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Assistant Commercial Taxes Officer Vs. Anand Laxmichand and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax/VAT
CourtRajasthan High Court
Decided On
Case NumberD.B. Sales Tax Ref. No. 14 of 1979
Judge
Reported in1985(2)WLN177
AppellantAssistant Commercial Taxes Officer
RespondentAnand Laxmichand and anr.
Cases ReferredIndia Hume Pipe Co. Ltd. v. The State of Rajasthan
Excerpt:
rajasthan sales tax act, 1954 - section 12--assessment--reopening of--assessing authority can reopen assessment if it is satisfied that: (1) whole or part of business escaped assessment,' or (2) registaration fee or exemptions fee escaped levy; or (3) assessment is at low rate.;the question of re-opening the assessment under section 12 of the act arises firstly where the assessing authority has for any reason satisfied that the whole or any part of the business of a dealer had escaped assessment to the tax; secondly, where the registration fee or exemption fee had escaped a levy and, thirdly, where it has been assessed at too low a rate in any year.;(b) rajasthan sales tax act, 1954 - section 12--assessment--reopening of--powers of dy. commissioner (adm)--held, dy. commissioner can act..........revenue under section 14(4a) of the act was also dismissed by older dated 30th march, 1973.5. the assessing authority filed an application under section 18(1) of the act for making a reference to this court. but the same was not disposed of within 180 days and, as such, the acto filed a reference application before this court under section 15(3a) of the act for giving a direction to the board of revenue to refer the question of law arising out of the order of the board of revenue. in the above circumstance, this court vide dated 6th october, 1976, gave a direction to refer the question of law as mentioned above.6. mr. bapna, learned counsel for the department, submitted that the above questions is concluded by a decision of the division bench of this court in india hume pipe company.....
Judgment:

Narendra Mohan Kasliwal, J.

1. This Court by order dated 6th October, 1976, had given a direction to the Board of Revenue to state the case and refer the following question of law:

Whether Section 12 of the Rajasthan Safes Tax Act enables the assessing authority to re-assess the dealer where the turnover has been assesseed at too low a rate ?

2. The facts of the case are that ACTO (Assistant Commercial Taxes Officer) Ward-II. Circle-I, Jaipur issued notice Under Section 18 of the Rajasthan Sales Tax Act, 1954 (here in after referred to as the Act) to the assessee for the assessment year 1964-65 on the ground that the assessee's turn-over of Rs. 34,406.08 relating to the imitation pearls was taxed at a lower rate of 1% while if ought to have been taxed at rate of 6%. The ACTO levied tax of Rs. 2,061.06 on the turn-over of mitation pearls at 6% and after allowing the adjustment of tax already paid at 1%, directed the assessee to pay the balance of Rs. 1,780.30.

3. The assessee filed an appeal before the Deputy Commissioner (Appeal-1); Commercial Taxes, Jaipur, who vide his order dt. 22nd December 1960, dismissed the appeal.

4. The assessee then filed a revision before the Board of Revenue Under Section 14(2) of the Act. The learned Single Member of the Board of Revenue held vide order dated 13th September, 1971 that the words 'too low a rate in any year' in Section 12 of the Act qualify the assessment of registration fee or reservation fee, but do not qualify the words 'assessment of the Tax' used in the first sentence of Section 12(1) of the Act. The learned Single Member of the Bond, as much, accepted the revision and quashed the order of the ACTO. An appeal preferred by the ACTO before the Special Bench of the Board of Revenue Under Section 14(4A) of the Act was also dismissed by older dated 30th March, 1973.

5. The assessing authority filed an application Under Section 18(1) of the Act for making a reference to this Court. But the same was not disposed of within 180 days and, as such, the ACTO filed a reference application before this Court Under Section 15(3A) of the Act for giving a direction to the Board of Revenue to refer the question of law arising out of the order of the Board of Revenue. In the above circumstance, this Court vide dated 6th October, 1976, gave a direction to refer the question of law as mentioned above.

6. Mr. Bapna, learned counsel for the Department, submitted that the above questions is concluded by a decision of the Division Bench of this Court in India Hume Pipe Company Ltd. v. The State of Rajasthan ILR (1968) 18 Raj 189 it was sub-mitted that in the above case, the language of Section 12 of the Act had come for interpretation and after giving detailed reasons it was held as under:

In view of the considerations that we have pointed out above, we are persuaded to hold that Section 12 of the Act enables the assessing a authority to re-assess not only when the business or turn-over of a dealer has escaped assessment to tax but also when the assessment has been made at too low a rate in any year and the power to re-assess on account of too low a rate is not confined merely to the registration for or exemption fee as contended by Shri Gupta.

7. Learned counsel for the assessee, on the other hand, submitted that the question which has been decided in India Hume Pipe Company Ltd. v. The State of Rajasthan ILR (1968) 18 Raj 189 was not directly involved, nor answered and, as such, the decision given in that case is merely obiter and cannot form a precedent in the case. It was also submitted that the view taken in the above case on interpretation of Section 12 of the Act is not correct.

8. In order to appreciate the arguments of the learned counsel for the assessee it would be proper to reproduce Section 12(1) of the Act:

If for any reason the whole or any part of the business of dealer has accepted assessment to the tax, or if the registration fee or exemption fee has escaped levy or has been assessed at too low rate in any year, the assessing authority may serve on the dealer liable to pay the tax in respect of such business or such registration fee or exemption fee a notice in the prescribed form and may proceed to assess or i&> assess the amount of the tax or levy the correct amount of registration! fee or exemption fee from such dealer.

Provided that if a Dy. Commissioner (Administration) has reason to believe that the whole or any part of the business of a dealer has escaped assessment to tax or has been under assessed or has been assessed at too low a rate, he may at any time subject to the time limit specified in Sub-section (2), either direct the assessing authority so assess or re-assess the amount of tax or himself proceed to assess or re-assess the tax.

9. It was contended that a plain reading of Section 12(1) of the Act shows that the words 'or has been assessed at too low a rate in any year' have been used after the words 'registration fee or exemption fee has escaped levy' and as such the power to issue a notice Under Section 12 on account of having been assessed at too low a rate is only permissible where it is a case of registration fee or exemption fee. It was also submitted in this regard that under the proviso to Sub-section (1) Deputy Commissioner (Administration) has been fully authorised to give a direction to the assessing authority where he has reason to believe that whole or any part of the business of the dealer has escaped assessment to tax or has been under assessed or has been assessed at too low a rate. It is submitted that the proviso to Sub-section (1) of Section 12 of the Act should be considered as an independent provision and when the Deputy Commissioner (Administration) has been empowered to give a direction in case of assessment at too low a rate, it could not have been intention of the Legislature to give the the case power to the assessing authority also under the main part of Sub-section (1) of Section 12 of the Act. It was also submitted by the learned counsel for the assessee that there could have been a case of assessment at too low a rate in case of levy of exemption fee and, as such, the language of Sub-scetion (1) empowers giving of notice in case of assessment at too low a rate and it cannot be applied to the case of assessment of tax on the general turn-over.

10. It was further submitted by the learned-counsel for the assessee that even if there was an ambiguity in the language of Section 12(1) of the Act, the same will have to be interpreted in favour of the assessee and not the department. We do not agree with the contention of the learned counsel for the assessee that the observations made by the Division Bench in Indian Hume Pipe Co. Ltd. v. The State of Rajasthan ILR (1968) 18 Raj 189 are merely obiter. In the above case, the question was directly raised regarding the scope of interpretation of Section 12 of the Act. After reproducing Section 12 of the Act, the arguments of Shri D.P. Gupta, learned counsel for the applicant (as he then was) were considered, which are quoted as under:

Shri Gupta contends that the words 'has been assessed at too low a rate' following the word 'or' will go only with the words 'if the registration fee or exemption fee has escaped'. In other words, the contention of Shri Gupta is that the opening words of the Section which relates to the escapement of the business of a dealer from assessment to tax will not be embraced by the words 'assessment at too low a rate' He argued that the preceding word 'or' is disjunctive and, therefore^ their operation will not be confined to the registration fee or exemption fee only.

11. A similar view has been taken by the Board of Revenue was contended by Shri Gupta in the above case. Their Lordships then considered the above contention of Shri Gupta and held as under:

We may observe at once that the language of the Section is, by no means, happy and it has consequently created a problem of interpretation. However, there are two indications in the Section which persuade us to discard the interpretation suggested by Shri Gupta. The first is that so far as the registration fee is concerned, it is a fixed fee. Rule 16 of the Rules provides for an application for registration and Rule 17 lays down that every application for registration shall be in Form ST 3 and it shall be accompanied by a treasury receipt of the payment of a fee of Rs. 10/-. Therefore, there is no question of there being a lower rate for the registration fee which is uniform for all dealers.

XXX XXX XXX XXX XXXIn view of the considerations that we have pointed out above, we are persuaded to hold that Section 12 of the Act enables the assessing authority to re-assess only when the business or turn-over of a dealer has escaped assessment to tax but also when the assessment has been made at too low a rate in any year and the power to re-assess on account of too low a rate is not confined merely to the registration fee or exemption fee as contended by Shri Gupta.

12. The above direction clearly shows that the interpretation of Section 12 was directly in consideration before the Hon'ble Judges in the above case and after giving detailed reasons it was decided that Section 12 enables the assessing authority to re-assess not only when the business or turn-over of a dealer has escaped assessment to tax, but also when the assessment has been made at too low a rate in any year.

13. We have also given our thoughtful consideration to the scope and interpretation of Section 12 of the Act. The question of re-opening the assessment Under Section 12 of the Act arises firstly where the assessing authority has for any reason satisfied that the whole or any part of the business of dealer has escaped assessment to the tax. Secondly, where the registration fee or exemption fee had escaped a levy and, thirdly, where it has been assessed at too low a rate in any year.

14. A perusal of the language of Sub-section (1) of Section 12 of the Act leaves no room of doubt that the power to the assessing authority to issue a notice Under Section 12 has been given where whole or any part of business of any dealer escaped assessment to the tax, or has been assessed at too low a rate in any year. 'Assessed at too low a rate in any year' will apply in case of assessment of the tax as well as in case of registration fee or exemption fee. We find no reason to take the view that the intention of the legislature would have been to empower the assessing authority to issue a notice Under Section 12 only in cases of registration fee or exemption fee having been assessed at too low a rate. So far as the power given to the Deputy Commissioner (Administration) under the proviso is concerned, that is an independent power given to the Deputy Commissioner in a case where the assessing authority may not act under the main provision of Sub-section (1) of Section 12 of the Act. Both these powers are given to different authorities, namely, to the assessing authority in one case and to the Deputy Commissioner (Administration) also in other cases.

15. The third question which calls for our opinion is the question referred to us. The Board of Revenue had taken the view that from a reading of Section 12 it was apparent that when the whole or part of the business of the dealer which escaped assessment re-course to Section 12 of the Act may be taken. It was further held that if the registration fee or exemption fee which escaped levy or has been assessed at too low a rate, then the same may be revised according to the procedure envisaged Under Section 12 of the Act. According to the Board of Revenue, the words 'too low a rate in any year' qualify the assessment of registration fee or exemption fee only and do not qualify the words 'assessment to the tax' used in the first sentence of Section 12(1) before the first. In our view, the Board of Revenue in this regard wrongly interpreted the ambit and scope of the words 'has been assessed at too low a rate in any year' Under Section 12 of the Act. We are in agreement with the view taken in India Hume Pipe Co. Ltd. v. The State of Rajasthan ILR (1968) 18 Raj 189 and held that Section 12 of the Act enables the assessing authority to re-assess the dealer where the turn-over has been assessed at too low a rate.

16. Learned counsel for the assessee then submitted that the present case was not a case of turn-over having been assessed at too low a rate, but it was a case of wrongly calculating the rates of tax. It was submitted that in the present case it remained undisputed that the goods in question were imitation pearls and the tax on such goods should have been levied at rate of 6%. It was submitted that such a mistake which is merely a wrong calculation of tax should have been rectified Under Section 17 of the Act and the assessing authority should resort to the remedy Under Section 17 of the Act and not Under Section 12 of the Act. No such argument was made before the Board of Revenue nor any question has been referred in this regard for our opinion. The scope of the question which his been referred to us is a limited one and, we have restricted our judgment to answer to the question only. It would be open for the assessee to raise other contentions before the Board of Revenue as permissible according to law.

17. In the result, the question referred to us is answered in the affirmative as indicated above.


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