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The Deputy Commissioner of Agricultural Income-tax and Sales Tax (Law), Board of Revenue (Taxes) Vs. M.K. Ahammed Kutty - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberT.R.C. No. 2 of 1975
Judge
Reported in[1976]38STC210(Ker)
AppellantThe Deputy Commissioner of Agricultural Income-tax and Sales Tax (Law), Board of Revenue (Taxes)
RespondentM.K. Ahammed Kutty
Appellant AdvocateThe Government Pleader
Respondent Advocate T.L. Viswanatha Iyer and; P.S. Narayanan, Advs.
Cases ReferredU.P. v. Kanpur Coal Syndicate
Excerpt:
.....as being beyond his control and without negligence. 1 of 1960) justifies the conclusion that the appellate tribunal, even where the dealer's failure be not explainable as being beyond his control and without negligence, would be justified in condoning the delay. that would be opposed to the rule well-settled that the case should be decided on the record as it stands, unless the appellate tribunal finds the record not sufficient to decide the appeal or there. this court following the principle of the two decisions, referred to above, held that this is a case in which the appellate assistant commissioner and the tribunal should have excused the delay in the production of c forms conforming to the proviso to sub-rule (1) to rule 11. the reason stated for excusing the delay was stated thus..........for the delay in getting them as he has to depend other parties to obtain them'. at the same time the tribunal did not find fault with the procedure adopted by the assessing authority in finalising the assessment. the tribunal also rejected the assessee's complaint that he was not given sufficient time to obtain the c forms from different parties. though he had asked for three weeks time but was given only two weeks to produce the c forms, the tribunal was of the view that the assessee could have filed another petition to extend the time, which was not done and, therefore, there is no scope for any complaint. so, in short, the tribunal found that the procedure adopted by the assessing authority was not wrong. still, the tribunal thought that a further opportunity should be given to.....
Judgment:

G. Viswanatha Iyer, J.

1. This tax revision case is filed by the revenue against the order of the Sales Tax Appellate Tribunal and the following questions are raised for consideration :

(1) Having found that the assessment was finalised properly, was the Appellate Tribunal justified in law in holding that the assessee is to be given an opportunity to produce the C forms before the assessing officer ?

(2) Has the Appellate Tribunal jurisdiction to direct the assessing authority to accept the C forms filed, after the final assessment and/or to condone the delay in filing the C forms Is the procedure followed by the Tribunal legal, in view of Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957, and the decision of this court reported in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Abdul Wasigh and Bros., [1962] 13 S.T.C. 295.?

2. To appreciate the questions certain facts have to be stated. The assessment proceedings related to the year 1969-70 under the Central Sales Tax Act, 1956. The assessing authority determined the taxable turnover at Rs. 9,07,107.16, of which for a turnover of Rs. 25,586.36 the assessee did not produce the C form declarations though time was given for producing the same. The relevant portion of the order of the Sales Tax Officer on this matter reads thus :

The assessee was given time till 31st January, 1971, to produce the C forms but he has failed to produce the C forms in respect of the above bills. The assessment is therefore completed as below :

Taxable turnover determined Rs. 9,07,107.16Turnover TaxTaxable at 10 per cent Rs. 25,586.36 Rs. 2,558.64Taxable at 3 per cent Rs. 8,81,520.80 Rs. 26,445.63--------------- ------------- Rs. 9,07,107.16 Rs. 29,004.27--------------- -------------Tax paid Rs. 26,858.27 Balance Rs. 2,146.00---------------A demand notice is issued for the balance.

The time asked for by the assessee to produce the C form declarations was three weeks from 15th January, 1971, to which date the hearing was previously posted. Against the order of the Sales Tax Officer, the assessee filed an appeal to the Appellate Assistant Commissioner. The order of the Appellate Assistant Commissioner is very brief and it is useful to extract the same hereunder:

The dispute is about a turnover of Rs. 25,586.36 not covered by the C forms and assessed at 10 per cent. It is explained that time for 3 weeks was asked for by the party and the officer had granted 2 weeks and because sufficient time was not granted the C forms could not be filed. The assessment of the year, viz., 1969-70, was completed only in January, 1971, and, therefore, the appellant had sufficient time at his disposal to obtain the C forms for the transactions done in the previous year, which he failed to do so. The appellant could not succeed even within the further time granted to him by the officer. So I do not find any reason to hold that the assessment was wrongly done. Therefore, the appeal is dismissed.

The assessee did not submit to this decision. He took up the matter in second appeal before the Tribunal and disputed the tax levied at 10 per cent on the turnover of Rs. 25,586.36. The Tribunal set aside the order of assessment and remitted the file to the assessing officer with a direction to him to finalise the assessment after giving the appellant an opportunity to produce the C forms and verify their genuineness. The reason stated for this order of remand is that 'the assessee has obtained all the C forms subsequently and has prayed the appellate authority to give an opportunity to produce them'. It was further observed that 'the C forms are obtained from others. The assessee cannot be held solely responsible for the delay in getting them as he has to depend other parties to obtain them'. At the same time the Tribunal did not find fault with the procedure adopted by the assessing authority in finalising the assessment. The Tribunal also rejected the assessee's complaint that he was not given sufficient time to obtain the C forms from different parties. Though he had asked for three weeks time but was given only two weeks to produce the C forms, the Tribunal was of the view that the assessee could have filed another petition to extend the time, which was not done and, therefore, there is no scope for any complaint. So, in short, the Tribunal found that the procedure adopted by the assessing authority was not wrong. Still, the Tribunal thought that a further opportunity should be given to the assessee to produce the C forms and claim for reduction in the tax payment. The question for consideration is whether the Tribunal was justified in holding that the assessee is to be given an opportunity to produce the C forms. Incidentally, a question arises whether the Appellate Tribunal has got jurisdiction to direct the assessing authority to accept the C forms after the final assessment or to condone the delay in filing the C forms. We will proceed to consider these aspects hereunder.

3. The learned counsel for the revenue relied on the decision of this court reported in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Abdul Wasigh and Bros. [1962] 13 S.T.C. 295, and contended that the Tribunal had no jurisdiction in the light of its finding that there was nothing wrong with the mode in which the assessing officer finalised the assessment and the further finding that the grievance of the assessee that he was not given sufficient time to obtain the C forms from different parties is without any substance to direct the assessing authority to accept the C forms filed after the final assessment and/or to condone the delay in filing the C forms. It is not disputed that the declaration forms should be produced before the assessing authority. The question is whether the appellate or the second appellate authority can receive the C forms or direct the assessing authority to receive the C forms received subsequent to the assessment order. If so, in what circumstances, this can be done ?

4. This court had occasion earlier to consider the scope of that power. In T.R.C. No, 1 of 1960, the facts were as follows : After the assessment was complete the assessee produced along with the appeal the C forms and prayed that the same may be accepted. The Appellate Assistant Commissioner rejected that request on the sole ground that the C forms were produced after the assessment was over. He did not consider the question whether there was sufficient cause for the appellant for not producing the forms before the order of assessment was passed. But the Tribunal found that the assessee could not produce the C forms on account of the delay in getting them from outside buyers and that was taken as a sufficient cause for the delay. On that ground the Tribunal held that the Appellate Assistant Commissioner ought to have excused the delay and accepted the forms. This order of the Tribunal was upheld by this court in the above T.R.C. No. 1 of 1960. The correctness of this decision was not doubted in the next case decided by this court, namely, Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Abdul Wasigh and Bros. [1962] 13 S.T.C 295. On the facts of that case, no doubt, it was found that the assessee did not satisfactorily explain the failure to produce the C forms as being beyond his control and without negligence. It was observed in that case thus :

We do not think that the decision in the above case (T.R.C. No. 1 of 1960) justifies the conclusion that the Appellate Tribunal, even where the dealer's failure be not explainable as being beyond his control and without negligence, would be justified in condoning the delay. That would be opposed to the rule well-settled that the case should be decided on the record as it stands, unless the Appellate Tribunal finds the record not sufficient to decide the appeal or there.be fresh evidence available to justify review by the ordinary tribunal. The appellate authority in the case does not say that it finds the record inadequate, and there is no procedural error by the taxing officer, which taints the assessment. Obviously, the Appellate Assistant

Commissioner was right in not allowing the appeal, and we are afraid in these circumstances that the Tribunal's order is not correct. The Tribunal has erred in allowing the forms to be received, and we, accordingly, allow the revision petition, vacate the order of the Tribunal, and the appeal before it stands dismissed with costs.

These two decisions were followed by this court in Palaniappa Match Works v. State of Kerala [1962] 13 S.T.C. 904. In the latter case, the declaration forms produced were not in conformity with the proviso to Sub-rule (1) of Rule 11 of the Central Sales Tax (Kerala) Rules, 1957. No objection was raised by the Sales Tax Officer at the time those returns were filed. But before making the assessment order the defect was pointed out by the Sales Tax Officer and the assessee urged that the forms were in order. In appeal the assessee specifically requested the Appellate Assistant Commissioner to grant him 15 days time to produce new declaration forms in accordance with the proviso to that rule. This was rejected. The same request was repeated before the Sales Tax Appellate Tribunal and the Tribunal observed thus :

If they had requested for time and the Sales Tax Officer had rejected their request the Appellate Assistant Commissioner ought to have allowed the appellants an opportunity to produce revised declaration forms. But that question does not arise as the appellant did not ask for any time to the Sales Tax Officer. The request was made only to the Appellate Assistant Commissioner. He cannot grant any time or receive them at that late stage, particularly when there is no such request to the Sales Tax Officer. The appellants themselves could have produced the revised declaration forms before the Appellate Assistant Commissioner. That was also not done. They have not produced them even now. Simply because the Sales Tax Officer did not point out the defects as and when the declaration forms were filed it cannot be said that the appellants were not given an opportunity to produce correct declaration forms.

On revision to this court the assessee produced the new C forms in accordance with the proviso to that rule. This court following the principle of the two decisions, referred to above, held that this is a case in which the Appellate Assistant Commissioner and the Tribunal should have excused the delay in the production of C forms conforming to the proviso to Sub-rule (1) to Rule 11. The reason stated for excusing the delay was stated thus :

We are satisfied that there has been no laches on the part of the assessee, particularly because the implications of Sub-rules (1) and (2) are not very clear. And this court itself has taken the view that Sub-rule (1) of Rule 11 may not apply to an assessee like the revision petitioner.

In that view it was held that the assessee should be given an opportunity to produce the C forms which conform to the proviso to Sub-rule (1) of Rule 11.

5. These three decisions were again referred to by this court in T.R.C. No. 33 of 1964. In that case, the assessee was asking for time for production of the relevant C forms and time was granted till a definite date. However, C forms were not produced by the assessee before that date and a fresh notice was issued by the assessing authority stating that in view of the non-production of the C forms before the specified date the assessment will be completed and tax at the rate of 7 per cent will be imposed. An assessment order followed. The assessee appealed and produced the C forms before the appellate authority and contended that the delay in the production of the C forms may be excused. The reason for the delay was sought to be explained by the assessee by stating that the assessing authority was convinced that there were good reasons for the delay and actually allowed time to produce the C forms till 31st August, 1962, and so some more time should have been allowed. This contention of the assessee was rejected. On further appeal before the Tribunal, the question was considered whether the C forms produced for the first time before the appellate authority or the second appellate authority can be accepted by those authorities. The Tribunal took the view that in all cases the C forms should be produced before the assessing authority and, consequently, dismissed the appeal. After noticing that the Full Bench in Abraham v. Sales Tax Officer [1964] 15 S.T.C. 110 (F.B ), had left open the question whether the appellate authorities have power to condone delay in cases where sufficient cause is shown, held that the appellate authority's power is coeval with that of the assessing authority and that if, in a given case, the assessing authority had not granted sufficient time to produce the C forms, the appellate authority certainly has the power to grant the time which the assessing authority refused to give and accept the forms in appeal or remit the case to the assessing authority and direct him to receive the C forms. In support of this conclusion the decision of the Supreme Court in Commissioner of Income-tax, U.P. v. Kanpur Coal Syndicate [1964] 53 I.T.R. 225 (S.C.), was relied on, wherein it had been observed that the Appellate Assistant Commissioner's power is conterminous with that of the Income-tax Officer and that he can do what the Income-tax Officer can do and also direct him to do what he has failed to do. The provisions of Section 34(3) of the Kerala General Sales Tax Act being similar in terms to Section 31(3) of the Indian Income-tax Act, 1922, the above principle was held to apply. Further, this court held that as there were sufficient reasons for the non-production of the C forms before the assessing authority, the appellate authority can accept the C forms itself and dispose of it. The accident of an assessment order intervening before the production of the C forms cannot, according to that decision, limit the jurisdiction of the appellate authority or that of the Tribunal to determine the question whether the later production of the C forms was justified or not on the facts of a given case.

6. No doubt, an appeal should be decided on the record as it stands unless the appellate authority finds the record not sufficient to decide the appeal or there be fresh evidence to justify the review by the ordinary tribunal. If there is a procedural error which taints the assessment that may be a reason for receiving fresh evidence in deciding the appeal. In other cases, if the appellate authority finds that the record is incomplete or finds that the assessee in spite of due diligence could not produce the evidence before the assessing authority and thus explains the delay for the non-production of the C forms before the assessing authority then also it is open to the appellate authority or the Tribunal to receive the C forms or direct the assessing authority to receive the C forms and proceed to fresh assessment. The two powers are distinct. In the former case, the appellate authority or the Tribunal finds there is a procedural error in the assessment by the assessing authority and then rectifies it by receiving the C forms or directing the C forms to be received by the assessing authority. In the latter case, even if there is no procedural error in the assessment by the assessing authority, the appellate authority or the Tribunal is convinced that the assessee's failure to produce the C forms was beyond his control and without negligence and then proceed to exercise the power to receive the C forms or direct the C forms to be received by the assessing authority. A reference to regulation 48(1) of the Kerala Sales Tax Appellate Tribunal Regulations, 1966, is relevant in this connection. Clause (1) of that regulation is in the following terms :

48. Fresh evidence in appeal. -- (1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Tribunal, but if,

(a) the authority, from whose order the appeal is preferred, had refused to admit evidence which ought to have been admitted ;

(b) the party seeking to adduce additional evidence satisfies the Tribunal that such evidence, notwithstanding the exercise of due diligence, was not within his knowledge or could not be produced by him at or before the time the order under appeal was passed; or

(c) the Tribunal requires any document to be produced or any witness to be examined to enable it to decide the case or for any other substantial cause, the Tribunal may allow such evidence or document to be produced or witness to be examined.

The three grounds which warrant receipt of fresh evidence in appeal are similar to the three grounds specified in Rule 27 of Order 41, Civil Procedure Code. If any other ground is stated to receive additional evidence that may not be accepted in view of the prohibition contained in the first part of the regulation, which says that the parties to an appeal shall not be entitled to adduce any evidence, whether oral or documentary.

7. In this case, the Tribunal has found that there is no procedural error in the assessment made by the assessing authority. The Tribunal was not of the view that it requires any further evidence to enable it to decide the case. That means the assessee must satisfy the Tribunal that notwithstanding the exercise of due diligence the C forms could not be produced before the assessment by the assessing authority. It appears that the Tribunal has not kept this aspect in view and/or applied its mind to the question whether the assessee was diligent enough to obtain the C forms and whether there was any negligence on his part in not obtaining them in time. In other words, unless he satisfies the Tribunal that the delay in producing the C forms was caused by reasons beyond his control, he is not entitled to produce them before the appellate authority or Tribunal and request that authority to receive them and modify or set aside the assessment. Then only there will be justification and jurisdiction to receive the C forms or direct the assessing authority to receive the C forms.

8. Sub-rules (4) to (9) were added to Rule 12 of the Central Sales Tax (Registration and Turnover) Rules only in 1973. Hence Sub-rule (7) has no application to the facts of this case and its scope is not considered here.

9. Therefore, we consider that the case must be sent back to the Tribunal for reconsideration of the appeal in the light of the observations made above. The assessee will be given a full opportunity before any decision is taken to explain the circumstances under which the C forms could not be produced before the assessing authority.

10. This revision case is ordered on the above terms. There will be no order as to costs.


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