Skip to content


Chandmal Gangabishan Vs. Assistant Commercial Taxes Officer - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case NumberD.B. Sales Tax Cases Nos. 34 and 35 of 1980 and D.B. Sales Tax References Nos. 13 and 14 of 1980
Judge
Reported in[1987]66STC360(Raj)
AppellantChandmal Gangabishan
RespondentAssistant Commercial Taxes Officer
Appellant Advocate Rajendra Mehta, Adv.
Respondent Advocate K.C. Bhandari, Standing Counsel for the Sales Tax Department
Cases ReferredAlcobex Metals (P.) Ltd. v. Additional Commissioner
Excerpt:
.....october 25, 1973. the applications under section 15(2) as well as references made by the board under section 15(1) were pending in this court, when the rajasthan sales tax (amendment) act, 1984 (no. rajendra mehta, learned counsel for the dealer-assessee has placed strong reliance on notification no. 3(a)(28) tax/cct/67/130 dated october 23, 1967 and on its basis, contended that the best judgment assessment, passed by the a. (anti-evasion), bikaner was absolutely without jurisdiction and therefore, the best judgment assessment is void. (anti-evasion), bikaner had jurisdiction to pass the best judgment assessment against the dealer-assessee. in this view of the matter, the best judgment assessment made by the a. the best judgment assessment being without jurisdiction, deserves to be set..........have led to d.b. sales tax reference no. 13 of 1980.3. the assistant commercial taxes officer (anti-evasion) ('a.c.t.o.'), bikaner seized books of accounts of the dealer-assessee, m/s. chandmal ganga-bishan, which carries on the business of 'bhujiya' and 'papad'. he found the books of accounts incomplete in respect of the purchase of raw materials and quantities of finished products manufactured. it was also detected that certain entries in the books maintained by shri hari ram chakkiwala with regard to the business of the dealer-assessee did not find place in his (dealer-assessee's) books of accounts. the a.c.t.o. (anti-evasion), thus, proceeded to make his best judgment assessment on the basis of the available material, namely, the books of accounts maintained by the.....
Judgment:

S.K. Mal Lodha, J.

1. This order will dispose of D.B. Sales Tax Case No. 35 of 1980 and Sales Tax Reference No. 13 of 1980 which relate to the period: October 19, 1971 to November 4, 1972 and D.B. Sales Tax Case No. 34 of 1980 and D.B. Sales Tax Reference No. 14 of 1980, relating to the period: November 5, 1972 to October 25, 1973.

2. We may briefly notice the facts, which have led to D.B. Sales Tax Reference No. 13 of 1980.

3. The Assistant Commercial Taxes Officer (Anti-Evasion) ('A.C.T.O.'), Bikaner seized books of accounts of the dealer-assessee, M/s. Chandmal Ganga-bishan, which carries on the business of 'bhujiya' and 'papad'. He found the books of accounts incomplete in respect of the purchase of raw materials and quantities of finished products manufactured. It was also detected that certain entries in the books maintained by Shri Hari Ram Chakkiwala with regard to the business of the dealer-assessee did not find place in his (dealer-assessee's) books of accounts. The A.C.T.O. (Anti-Evasion), thus, proceeded to make his best judgment assessment on the basis of the available material, namely, the books of accounts maintained by the dealer-assessee and Shri Hari Ram Chakkiwala and the facts regarding which the admission was made by the dealer-assessee. The periods involved, as stated above are October 19, 1971 to November 4, 1972; and November 6, 1972 to October 26, 1973. The best judgment assessment made by the A.C.T.O. on February 6, 1972 was upheld by the Deputy Commissioner (Appeals), Commercial Taxes, Bikaner, by his order dated June 12, 1974. Two separate revisions were filed before the Board of Revenue, Rajasthan, Ajmer ('the Board' herein) regarding the aforesaid two periods. On behalf of the dealer-assessee, the following three contentions were raised before the Board:

(1) that the A.C.T.O. (Anti-Evasion), Bikaner had no jurisdiction over the dealer-assessee, which fell within the jurisdiction of the Commercial Taxes Officer, Special Circle, Jodhpur.

(2) that no sufficient opportunity was afforded to the dealer-assessee to present its case and rebut the basis on which the A.C.T.O. had made his best judgment assessment; and

(3) that the best judgment assessment made by the A.C.T.O. was wrong and baseless.

4. After dismissal of the revision petitions, two reference applications under Section 15(1) of the Rajasthan Sales Tax Act, 1954 (Act No. 29 of 1954) (for short 'the Act') were filed stating that the questions of law arising out of the Board's order dated February 27, 1978 may be referred to this Court for its opinion. The dealer-assessee suggested the following questions for being referred to this Court:

(i) Whether, on the admitted facts and circumstances when the Commercial Taxes Officer, Special Circle, Jodhpur exercised his jurisdiction as an assessing authority and received the returns for the period under dispute, can the Assistant Commercial Taxes Officer (Anti-Evasion) assume the jurisdiction as an assessing authority without any order under Rule 52 of the Rajasthan Sales Tax Rules ?

(ii) Whether, the Assistant Commercial Taxes Officer has any jurisdiction to act as an assessing authority when he himself alleged to seize the books of accounts and acted as a prosecutor ?

(iii) Whether, the Assistant Commercial Taxes Officer (Anti-Evasion) has any reason to believe to seize the books of accounts to assume the jurisdiction as an assessing authority ?

(iv) Whether, the Assistant Commercial Taxes Officer (Anti-Evasion) has any jurisdiction to make the assessment on a basis which was not disclosed in the notice issued or confronted at any stage in assessment proceedings ?

(v) Whether, the proceedings initiated are in consonance of law and the Assistant Commercial Taxes Officer has any jurisdiction to assess under sectidh 10(4) without disclosing his mind on the basis of various alleged facts ?

(vi) Whether, in the facts and circumstances of the case, the best judgment assessment was justified or the same has been made capriciously or arbitrarily ?

(vii) Whether, there was any evidence on record for the alleged suppression of the sales so as to justify the enhancement ?

(viii) Whether, the Assistant Commercial Taxes Officer was justified in presuming the market practice and facts without any evidence on record or without calling for the expert evidence on the subject and ignoring material evidence on record ?

(ix) Whether, the assessment order is against the principles of natural justice ?

(x) Whether, the Board has jurisdiction to go on facts under Section 14(2) or its jurisdiction is restricted to legal questions only ?

(xi) Whether, the Board of Revenue was justified in hearing the revision for both the years so as to deprive the right of special appeal of the petitioner ?

(xii) Whether, there was any material on record to justify the penalty or to prove the offence of the assessment ?

(xiii) Whether, the estimation of turnover is inconsistent and contrary to the evidence on record and not supported by any legal evidence or material or is unreasonable or perverse ?

5. The Board, by its order dated October 27, 1978, referred questions Nos. (i) and (ii) for the opinion of this Court. It declined to refer questions Nos. (iii) to (xiii). The reference applications under Section 15(2) of the Act, which have been registered as Sales Tax Cases Nos. 35 of 1980 and 34 of 1980, have been filed in respect of the periods: October 19,1971 to November 4,1972 and November 5,1972 to October 25,1973, respectively by the dealer-assessee. It was prayed that the Board may be directed to state the case and refer questions Nos. (iii) to (xiii), which also arise out of its order dated February 27,1978. The Board has referred the above-mentioned questions Nos. (i) and (ii). The references are D.B. Sales Tax Reference Applications Nos. 14 and 13 of 1980 in respect of the periods : October 19, 1971 to November 4, 1972 and November 5, 1972 to October 25, 1973. The applications under Section 15(2) as well as references made by the Board under Section 15(1) were pending in this Court, when the Rajasthan Sales Tax (Amendment) Act, 1984 (No. 20 of 1984) (for short 'the Amendment Act') came into force from May 1, 1985. As provided in Sections 13(10) and 13(11) of the Act, the references under Section 16(1) and the reference applications under Section 15(2) respectively have been treated and heard as revisions under Section 16 of the Act, as substituted by the Amendment Act.

6. We have heard Mr. Rajendra Mehta, learned counsel for the assessee and Mr. K.C. Bhandari, Standing Counsel for the Sales Tax Department for the non-petitioner.

7. It will be convenient to take up question No. (i) first, which has been referred by the Board for our opinion.

8. Before we proceed to examine this question, which relates to the jurisdiction of the A.C.T.O. (Anti-Evasion), Bikaner over the dealer-assessee, it may be stated that the Board in its order dated February 27, 1978, has held that in view of Notification No. F. 3(a)(28)Tax/CCT/69/66 dated June 13, 1970, nothing more is required to be said in regard to question of jurisdiction. The Board has observed :

The departmental representative has countered with Notification No. F. 3(a)(28)Tax/CCT/69/66 dated June 13, 1970, wherein the jurisdiction of all Assistant Commercial Taxes Officers working in the Anti-Evasion wing has been fixed. This notification assigns to the Assistant Commercial Taxes Officer (Anti-Evasion), Bikaner the jurisdiction of the districts of Bikaner and Churu. This notification has not been withdrawn and in view of this, nothing further need to be said in regard to the question of jurisdiction except that the applicants have never specifically questioned the jurisdiction of the assessing authority as provided for under Section 12B of the Act.

9. Thus, the question which arises for our determination in these revisions is that as the C.T.O., Special Circle, Jodhpur exercised jurisdiction as an assessing authority over the dealer-assessee and received the returns for the periods in dispute, whether the A.C.T.O. (Anti-Evasion) could assume jurisdiction to assess the dealer-assessee without any order under Rule 52 of the Rajasthan Sales Tax Rules, 1955 (for short 'the,Rules'). It is not in dispute before us that at the relevant time, i.e., for the aforesaid two periods, the C.T.O., Special Circle, Jodhpur was the assessing authority of the dealer-assessee. He received the returns of the dealer-assessee in respect of the aforesaid periods.

10. Mr. Rajendra Mehta, learned counsel for the dealer-assessee has placed strong reliance on Notification No. F. 3(a)(28) Tax/CCT/67/130 dated October 23, 1967 and on its basis, contended that the best judgment assessment, passed by the A.C.T.O. (Anti-Evasion), Bikaner was absolutely without jurisdiction and therefore, the best judgment assessment is void. On the other hand, Mr. K.C. Bhandari, Standing Counsel for the Sales Tax Department, argued that in view of Notification No. F. 2(a)(29)Tax/CCT/67/131 dated October 23, 1967, the A.C.T.O. (Anti-Evasion), Bikaner had jurisdiction to pass the best judgment assessment against the dealer-assessee. In support of this, he placed reliance on Alcobex Metals (P.) Ltd. v. Additional Commissioner 1978 RRD 169.

11. We have bestowed our most anxious and thoughtful consideration to the rival contentions of the parties.

12. Section 2(b) of the Act defines 'assessing authority' in relation to a dealer to mean the Commercial Taxes Officer or the Assistant Commercial Taxes Officer having jurisdiction.

13. Rule 2(d) of the Rules defines 'Commercial Taxes Officer', as under :

(d) 'Commercial Taxes Officer' means a Commercial Taxes Officer appointed by the Government and includes an Assistant Commercial Taxes Officer.

14. Section 2 (cccc) of the Act defines 'Commercial Taxes Officer', 'Assistant Commercial Taxes Officer', or 'Inspector, Commercial Taxes Department' to mean, the person holding office with that designation under the State Government. We may read Rules 3 and 4 of the Rules, which are as under:

3. Assessing authorities and their jurisdiction.-(1) The Commercial Taxes Officer for the area within his jurisdiction as fixed by the Commissioner, shall be the assessing authority for that area and such area shall be called his 'circle'.

(2) The jurisdiction of an assessing authority shall be determined with reference to the place of business of the dealer. If a dealer carries on business within the limits of the jurisdiction of more than one assessing authority, the assessing authority within whose jurisdiction the principal place of business is situated, shall be the assessing authority in respect of such dealer.

Explanation.-Where the dealer has declared a place to be his principal place of business in writing, that place shall ordinarily be. regarded as his principal place of business.

(3) If the principal place of business of a dealer is situated outside Rajasthan, the assessing authority having jurisdiction over the place in Rajasthan declared by the dealer in this behalf, in the return of turnover, shall have jurisdiction in respect of such dealer.

(4) Whenever there is doubt, the Commissioner shall determine which assessing authority shall have jurisdiction over the dealer and his decision shall be final.

4. Distribution of business amongst various Commercial Taxes Officers in a circle.-Where there are more than one Commercial Taxes Officers in a circle, their respective jurisdiction and the distribution of business amongst them shall be such as may be fixed by the Commissioner.

15. The relevant part of Notification No. F. 3(a)(28)Tax/CCT/67/130 dated October 23,1967, as it stood then, is as under :

In pursuance of Rule 4 of the said Rules it is also hereby directed that the Commercial Taxes Officers, Special Circles, shall have jurisdiction over the following category of dealers, namely :

All manufacturers and importers whose turnover in the previous year relevant to the assessment year 1970-71 was not less than 5 lacs and 25 lacs respectively :

Provided that the Commercial Taxes Officers, Special Circles shall exercise jurisdiction subject to the provisions of Clause (ii) below :

(ii) The C.T.Os., Anti-Evasion Circle, Ganganagar, Jaipur and Kota shall have jurisdiction over dealers in whose case any evasion of tax or concealment of liability to tax has been detected by him or by any officer not below the rank of Commercial Taxes Inspector of his Circle, in respect of the dealer's year of account to which such evasion or concealment relates...

16. It is clear from the aforesaid notification that the C.T.O., Special Circle, Jodhpur had jurisdiction over the manufacturers whose turnover in the previous year relating to the assessment year 1970-71 was not less than five lacs. This is not disputed by Mr. K.C. Bhandari, learned counsel for the Sales Tax Department. It may be stated that the dealer-assessee's place of business is at Bikaner and as the turnover in the previous year 1970-71 was more than five lacs, the jurisdiction over it was of the C.T.O., Special Circle, Jodhpur. An exception has been provided to Clause (i) that the C.T.O., Special Circle shall only exercise jurisdiction, if the case of the dealer-assessee does not fall 'within the four corners of Clause (ii). Clause (ii) provides an exception to the exercise of jurisdiction by the C.T.O., Special Circle. The C.T.O. (Anti-Evasion), Ganganagar had jurisdiction over the dealers whose place of business was in Bikaner. In case there was an evasion of tax or concealment of liability to tax, which has been detected by him [C.T. 0. (Anti-Evasion), Ganganagar], his jurisdiction extended to the dealers whose place was Bikaner. It may be recalled that the argument raised by the learned counsel for the dealer-assessee is that as the evasion of tax or concealment of liability to tax was not detected by the C.T.O., (Anti-Evasion) Circle, Ganganagar, the C.T.O., Special Circle, Jodhpur could only exercise jurisdiction over it and as this was not done, the Assistant Commercial Taxes Officer (Anti-Evasion), Bikaner could not acquire jurisdiction even if there was evasion of tax or concealment of liability to tax so far as the dealer-assessee was concerned, having been detected by him.

17. Mr. K.C. Bhandari, submits that on the same date, i.e., October 23, 1967, under the same rule, i.e., Rule 4, the very same Commissioner issued another Notification No. F. 2(a)(29)Tax/CCT/67/131, dated October 23,1967 and fixed the jurisdictions of the A.C.T.Os. in respect of the circles of the Commercial Taxes Officers, as mentioned in the Schedule appended thereto. This was, however, made subject to the condition that the A.C.T.Os. shall exercise jurisdiction subject to pecuniary limits fixed by him regarding individual A.C.T.O, by name from time to time. Clause (a) of this notification is a sort of exception. According to it the A.C.T.Os. of the various wards could not exercise their jurisdiction over the dealers over whom the C.T.O. (Anti-Evasion) or A.C.T.O. (Anti-Evasion) has acquired jurisdiction. According to Mr. K.C. Bhandari, the A.C.T.O. (Anti-Evasion) having detected the evasion of tax or concealment of liability to tax by the dealer-assessee, he was competent to exercise jurisdiction over the dealer-assessee as the conditions laid down in Clause (ii) of the first notification are fulfilled. The C.T.O. or the A.C.T.O. qua the dealer is the officer who has jurisdiction over such dealer. The Commissioner has been empowered under Rules 3 and 4 of the Rules to fix the jurisdiction of the various officers of the department and to distribute business amongst them. By virtue of the powers given to him under Rules 3 and 4 of the Rules, the Commissioner issued the notification regarding jurisdiction and distribution of business amongst various officers. It is in exercise of that power that the C.T.O. (Anti-Evasion) and A.C.T.O. (Anti-Evasion) for various circles in the State were appointed and overriding jurisdiction is permissible so far as the C.T.Os. and A.C.T.Os. (Special Circle) andC.T.O. (Anti-Evasion) are concerned. So far as the first notification is concerned, under Clause (i) thereof, in respect of a particular category of dealer, the C.T.Os., Special Circle, have been conferred jurisdiction, but that jurisdiction has not been made exercisable by them if the C.T.O. (Anti-Evasion) detects evasion of tax or concealment of liability of tax of the dealers over whom the C.T.O., Special Circle exercised jurisdiction. To our mind, it is clear that special jurisdiction in case of evasion of tax or concealment of liability of tax has been conferred on the C.T.O. (Anti-Evasion) over the manufacturers whose turnover in the previous year relating to the assessment year 1970-71 is five lacs or more, if their place of business fell within their circle over which they exercised their jurisdiction.

18. So far as second notification is concerned, that relates to the exercise of jurisdiction and distribution of business in respect of the circle or circles, over which, the Commercial Taxes Officer, exercised jurisdiction. Learned counsel for the parties are in agreement that the circle consists of ward/wards and so, according to the second notification in respect of the circle over which the C.T.O. exercised jurisdiction, the Commissioner has conferred jurisdiction on the A.C.T.O. over the dealers of ward/wards forming part of circle subject to the pecuniary jurisdiction which the Commissioner may confer by name on A.C.T.O. Bearing in mind, the purport of this notification, we have to examine the argument of the learned counsel for the Sales Tax Department. Clause (a) of the second notification merely lays down that the A.C.T.O. who has been conferred jurisdiction over the dealers of a particular ward/wards, which was or is exercisable by the C.T.O. over the circle, will not exercise jurisdiction in respect of those dealers regarding whom the C.T.O. (Anti-Evasion) or A.C.T.O. (Anti-Evasion) has acquired jurisdiction. The C.T.O. (Anti-Evasion) or the A.C.T.O. (Anti-Evasion) acquires jurisdiction over a dealer of a circle or ward, as the case may be, in case he detects evasion of tax or concealment of liability to tax of such dealer. This is further subject to condition that the C.T.O. (Anti-Evasion) and A.C.T.O. (Anti-Evasion) should have been conferred the pecuniary limits by the Commissioner. In the cases before us, the A.C.T.O. (Anti-Evasion), Bikaner did not have the pecuniary jurisdiction over the manufacturer whose turnover in the previous year regarding the assessment year 1970-71 was five lacs or more than five lacs. It was only the C.T.O., (Anti-Evasion) Circle, Ganganagar, at the relevant time, who could exercise jurisdiction over the dealers over whom the C.T.O., Special Circle, Jodhpur exercised jurisdiction. It follows from what has been stated that no benefit or advantage can be derived by the learned counsel for the Sales Tax Department on the basis of Clause (a) of the second notification, for, by means of that jurisdiction over the wards forming part of circle, over the dealers on whom the C.T.O. had exercised jurisdiction, the A.C.T.Os. (Anti-Evasion), were conferred jurisdiction in respect of the dealers of ward/wards forming part of the circle against whom a case of evasion of tax or concealment of tax has been detected by them and so, the question of exercise of jurisdiction by the A.C.T.O. (Anti-Evasion), Bikaner, in pursuance of the second notification over the dealer-assessee, does not arise.

19. In Alcobex Metals (P.) Ltd.'s case 1978 RRD 169 in a revision under Section 14(2) of the Act, in connection with an order passed under Section 12B of the Act by the Additional Commissioner, Commercial Taxes, Jaipur, one of the contentions raised on behalf of the dealer-assessee was that as there was no evasion of tax by the dealer, the A.C.T.O. (Anti-Evasion) did not acquire jurisdiction over the dealer and the case should have been transferred to the assessing authority of the regular circle. While examining this contention, the first and second notifications were taken note of by the Board. While rejecting the said argument, the Board observed as under :

In pursuance of Rules 3 and 4 the Commissioner, Commercial Taxes had issued several notifications defining the jurisdictions of what are called the Commercial Taxes Officers and Assistant Commercial Taxes Officers of regular and special circles and those of anti-evasion circles. One such Notification No. F. 3(a)(28)Tax/CCI/67/130 dated October 23, 1967 was issued regarding the jurisdiction of C.T.Os. This was amended from time to time. Another Notification No. F. 2(a)(29)Tax/CCT/67/131 dated October 23, 1967 was issued fixing the jurisdiction of various A.C.T.Os. According to these notifications, the C. T.Os. and the A.C.T.Os. of anti-evasion circles shall have jurisdiction over dealers in whose case any evasion of tax or concealment of liability to tax has been detected by him or by any officer not below the rank of a Commercial Taxes Inspector of the circle in respect of dealer's year of accounts to which such evasion or concealment relates. The jurisdiction of C.T.Os. and A.C.T.Os. of regular special circles in their respective areas is made subject to the above provisions regarding acquisition of jurisdiction by officers of anti-evasion circle in respect of specific dealers and specific years in which the evasion or concealment of tax liability is detected. In the present case, according to officers of the anti-evasion wing, the dealer had concealed tax liability under Central sales tax by showing certain transactions which were sales in the course of inter-State trade or commerce, as sales outside the State. It cannot, therefore, be said that there was no detection on the part of the officers of the anti-evasion wing of evasion of tax or concealment of liability to tax by the dealer for the purpose of acquisition of jurisdiction by these officers. The contention of the learned counsel for the applicant is, therefore, rejected.

20. The Board seems to have taken the view that an A.C.T.O. (Anti-Evasion), with pecuniary powers equivalent to aC.T.O., acquires jurisdiction over a dealer who is an assessee of the special circle, if evasion of tax or concealment of liability to tax by the dealer is detected by the A.C.T.O. or a Commercial Taxes Inspector, Anti-Evasion. In our considered opinion, the view taken by the Board is not correct, for, it did not consider the effect of para 2(ii) of the first notification by which the C.T.O, (Anti-Evasion) alone could acquire jurisdiction over the dealers of special circle in case of evasion of tax or concealment of liability of tax is detected by such officer.

21. We are disposed to think that in view of para 2(ii) of the first notification (the relevant part has already been reproduced), the A.C.T.O. (Anti-Evasion), Bikaner could not exercise jurisdiction over the dealer-assessee, as an assessing authority, as the C.T.O., Special Circle, Jodhpur exercised jurisdiction over him, as its turnover in respect of the relevant accounting years was more than five lacs. It was not canvassed by the learned counsel, appearing for the sales tax department, that any specific order under Rule 52 of the Rules in favour of the A.C.T.O. (Anti-Evasion), Bikaner was passed by the Commissioner. In this view of the matter, the best judgment assessment made by the A.C.T.O. (Anti-Evasion), Bikaner is by an assessing authority, who had no jurisdiction to do so. The best judgment assessment being without jurisdiction, deserves to be set aside. At this point of time, Mr. Rajendra Mehta submitted that he does not press the two reference applications under Section 15(2) of the Act, which have been treated as revision petitions.

22. Sales Tax References Nos. 13 and 14 of 1980, which have been treated and heard as revisions under Section 16 of the Act, as substituted by the Amendment Act, are allowed and the best judgment assessment made by the A.C.T.O. (Anti-Evasion), Bikaner, are set aside. It follows therefore, that the orders of the Deputy Commissioner (Appeals) dated June 12, 1974 and the order of the Board, dated February 27, 1978 cannot be sustained and they are also set aside. The reference applications registered as D.B. Sales Tax Cases Nos. 34 and 35 of 1980 are dismissed as not pressed.

23. In the circumstances of the case, we leave the parties to bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //