Commissioner of Sales Tax vs Aaditya Agencies Bilaspur

Satish K. Agnihotri, J.—This is a reference u/s 44(i) of the Madhya Pradesh General Sales Tax Act, 1958 (for short `the Act, 1958)''. The reference was admitted for hearing on 29.072011.

The facts, in brief, as projected by the applicant are that the non-applicant is a dealer of medicines and surgical equipments. For the period from 01.01.1988 to 31.12.1988, the non-applicant submitted its return and the said firm was assessed by the Assistant Sales Tax Officer (for short `ASTO''), Bilaspur. In the order dated 30.04.1992, passed by the ASTO, a tax of Rs. 6610/- was assessed and after imposing penalties under various heads and after deducting the amount already paid, a demand notice to the tune of Rs. 1982/- was directed to be issued. Against the said order, the non-applicant preferred an appeal before the Deputy Commissioner (Appeals) Sales Tax, Bilaspur. Therein, the contention of the non-applicant was that the first notice of tax assessment was issued by ASTO, Ward C, whereas the assessment has been done by the ASTO, Ward-B. There are no orders from competent authority to transfer the case from Ward-C to ward -B and therefore, the entire proceedings are without jurisdiction. The Deputy Commissioner (Appeals) held that the transfer of the case from Ward C to B was without jurisdiction. He mentioned that both the wards were in the same circle, therefore, assessment by any competent officer posted in the circle is within the rules but the cases should be transferred by the competent authority u/s 31 of the Act. Resultantly, the case was remanded to the competent tax assessment officer as per law.

Thereagainst, the Revenue filed an appeal before the Board of Revenue (Tribunal) on the ground that the order of remand is unjustified in view of the provisions of law and the findings recorded in the appellate order. It was argued that the illegal action of the competent authority cannot be legalized by remanding the case in appeal. It was submitted that as the prescribed time limit was over, no assessment can now be done. It was argued on behalf of the Department that there was no illegality in remanding the case for fresh assessment. The Tribunal held that u/s 31(1) of the Act, 1958, the Commissioner can transfer a case from one officer to another officer appointed u/s 2(1) for assisting him. It has also been laid down that apart from the Commissioner and the Additional Commissioner, who have state-wise jurisdiction, the other officers will exercise their powers within the area specified by the appointing authority. In Rule 2(d) of the Madhya Pradesh General Sales Tax Rules, 1959, circle has been defined as an area which comes within the local limit of the Sales Tax Officer. The Rules do not mention ward. The ward is a smaller unit within a circle. Thus, it has been correctly held that the assessment order dated 30.04.1992 was without jurisdiction. It further held that the case should have been remanded only if the assessment has been completed within the time period laid down u/s 1(8). As the two calendar year''s limit specified in the Act has expired, therefore, the remand was not in order.

The President, Board of Revenue, Madhya Pradesh has referred this matter for considering the following question:

Whether in the facts and circumstances of the case, the Tribunal was justified in holding that the orders of remand were not justified.

Shri Bhatia, learned Deputy Government Advocate appearing for the State/applicant submits that the assessment order was passed on 30.04.1992 which related to the period of assessment from 01.01.1988 to 31.12.1988 as per law the assessment order has to be passed within two calendar year meaning thereby the last date to pass the assessment order in normal circumstances was 31.12.1990. In this regard, it is submitted that the applicant extended the period of passing assessment order fro 31.12.1990 to 31.12.1991 vide notification dated 16.10.1990 (Annexure A/5). The time limit was further extended from 31.12.1991 to 30.061992 vide notification dated 24.10.1991 (Annexure A/6). Again, vide notification dated 30.06.1992 (Annexure A/4) the time limit was extended from 30.06.1992 to 31.07.1992.

On the other hand, Shri Dubey, learned counsel appearing for the non-applicant submits that the question of law, referred to this Court in the instant reference case, has already been answered by the High court of Madhya Pradesh, Indore Bench, in Auto Sales (Bombay) v. Commissioner of Sales Tax, M.P. 1.

Heard learned counsel appearing for the parties, perused the pleadings and documents appended thereto.

Section 31 of the Act, 1958 which was relevant at that point of time, reads as under:

Transfer of proceedings - (1). The Commissioner may transfer any proceeding or class of proceeding under any provision of this Act from himself to any person appointed u/s 3 to assist him, and he may likewise transfer any such proceeding (including the proceeding already transferred under this sub section) from one such person appointed u/s 3 to assist him to another such person or to himself.

Where any proceeding or class of proceedings is transferred, the person to whom such proceeding or class of proceeding is transferred, shall proceed to dispose it of as if it has been initiated by the said person, irrespective of the local limits of his jurisdiction; such transfer shall not render necessary the re-issue of any notice already issued before the transfer and the person to whom the proceeding or class of proceeding is transferred, in his discretion, continue it from the stage at which it was left by the person from whom it was transferred.

On bare perusal of the aforestated provision, it is crystal clear that the Commissioner alone may transfer any proceeding or any class of proceeding from himself to any person or from one such person to other person as provided u/s 3 of the Act, 1958.

Section 3 of the Act, 1958 deals with such officers who can be appointed by the Commissioner of Sales Tax to assist him. Sub section (3) of Section 3 of the Act, 1958 provides that the Commissioner and the Additional Commissioner, Sales Tax shall exercise all the powers and perform all the duties conferred or imposed on the Commissioner by or under this Act throughout the State and for this purpose, any reference to the Commissioner in this Act shall be deemed to include a reference to the Additional Commissioner of Sales Tax. Thus, for the purpose of transferring a proceeding, the Commissioner or the Additional Commissioner are the only competent officer.

The contention of learned counsel for the State is not relevant as the issue referred in this Court is asto whether in the facts and circumstances of the case, the Tribunal was justified in holding that the orders of remand were not justified?

We have perused the statement of the case, and the order passed by the authorities below and documents available before them. There is no infirmity in coming to the conclusion by the Tribunal that the order dated 14.08.1992, passed by the Deputy Commissioner (Appeals) in Appeal Case No. 58/BPR/92(Regional) was not in accordance with law. The Deputy Commissioner, after holding that the imposition of tax was not in accordance with law and the same was improper and the assessment was accordingly quashed. Thereafter, the Deputy Commissioner directed the Sales Tax Officer to initiate proceedings for re-assessment u/s 17(3) of the Act, 1958.

Section 17(3) of the Act, 1958 reads as under:

Returns. - (1). Every such dealer as may be required so to do by the Commissioner by notice served in the prescribed manner and every registered dealer shall furnish returns in such form in such manner for such period by such dates and to such authority as may be prescribed:

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(2). If -

(a). a dealer fails without sufficient cause to comply with the requirement of a notice issued under sub-section (1); or

(b). a registered dealer fails without sufficient cause to pay the amount of tax in the manner prescribed under sub-section (2) of section 22 to furnish his return under sub-section (1) or revised return under sub-section

(3). for any period in the manner and by the date prescribed thereunder or while furnishing the return fails to furnish alongwith the return, the proof of payment required by subsection (1-A); or

xxx xxx xxx

The provisions of section 17(3) of the Act, 1958 may be invoked only when the dealer fails without any reasonable cause to comply with the requirements of a notice issued under sub-section (1) or the registered dealer fails to furnish its return or fails to pay the amount of tax in the manner prescribed under sub-section (2) of section 22 or furnish his return under subsection (1) or revised return under sub-section (2) for any period. The Commissioner may, after giving proper opportunity of hearing to such dealer, direct him to pay by way of penalty. The Deputy Commissioner (Appeals) without examining the facts asto whether the above stated ingredients were available for directing him to initiate proceedings u/s 17(3) after holding that the assessment order passed, was bad. The Tribunal has rightly held that the assessment ought to have been done within a period of two years and in the case on hand, assessment proceeding was completed beyond the period of two years. Thus, directing re-assessment after quashing of the assessment done at the first instance, was bad and unjustified as the assessment was not completed within a period of two years.

The Privy Council, in Nazir Ahmed v. King Emperor 2, observed as under:

The rule which applies is a different and not less well recognized rule, namely, that where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden.

The Supreme Court, in Hukum Chand Shyam Lal v. Union of India & Others 3, observed as under:

It is well-settled that where a power is required to be exercised by a certain authority in a certain way, it should be exercised in that manner or not at all, and all other amodes of performance are necessarily forbidden. It is all the more necessary to observe this rule where power is of a drastic nature and its exercise in a mode other than the one provided will be violative of the fundamental principles of natural justice.

A Constitution Bench of the Supreme Court, in Commissioner of Income Tax, Mumbai v. Anjum M.H. Ghaswala & Others 4, held as under:

27..It is a normal rule of construction that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself..

In Captain Sube Singh & Others v. Lt. Governor of Delhi & Others 5, the Supreme Court observed as under:

In Anjum M.H. Ghaswala a Constitution Bench of this Court reaffirmed the general rule that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. (See also in this connection Dhanajaya Reddy v. State of Karnataka.) The statute in question requires the authority to act in accordance with the rules for variation of the conditions attached to the permit. In our view, it is not permissible to the State Government to purport to alter these conditions by issuing a notification u/s 67(1)(d) read with sub-clause (i) thereof.

In J & K Housing Board & Another v. Kunwar Sanjay Krishan Kaul & Others 6, the Supreme Court reiterated the settled position, as aforestated and observed as under:

It is settled law that when any statutory provision provides a particular manner for doing a particular act, the said thing or act must be done in accordance with the manner prescribed therefor in the Act. Merely because the parties concerned were aware of the acquisition proceedings or served with individual notices does not make the position alter when the statute makes it very clear that all the procedures/modes have to be strictly complied with in the manner provided therein.

A Constitution Bench of the Supreme Court, in Delhi Transport Corporation v. D.T.C. Mazdoor Congress & Others 7 laid down the principle of natural justice succinctly as under:

202..It is now well settled that the `audi alteram partem'' rule which in essence, enforces the equality clause in Article 14 of the Constitution is applicable not only to quasijudicial orders but to administrative orders affecting prejudicially the party-inquestion unless the application of the rule has been expressly excluded by the Act or Regulation or Rule which is not the case here. Rules of natural justice do not supplant but supplement the Rules and Regulations. Moreover, the Rule of Law which permeates our Constitution demands that it has to be observed both substantially and procedurally. Considering from all aspects Regulation 9(b) is illegal and void as it is arbitrary, discriminatory and without any guidelines for exercise of the power. Rule of law posits that the power is to be exercised in a manner which is just, fair and reasonable and not in an unreasonable, capricious or arbitrary manner leaving room for discrimination...

The same has been explained further by the Supreme Court in Central Inland Water Transport Corpn. v. Brojo Nath Ganguly 8, Union of India v. Tulsiram Patel 9, D.K. Yadav v. J.M.A. Industries Ltd 10., Jaswantsingh Mathurasingh v. Ahmedabad Municipal Corpn. 11, Sahara India Firm Lucknow v. Commissioner of Income Tax, Central I and another 12, Devdutt v. Union of India 13, Joint Action Committee of Airlines Pilots Association of India & Others v. Director General of Civil Aviation 14.

Applying the well settled principles of law to the facts of the case on hand, and in view of the foregoing, the reference is answered in affirmative and the reference case is dismissed accordingly.

There shall be no order asto costs.

A copy of this order shall be sent to the Tribunal under the seal of the Court and the signature of the Registrar under the provisions of section 70(5) of the Chhattisgarh Vanijyik Kar Adhiniyam, 1994.