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Munishi Ram Mehta Vs. Assistant Sales Tax Officer - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtDelhi High Court
Decided On
Case NumberC.M. (M) No. 92 of 1969
Judge
Reported in[1973]32STC213(Delhi)
AppellantMunishi Ram Mehta
RespondentAssistant Sales Tax Officer
Appellant Advocate C.P. Wig, Adv
Respondent Advocate B.N. Kirpal, Adv.
DispositionPetition dismissed
Cases ReferredKhushi Ram Prem Chand v. Excise and Taxation Commissioner
Excerpt:
.....rules were framed there was no condition like the one now contained in sub-section (4). the question of placing these rules before each house of parliament, thereforee, at that time did not arise. all that sub-section (1) of section 1 of the act requires is that if no returns are furnished by the prescribed date, or if the commissioner is not satisfied that the returns furnished are correct and complete, the commissioner shall, within eighteen months after the expiry of such period, proceed in such manner as may be prescribed to assess to the best of his judgment the amount of the tax due from the dealer. 10. the learned counsel placed strong reliance on khushi ram prem chand v......competent to frame the assessment against the petitioner and to create a valid demand.(3) that the delhi sales tax rules, 1951, made by the chief commissioner, are inoperative and illegal because they were not laid before each house of parliament as required by sub-section (4) of section 26 of the extended act.(4) that the assessment order, in any view, is vitiated because the assessment was not made within 18 months after the expiry of the period for which the petitioner was sought to be assessed.(5) that the order was passed by the assistant sales tax officer without giving a hearing to the petitioner.(6) that the item 'electric fans' included in the assessment order were tax-free goods and their sales could not be taxed.3. i have heard the learned counsel for the parties.4. the first.....
Judgment:

S.N. Shankar, J.

1. The petitioner is a registered dealer carrying on the business of sale and supply of electric fans, sewing machines and radios under the name of M/s. Shakti Traders. Respondent No. 1, Assistant Sales Tax Officer, Ward No. 37 by order dated 17th June, 1969, framed assessment order holding the petitioner to be liable to pay Rs. 4,125 on account of sales tax and Rs. 1,000 on account of penalty. By this petition under Article 227 of the Constitution, the petitioner has assailed this order of respondent No. 1.

2. Shri C.P. Wig, the learned counsel appearing for the petitioner, has raised the following contentions in support of the relief claimed:

(1) That the extension of the Bengal Finance (Sales Tax) Act, 1941, to the State of Delhi was invalid and in any case no modifications could be made in the Act when extended to Delhi.

(2) That the Assistant Sales Tax Officer in the instant case was in any event not competent to frame the assessment against the petitioner and to create a valid demand.

(3) That the Delhi Sales Tax Rules, 1951, made by the Chief Commissioner, are inoperative and illegal because they were not laid before each House of Parliament as required by Sub-section (4) of Section 26 of the extended Act.

(4) That the assessment order, in any view, is vitiated because the assessment was not made within 18 months after the expiry of the period for which the petitioner was sought to be assessed.

(5) That the order was passed by the Assistant Sales Tax Officer without giving a hearing to the petitioner.

(6) That the item 'electric fans' included in the assessment order were tax-free goods and their sales could not be taxed.

3. I have heard the learned counsel for the parties.

4. The first contention has no merits. The Bengal Finance (Sales Tax) Act, 1941 (hereafter called the 'Act') was extended to Delhi by means of Notification No. S. R. O. 615 dated 28th April, 1951, issued by the Central Government in exercise of powers conferred on them by Section 2 of the Part C States (Laws) Act, 1950 (30 of 1950), subsequently amended to be called as the Union Territories (Laws) Act, 1950. This power of the Central Government was upheld by majority decision of the Supreme Court in the reference under Article 143 of the Constitution in In re Delhi Laws Act A.I.R. 1951 S.C. 332. Material portion of Section 2 of the Act as it was in 1951 prior to its amendment in 1952 and then in 1956, provided that the Central Government may by notification in the official Gazette extend to any Part C State or to any part of such State with such restrictions and modifications as it thinks fit, any enactment which is in force in Part A State at the date of the notification and the provision may be made in any enactment so extended for the repeal or amendment of any corresponding law (other than a Central Act), which is for the time being applicable to Part C State. Mukherjea and Bose, JJ., held that this provision was intra virus except for the latter part referring to repeal or amendment. The same view was taken by the Supreme Court in Rajnarain Singh v. Chairman, Patna Administration Committee, Patna : [1955]1SCR290 . There is thus no substance in the grievance that acting under Section 2 of the Part C States (Laws) Act, 1950, the Central Government could not extend the Act to the State of Delhi.

5. The contention of the learned counsel that this extension could not be made with modifications mentioned in the notification is also without merits. Copy of the notification enumerating the modifications has been filed by the petitioner as annexure A to the petition. It was not pointed out at the time of arguments as to which particular modification the petitioner was taking exception to and which affected him adversely in this case. The power of modification is incidental to the power to adopt the law as held by the Supreme Court in Rajnarain Singh's case : [1955]1SCR290 . Bose, J., speaking for the court, said:

An executive authority can be authorised to modify either existing or future laws but not in any essential feature. Exactly what constitutes an essential feature cannot be enunciated in general terms. But this much is clear that it cannot include a change of policy.

6. As stated earlier, the learned counsel was unable to point to any modification embodied in the notification issued by the Central Government to show that there was any change of policy of the Act on the basic structure thereof.

7. Coming now to the second contention regarding the jurisdiction of the Assistant Sales Tax Officer to frame the assessment against the petitioner, I find that the same can also not be accepted. Section 3 of the Act provides that for carrying out the purpose of the Act, the Chief Commissioner may appoint a person to be Commissioner of Sales Tax together with such other persons to assist him as the Chief Commissioner thinks fit. Persons so appointed are empowered by Sub-section (2) of this section to exercise such powers as may be conferred and perform such duties as may be required by, or under, the Act. Section 15 authorises the Commissioner, by order in writing to delegate any of his powers under the Act except those under Sub-section (2) of Section 22, i. e., the power to sanction prosecution of an offence under the Act. Acting under Section 15 of the Act read with the relevant Rules, the Sales Tax Commissioner, by order dated 4th August, 1961, (annexure C), has empowered the Sales Tax Officer to make an assessment of tax, etc., to impose penalty, etc. According to Rule 2(f) of the Delhi Sales Tax Rules, 1951, framed by the Chief Commissioner in exercise of his powers conferred by Section 26 for carrying out the purpose of the Act, Sales Tax Officer means the person appointed by that designation by the Chief Commissioner under Section 3 of the Act and includes the Assistant Sales Tax Officer. The Assistant Sales Tax Officer, who has framed the assessment in this case, it is not disputed, was an officer appointed by the Chief Commissioner. He was, thereforee, fully competent to make the assessment against the petitioner and also to impose the penalty. The second contention for these reasons is repelled.

8. In regard to the third contention, it is true that Sub-section (4) of Section 26 of the Act provides that all Rules made under this section shall be laid for not less than thirty days before each House of Parliament as soon as may be after they are made and shall be subject to such modifications as Parliament may make during the session in which they are so laid or the session immediately following. This Sub-section was, however, added by Section 16(ii) of the amending Act, 1959, with effect from 1st October, 1959. The Rules in question were framed in the year 1951. They were published in the Gazette of India, Part III, Section 3, dated 22nd September, 1951. At the time when these Rules were framed there was no condition like the one now contained in Sub-section (4). The question of placing these Rules before each House of Parliament, thereforee, at that time did not arise. There is nothing in Sub-section (4) to indicate that it was intended to operate retrospectively in the sense that rules already framed had also to be put before Parliament after Sub-section (4) was incorporated. The Sales Tax Rules, 1951, thereforee, even though not placed before Parliament, are perfectly legal.

9. The next contention of the learned counsel that assessment is vitiated because the demand was made after the lapse of more than 18 months is also without substance. All that Sub-section (1) of Section 1 of the Act requires is that if no returns are furnished by the prescribed date, or if the Commissioner is not satisfied that the returns furnished are correct and complete, the Commissioner shall, within eighteen months after the expiry of such period, proceed in such manner as may be prescribed to assess to the best of his judgment the amount of the tax due from the dealer. The word 'proceed' used in the Sub-section does not mean the completion of the assessment. It refers only to the initiation of the proceedings for the assessment. This is clear on a reference to the words 'proceed in such manner as may be prescribed'. The manner prescribed by the Act and the Rules framed there under is indicated by Rule 32. This rule requires that proceedings for assessment of tax and imposition of penalty will be initiated by issuing a notice under S. T. XIV. The limitation prescribed in this Sub-section has thus a reference to Rule 32 and, thereforee, to the initiation of proceedings and not to their completion. This conclusion is further borne out by reference to Sub-section (2a) of this section. This Sub-section provides that no assessment under Sub-section (1) shall be made after the expiry of four years from the end of the year in respect of which or part of which assessment is made; while Sub-section (1) provides the outside as limit for initiating the assessment proceedings, Sub-section (2a) lays down the period within which the assessment should be made and completed. If Sub-section (1) of Section 11 were to be read to provide the limitation for completing the assessment, Sub-section (2a) of this section will be wholly redundant. This could not be the intention of the Legislature. In the instant case, the assessment of the petitioner was for the year 1965-66, ending 31st March, 1966. Notice in form S. T. XIV Under Section 11 was issued to him on 30th August, 1966. The assessment was completed in terms of the impugned order on 17th June, 1969. There was, thereforee, no violation of the provisions of Section 11 of the Act and the assessment order cannot be assailed on this ground.

10. The learned counsel placed strong reliance on Khushi Ram Prem Chand v. Excise and Taxation Commissioner [1963] 65 P.L.R. 1003, where it was held that the words 'proceed to assess' meant actual assessment and assessment must be completed within three years of the expiry of the period to which the assessment related. This case was under the East Punjab General Sales Tax Act (46 of 1948). Unlike Section 11 of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, Section 11 of the East Punjab General Sales Tax Act did not prescribe two periods of limitation. Further, while Sub-section (1) of Section 11 of the Delhi Act provides, as stated earlier, that the Commissioner shall within 18 months after the expiry of the relevant period proceed in such manner as may be prescribed to assess the dealer, the Punjab Act simply contained the expression 'proceed to assess'. It was, in these circumstances, held that the expression 'proceed to assess' meant that assessment should be completed. This authority is of no assistance in the present case having regard to the special scheme of the Delhi Act.

11. There is also no substance in the fifth contention of the petitioner that the assessment was made without giving a bearing to him. Departmental files were produced at the time of hearing. Apart from other notices, there is a notice dated 4th February, 1969, intimating the petitioner that the assessment proceedings will be taken up on 13th February, 1969. This notice was served on the petitioner and bears his signatures in token of service. It is mentioned in the assessment order that notice in form S.T. XIV Under Section 11(1) was issued to him on 30th August, 1966 and the case was fixed for hearing for ,12th September, 1966. Several adjournments were granted thereafter from time to time. These statements are borne out from the records. The objection, thereforee, that no notice of assessment was served on the petitioner is factually incorrect.

12. This takes me to the last contention. The learned counsel referred to item 34 of the Second Schedule issued Under Section 6 of the Act specifying the tax-free goods. This item reads: 'electrical energy'. It was contended that electric fans were excluded under this item. Electric fans are certainly not 'electrical energy'. They work with electrical energy but are not 'electrical energy' by themselves. They are electrical goods and as such are covered by item 18 of the First Schedule Under Section 5(1)(a) of the Act and tax is payable in respect of them by a dealer at the rate of ten paise in the rupee. Sales of electric fans were, thereforee, rightly included by the Assistant Sales Tax Officer in the assessment' order.

13. In this view of the matter, this petition fails and is dismissed with Counsel's fee Rs. 150.


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