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Muthyala Balaiah Chetty and Sons Vs. Joint Commercial Tax Officer, Sowcarpet Division I and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberWrit Petition No. 140 of 1969
Judge
Reported in[1974]33STC605(Mad)
AppellantMuthyala Balaiah Chetty and Sons
RespondentJoint Commercial Tax Officer, Sowcarpet Division I and anr.
Appellant AdvocateN. Inbarajan, Adv. for C.S. Chandrasekara Sastri, ;C. Venkataraman ;and C. Natarajan, Advs.
Respondent AdvocateK. Venkataswami, First Assistant Government Pleader
DispositionPettion dismissed
Excerpt:
- - therefore, the jurisdiction exercised by the statutory authorities under section 45 as well as under section 46 of the tamil nadu general sales tax act is a jurisdiction which is totally different from the one exercised by the assessing authorities and the authorities in the higher hierarchy for the purposes of determining the actual or probable assessable turnover of a dealer......was in the middle of the month of september, 1962. prima facie, therefore, the action taken by the assessing officer in having included the month of september, 1962, also for the purpose of demanding a compounding fee for the alleged irregularity committed by the petitioner appears to be not within the purview of law. as a matter of fact, the board of revenue, as the ultimate authority, has also expressed this view. the position, therefore, is that for non-submission of correct returns for the months commencing from april, 1962, to august, 1962, the petitioner was confronted with notice to compound the offences charged, by paying the compounding fee as indicated in the said notice. the petitioner questioned the correctness of the levy and the manner in which it was proposed to be levied,.....
Judgment:
ORDER

Ramaprasada Rao, J.

1. The petitioner is a dealer and is carrying on business at No. 120, Audiappa Naicken Street, Madras-1. On 20th September, 1962, the petitioner's business premises was inspected by the sales tax authorities and in the course of the inspection it was detected that the accounts kept by the petitioner did not correctly reflect his dealings and even the returns filed by him as a person who opted to file monthly returns in respect of his turnover, were also incorrect in that they contained inaccurate particulars. The petitioner was, therefore, confronted with a notice under Section 45(2)(a) read with Section 46 of the Tamil Nadu General Sales Tax Act, 1959, in and by which he was asked to explain why his conduct in having wilfully submitted an untrue return should not be dealt with in accordance with law. Whilst, however, giving such notice, the petitioner was given the option to compound such offences committed by him for the months in question commencing from April, 1962, to September, 1962, by paying the various compounding fees levied by the assessing authority. As I stated already, the inspection was in the middle of the month of September, 1962. Prima facie, therefore, the action taken by the assessing officer in having included the month of September, 1962, also for the purpose of demanding a compounding fee for the alleged irregularity committed by the petitioner appears to be not within the purview of law. As a matter of fact, the Board of Revenue, as the ultimate authority, has also expressed this view. The position, therefore, is that for non-submission of correct returns for the months commencing from April, 1962, to August, 1962, the petitioner was confronted with notice to compound the offences charged, by paying the compounding fee as indicated in the said notice. The petitioner questioned the correctness of the levy and the manner in which it was proposed to be levied, but ultimately, the Board of Revenue, after considering all the facts, came to the conclusion that there was an attempt to submit wilfully incorrect monthly returns as was seen from the entries in the account books kept by the petitioner and from other records and they, therefore, confirmed the conviction in the sense that they found the petitioner guilty of not having submitted the returns properly and regularly. But, the Board, after taking into account certain supervening circumstances in the regular assessment proceedings such as the actual turnover suppressed by the petitioner, reduced the compounding fee to Rs. 1,000 in respect of each of the above months. The Board was prompted to reduce the compounding fee in the above manner, because in the regular assessment proceedings which resulted in the final order of assessment by the Sales Tax Appellate Tribunal, the quantum of escapement was assessed at Rs. 9,505 as against the estimated escapement of Rs. 6,10,998 by the assessing officer who took action under Section 45 of the Act. It is as against this order of the Board of Revenue that the present writ petition has been filed.

2. It cannot be disputed that the jurisdiction which an assessing officer could exercise under Section 45(2)(a) read with Section 46 of the Tamil Nadu General Sales Tax Act is distinct and disjunct from the jurisdiction which the assessing officers and the higher hierarchy thereto could normally exercise for assessing a dealer to tax under the provisions of the Act. In the latter process, an elaborate investigation is made with reference to the account books kept by the dealer and the quantum of escapement of the turnover is thereafter discovered. In the former case, where action is taken on inchoate or incomplete information, but mostly on opinion and speculative hypothesis, the assessing officer estimates the escapement at a rather high figure. That is not unusual. After entertaining that suspicion that there would have been such an amount of escapement of turnover, the assessing officer, acting under Sections 45 and 46 of the Act, gives an option to the delinquent dealer to compound the offence. Whilst doing so, he fixes the compounding fee which is invariably based upon the hypothetical quantum of escaped assessment, fixed by the assessing officer soon after a raid or inspection. No doubt, a maximum compounding fee is also prescribed under the Act. But, as I said, the adoption of a hypothetical numeral as to turnover and the consequential call for a compounding fee on such a basis are all founded on information which cannot be said to be full and complete. Therefore, the jurisdiction exercised by the statutory authorities under Section 45 as well as under Section 46 of the Tamil Nadu General Sales Tax Act is a jurisdiction which is totally different from the one exercised by the assessing authorities and the authorities in the higher hierarchy for the purposes of determining the actual or probable assessable turnover of a dealer. This may be under Section 12 or under Section 16 of the Act. The process involved in the present case is not based on hypothetical considerations, but on known material inspected by them and weighed by them. Therefore, the ultimate orders passed by the assessing officers while determining the assessable turnover on the basis of the facts and figures noticed by them is a totally different jurisdiction under the Act. It cannot, therefore, be said that, because under the regular assessment procedure, the escapement of turnover discovered is only Rs. 9,505, the order of the assessing authority when he assumed such an escapement at the figure of Rs. 6,10,998 is without jurisdiction. As I said, it is based on the material which, though incomplete, was noticed by the assessing authority and which, in his opinion, was so grave as to warrant a legitimate inference that a sum of Rs. 6 lakhs and odd would have escaped assessment. But, ultimately, he gave an option to the petitioner to compound. The quantum of composition fee has been reduced by the Board. In these circumstances, when the statutory functionaries could act in two different channels and exercise their jurisdiction, the discovery of Rs. 9,000 and odd as the quantum of escapement of turnover by the assessing officer or the higher authority cannot, by itself, be a ground to hold that the call for a composition fee, which in the instant case, is Rs. 1,000 per month, for wrongful submission of incorrect returns is without jurisdiction or highly inequitable. There is, therefore, no error of jurisdiction or any violation of the principles of natural justice or any other error of law in the order challenged. The writ petition is dismissed with costs. Counsel's fee Rs. 100.


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