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Elector Diesel (P.) Ltd. Vs. State of Tamil Nadu - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case Number T.C. Nos. 230 to 233 of 1970 (Revisions Nos. 172, 173, 174 and 175)
Judge
Reported in[1975]36STC589(Mad)
AppellantElector Diesel (P.) Ltd.
RespondentState of Tamil Nadu
Appellant Advocate C. Venkataraman, Adv.
Respondent Advocate K. Venkataswami, Additional Government Pleader No. I
Cases ReferredPonkunnam v. Abraham
Excerpt:
.....if the condition is not satisfied, under section 8(2) the dealer will have to pay tax on the inter-state sales at the higher rate of seven per cent, during the assessment years 1961-62 and 1962-63, and at ten per cent, during 1963-64. section 13 enabled both the central government and the state government to frame rules. 481, which was relied on by the learned counsel, decided another important point, namely, that, if the declarations had been lost, and if there was delay in getting duplicate forms or counterfoils of the same, the appellate assistant commissioner might consider whether they were not filed within a reasonable time and receive the same if satisfied that the delay was not unreasonable. 10. these decisions go to show that the declaration in c form need not necessarily be..........after a transfer of stock from this state to the depot in that state. they, however, obtained c form declarations from the purchasers in kerala and enclosed them with a note that, they were producing the same without prejudice to their contention that the transactions were not inter-state sales. the joint commercial tax officer, after considering the nature of the transactions and the evidence available, came to the conclusion that they were inter-state sales, and that, since the goods had moved from this state, they were liable to be taxed under section 3(a) of the central sales tax act, 1956 (hereinafter referred to as the act). but, as regards the concessional rate claimed by the petitioners, he held that, as the c form declarations were not filed along with the original returns.....
Judgment:

V. Ramaswami, J.

1. These four revision petitions relate to the assessment years 1961-62 to 1963-64. In respect of the last assessment year, there are two assessment orders and two revision cases, because of the change in the firm of the petitioners. The petitioners are dealers in asbestos sheets, etc. They were originally assessed on a certain turnover, accepting the returns submitted by them. Later on, on the ground that certain turnover in their returns under the Central Sales Tax Act relating to inter-State sales had escaped assessment, proceedings were initiated by the Joint Commercial Tax Officer, Coimbatore-IV. The petitioner submitted their written objections to the proposed assessment and levy, and contended that the transactions which were sought to be taxed as inter-State sales were really local sales in Kerala State, as they were effected locally in that State after a transfer of stock from this State to the depot in that State. They, however, obtained C form declarations from the purchasers in Kerala and enclosed them with a note that, they were producing the same without prejudice to their contention that the transactions were not inter-State sales. The Joint Commercial Tax Officer, after considering the nature of the transactions and the evidence available, came to the conclusion that they were inter-State sales, and that, since the goods had moved from this State, they were liable to be taxed under Section 3(a) of the Central Sales Tax Act, 1956 (hereinafter referred to as the Act). But, as regards the concessional rate claimed by the petitioners, he held that, as the C form declarations were not filed along with the original returns or, at any rate, before the final assessment, they could not be accepted in the reassessment proceedings. Accordingly he held that tax was leviable at the higher rates and that the concessional rate under Section 8(1) of the Act was not applicable. This order was confirmed by the Appellate Assistant Commissioner, who also held that the C form declarations could not be accepted at the stage of reassessment. The Tribunal also, while confirming the finding that they were inter-State sales, further held that, since the C form declarations were not filed before the assessments were finalised, the refusal to accept them at the reassessment stage could not be interfered with.

2. In these revision petitions, the learned counsel for the petitioners challenges the findings of the Tribunal both on the question of the inter-State nature of the transactions, and also the rejection of the C form declarations as not being in accordance with law. So far as the nature of the transactions is concerned, we are satisfied that they were inter-State sales. The goods were despatched from this State to the buyers directly, as has been found by the Tribunal and the assessing officers. Though the orders were placed with the Kottayam office, they were transferred to this State for execution. The finding of the Appellate Assistant Commissioner and the Tribunal further was that, even at the time of the contract, it was under the contemplation of the parties that the goods should move from this State to out-of-State purchasers. On these facts, we are not able to interfere with the finding of the Tribunal that the disputed turnover related to inter-State sales.

3. Before we deal with the question whether the petitioners are not entitled to the concessional rate on the ground that they had not produced the C form declarations in the original assessment proceedings it is necessary to set out certain provisions relating to the concessional levy in respect of inter-State sales, and the conditions to be fulfilled by the assessees in order to obtain the benefit of such concessional levy. under Section 8 of the Act, every dealer, who, in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in Sub-section (3) of the section, shall be liable to pay tax under the Act only at one per cent during the assessment years 1961-62 and 1962-63, and at two per cent during 1963-64. It is not in dispute that the goods in this case were of the description referred to in Section 8(3). Sub-section (4) of Section 8 imposed a condition to be fulfilled in order to get the benefit of the concessional tax. That condition was that the dealer should furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods were sold. The form prescribed under this provision was one in form C of the Central Sales Tax (Registration and Turnover) Rules, 1957. If the condition is not satisfied, under Section 8(2) the dealer will have to pay tax on the inter-State sales at the higher rate of seven per cent, during the assessment years 1961-62 and 1962-63, and at ten per cent, during 1963-64. Section 13 enabled both the Central Government and the State Government to frame rules. In exercise of the powers under Section 13(3) and (4), the State Government framed the Central Sales Tax (Madras) Rules, 1957. Rule 5 of the said rules related to the production of C form declaration and the authority to whom it should be produced and the time at which it will have to be produced. The relevant portion of that rule was to the following effect:

Every dealer registered under Section 7 of the Act shall submit a return of his transactions in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India in form 1 together with the connected declaration form or duplicate of such form where the original has been lost, so as to reach the assessing authority on or before the 25th of each month showing the turnover for the preceding month and the amount or amounts collected by way of tax together with a chalan or a crossed cheque in favour of the assessing authority for the payment of tax due thereon under the Act.

4. The two provisos to Sub-rule (1) of Rule 5 are not relevant for the purpose of this case. It may be seen from this rule that it required the C form declarations to be, produced along with each monthly return on or before the 25th of the succeeding month. A similar provision was contained in Rule 6 of the Central Sales Tax (Kerala) Rules, 1957. In a case where the assessee had not complied with this provision, but produced the declarations at a subsequent stage of the assessment proceedings, the Supreme Court in Sales Tax Officer, Ponkunnam v. Abraham : [1967]3SCR518 , considered the validity of the time-limit prescribed in Rule 6 of the Kerala Rules, which was in part materia with Rule 5(1) of the Madras Rules, except that, instead of the 25th of each succeeding month, the monthly return and the C form declaration were to be filed on or before the 20th of each succeeding month. The Supreme Court held that Section 13(3) and (4) of the Act did not enable the State Governments to prescribe any period within which the declaration in form C would have to be produced. But, at the same time, the Supreme Court observed that, 'in the absence of any such time-limit it was the duty of the assessee to furnish the declarations in form C within a reasonable time'. In that particular case, the production of the declarations before the final order of assessment was made was considered as reasonable compliance with the requirements of Section 8(4)(a) of the Act. The ratio of this judgment was applied by this court in Tirukoilur Oil Mills Ltd. v. State of Madras [1967] 20 S.T.C. 388, with reference to the validity of the time-limit prescribed in Rule 5(1) of the Madras Rules, and it was held that that rule, in so far as it prescribed a time-limit for filing declarations in form C, was invalid as being in excess of the rule-making power of the State Government. This court also held that what would be reasonable time within which the declaration in the prescribed form should be filed in a given case would depend on the particular circumstances of the case. In that case, the assessee originally filed a single declaration in form C before the assessing authority along with the connected monthly return. But, when it was pointed out to him that Rule 10 of the Madras Rules require separate declarations in respect of each of the transactions, the assessee obtained separate declarations in form C for each of the transactions and tendered them to the assessing officer before the assessment was completed. The assessing authority considered that he had no power to condone the delay in filing the declaration and that, therefore, the assessee was not entitled to the concestional rate of tax in respect of those transactions. In respect of certain other transactions, for which the assessee had produced the declarations in form C, the assessing authority taxed him at the concessional rate. When the assessee filed an appeal questioning the rejection of the fresh declarations filed by him complying with the proviso to Rule 10(1), the Appellate Assistant Commissioner not only confirmed the view of the assessing authority, but he also stated that even some of the declarations in form C which had been accepted by the assessing authority were defective, in that the registration numbers of the purchasing dealers had either not been correctly given or not given at all. Thereafter the astessee produced rectified C form declarations which showed the correct registration numbers of the purchasers, but the Appellate Assistant Commissioner rejected them as filed out of time. After holding that the time prescribed in Rule 5(1) for the production of the declarations in C form was ultra vires the powers of the State Government, this court proceeded to consider whether the assessee could be said to have produted the declarations within a reasonable time, as held by the Supreme Court. This court held :

In our view, an appeal, after all, is, in a sense, an extension of the original jurisdiction, especially when the Appellate Assistant Commissioner reopened the order which was in favour of the assessee and when the appeal was one filed by the latter. Apart from that, even the principles of natural justice would require that, when something is discovered at the appellate stage which exposed the assessee to the higher rate of tax, the dealer should be given an opportunity to rectify the defects within a stipulated time granted for the purpose. In our view, therefore, the fresh particulars furnished before the Appellate Assistant Commissioner, which rectified the defects in the C forms filed before the assessing authority, should have been received and, if they were found to be in order, the Appellate Assistant Commissioner should have confirmed the original order applying the lower rate of tax in respect of the three items of sales covering a total turnover of Rs. 48,681.08.

5. Thus, this decision is authority for the position that even at the appellate stage the assessee could produce the declarations in form C, If he is not guilty of any laches.

6. The principle was applied in Murlimal Santharam and Company v. Government of Madras T.C. No. 72 of 1967 (Madras High Court), even to a case where the assessee did not produce any declarations at all at the assessment stage, but produced them only at the appellate stage. In State of Madras v. Areny Company of India (P.) Ltd. T.C. No. 310 of 1969 (Madras High Court) this court held that the Tribunal was bound to accept the declaration in form C produced even as late as in the appeal before It, provided that the delay in the production of the same was duly explained.

7. Shansshia Oil Mills v. State of Madras [1967] 20 S.T.C. 481, which was relied on by the learned counsel, decided another important point, namely, that, if the declarations had been lost, and if there was delay in getting duplicate forms or counterfoils of the same, the Appellate Assistant Commissioner might consider whether they were not filed within a reasonable time and receive the same if satisfied that the delay was not unreasonable.

8. In another decision, Madura Mills Company Limited v. Government of Madras [1970] 25 S.T.C. 407, this court ruled that, in considering the question of delay, the authority should act prudently and, as a reasonable man, consider the totality of the facts and circumstances of each case and come to a diligent conclusion in dealing with the reasonableness of the time within which the declarations in C form should have been produced, and the delay in the production of the same.

9. The Allahabad High Court also has taken a similar view in Commissioner of Sales Tax v. Kanpur Dal and Rice Mills [1970] 25 S.T.C. 511, where it has held that, where the assessing authority had wrongly refused to allow sufficient time to the assessee to file the declarations, the appellate authority could grant time for filing the same.

10. These decisions go to show that the declaration in C form need not necessarily be produced along with the return of the assessee, but, if he could satisfy the authorities that he was either acting bona fide or that for good and reasonable cause he was not able to produce the same at any earlier stage, the assessing officer, appellate authority and the Tribunal may receive the declarations at any stage.

11. In this case, as already stated, in the original returns filed by the assessee-petitioners they did not include the disputed turnover in their Central sales tax return, as, according to them, it related to outside sales and not inter-State sales. In fact, consistent with this stand of theirs, they included the turnover in the return submitted by them in the Kerala State and subjected it to assessment by that State. When the Joint Commercial Tax Officer issued a notice proposing to reassess the petitioners, on the ground that the disputed turnover related to inter-State sales and had escaped assessment, the petitioners, while contending that it related to outside sales, immediately procured the declarations in form C from the out-of-State purchasers and produced the same along with their objections. The assessing officer, appellate authority and the Tribunal rejected those declarations merely on the ground that they were not produced before the final assessment was made in the original assessment proceedings. There could be no doubt about the bona fides of the petitioners in this case in not producing the declarations in form C earlier. In fact, In the view that they were local sales, they had not even obtained the C form declarations, though the purchasers were registered dealers under the Act. They obtained the C form declarations only when the transactions were disputed by the Joint Commercial Tax Officer as inter-State sales. It is also pertinent to note that, though Section 8(4) requires that the declaration in form C should be produced in order to get the concessional rate of levy under Section 8(1), it does not state that the declaration should have been obtained even at the time of the transaction itself. It was therefore open to the petitioners to have obtained the declarations when the turnover was disputed by the assessing authority as inter-State sales. In such circumstances, they could not have obtained the C form declarations earlier and, therefore, they could not be held to be guilty of any laches. There is also nothing in the rules which suggest that the declaration could not be produced at the time of reassessment, if the assessee was not otherwise guilty of laches, nor is there any other prohibition against accepting the declarations at the stage of reassessment proceedings by the assessing officer. In this case, the Tribunal and the authorities below rejected the declarations on the ground that they were not produced before the 'final assessment'. Probably this view was taken in view of the observations of the Supreme Court in Sales Tax Officer, Ponkunnam v. Abraham : [1967]3SCR518 , that, in the absence of any such time-limit, it was the duty of the assessee to furnish the declaration in form C within a reasonable time before the order of assessment was made by the Sales Tax Officer. We do not think that the learned Judges, by those observations, intended to lay down that the C form declaration could not be produced at any stage after the order of assessment, even if circumstances justified such a course. In the other decisions, which we have noted above, the declarations were permitted to be filed even at the appellate stage and before the Tribunal. Further, when once reassessment notice is issued in respect of the disputed turnover, the finality attaching to that turnover by the original order of assessment is set at large and it cannot be said that the assessability of that turnover has been finally determined. Therefore, the production of the C form declaration at the reassessment stage would also come within the observations of the Supreme Court, referred to above.

12. For the foregoing reasons, we consider that the assessing officers and the Tribunal ought to have received the C form declarations filed by the petitioners and considered them on the merits. Accordingly, the order of the Tribunal, in so far as the assessment years 1961-62 to 1963-64 are concerned, is set aside and the matter is remanded to the Tribunal to determine afresh the turnover which is entitled to the concessional rate and that which is not entitled to the concessional rate, in the light of the C form declarations now produced. The petitioners will be entitled to their costs in these petitions. Counsel's fee Rs. 150 in each.


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