand and Sons v. State of Punjab [1972] 30 STC 211. That was a case in which the Assessing Authority disallowed certain exemptions on the basis of material which was never brought to the notice of the assessee and regarding which the assessee was given no chance to meet. So far as gross turnover is concerned, that is a turnover which an assessee has himself shown and stands by it. In order to claim exemptions in that gross turnover, he has to satisfy the requirements envisaged in that regard by the statute. If on the basis of the material on the record, he fails to do so, then such exemptions will not be allowed. However, if such an exemption is denied not on the basis of the material on the record but on the basis of knowledge of some facts available only to the Assessing Authority and regarding which the assessee had not been taken into confidence and an opportunity had not been granted to him to rebut that, then the exemption claimed by the assessee cannot be denied to him. And it was in this context that it was said that if some purchasing dealer had said that no sale had been made to him and the assessee had not been asked to rebut that statement, then at best it could be taken that such a sale was in fact not effected, and therefore, should not form part of the business turnover of the assessee.

25. The present case is a case where the petitioner-assessee was informed about the names of the purchasing dealers who had denied having purchased from it the amount of goods shown against their names and an opportunity was sought to be afforded by issuing notice to it. The petitioner-assessee did not avail of that opportunity nor availed of another opportunity which was offered to it through letters, annexures P-6 to P-8. In a case like the present one, if an assessee does not co-operate, then the Assessing Authority will be left with no choice but to proceed ex parte and such an assessee thereafter cannot be heard to make any grievance. In the present case, the petitioner-assessee, instead of complying with the notices and availing of the opportunity to rebut the statements of the purchasing dealers that they had not effected any purchases from it, has sought not to co-operate and tried to indulge in mud-slinging against respondent No. 1, the Assistant Excise and Taxation Commissioner, and respondent No. 2, Shri Gurbachan Singh, Assessing Authority/Excise and Taxation Officer, by saying that respondent No. 2 would not bring to bear an unbiased approach to the case as he had filed, under the instructions of respondent No. 1, an F.I.R. against one of the partners of the petitioner. Respondent No. 2, as already observed, cannot have anything personal against the petitioner.

26. For the reasons aforementioned, we find no merit in this petition and dismiss the same.

27. An oral request for granting a certificate of fitness for filing an appeal to the Supreme Court is considered without merit and is declined.


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