Commissioner of Sales Tax vs Yashvijay & Co.

M.R. Shah, J.—The present sales tax reference, at the instance of the appellant-State of Gujarat, is made by the Gujarat Sales Tax Tribunal, Ahmedabad, submitting the following questions for determination by this court under the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act 1969"):

"(a) Whether, on the facts and in the circumstances of the case, the decision of the Tribunal that the Sales Tax Officer could have passed the order for levying interest only under the provisions of section 72 of the Gujarat Sales Tax Act, 1969 is legally correct?

(b) Whether, on the facts and in the circumstances of the case, the decision of the Tribunal that the order passed by the Sales Tax Officer should be deemed to have been passed under the provisions of section 72 of the Gujarat Sales Tax Act, 1969 and that as it was passed after the prescribed period of limitation contained therein was over, it was time-barred, is legally correct?"

The facts leading to the present reference in a nutshell are as under:

"2.1. The respondent herein, M/s. Yashvijay & Co., a registered dealer under the provisions of the Act, 1969 as well as the Central Sales Tax Act, 1956 (hereinafter referred to as "the Central Act, 1956"), was carrying on the business of reselling cotton. The respondent was assessed under the Act, 1969 as well as the Central Act, 1956 for the co-operative year, which was also the assessment year 1981-82. The Sales Tax Officer passed the order of assessment on February 22, 1983. It appears that during the previous year 1980-81, the respondent was required to deposit the tax on monthly rate for the first two months of each quarter. However, no such tax was required to be deposited under the local Act and, therefore, under the Act, 1969 the respondent did not deposit any tax every month and under the Central Act, 1956 even the though the respondent was liable to deposit the tax at a monthly rate for the first two months of each quarter, he did not deposit any such tax under the belief that the provisions of the local Act concerning depositing of tax every month did not apply to the tax liability incurred under the Central Act, 1956. When the Sales Tax Officer did not levy any interest under section 47(4A) of the local Act for not depositing the Central sales tax every month as per the rule 31(A) of the Gujarat Sales Tax Rules, 1978 (hereinafter referred to as "the Rules"), the matter was examined by the audit and a view was taken by the Department that interest ought to have been charged from the respondent and, therefore, the Sales Tax Officer issued notice to the respondent dated January 30, 1985 in form No. 45 calling upon the respondent to produce the documents stated in the notice as the interest was required to be charged. The same was replied by the respondent-dealer. The Sales Tax Officer did not accept the submissions made on behalf of the respondent-dealer and passed the order dated April 30, 1985 directing the respondent to pay Rs. 19,013.06 as interest under section 47(4A) of the local Act.

2.2. Being aggrieved and dissatisfied with the order passed by the Sales Tax Officer levying the interest under section 47(4A) of the local Act, the respondent preferred appeal before the first appellate authority, which came to be dismissed on merits.

2.3. Being aggrieved and dissatisfied with the aforesaid orders, the respondent preferred second appeal before the Tribunal and the Tribunal held that the order passed by the Sales Tax Officer can be said to be an order passed under section 72 of the Act rectifying the earlier order of not charging interest under section 47(4A) of the local Act and, therefore, the Tribunal held that such exercise of powers by the Sales Tax Officer under section 72 of the Act was beyond the period of limitation, i.e., beyond the period of two years and, therefore, held that the exercise of powers by the Sales Tax Officer was without jurisdiction and the Tribunal quashed and set aside the order passed by the Sales Tax Officer as well as the first appellate authority and thereafter, at the instance of the appellant herein, Department, the Tribunal has referred the following questions for its determination under section 69 of the Act:

"(a) Whether, on the facts and in the circumstances of the case, the decision of the Tribunal that the Sales Tax Officer could have passed the order for levying interest only under the provisions of section 72 of the Gujarat Sales Tax Act, 1969 is legally correct?

(b) Whether, on the facts and in the circumstances of the case, the decision of the Tribunal that the order passed by the Sales Tax Officer should be deemed to have been passed under the provisions of section 72 of the Gujarat Sales Tax Act, 1969 and that as it was passed after the prescribed period of limitation contained therein was over, it was time-barred, is legally correct?"

Shri Jaimin Gandhi, learned Additional Government Pleader has vehemently submitted that as such the Tribunal has materially erred in treating and considering the order passed by the Sales Tax Officer levying the interest under section 72 of the Act. It is submitted that as such notice was issued by the Sales Tax Officer in form No. 45, which was in the form of revision, which is required to be passed in exercise of revisional jurisdiction and, therefore, the Tribunal ought to have treated the order passed by the Sales Tax Officer as in exercise of powers under section 67 of the Act. It is submitted that therefore consequently the Tribunal has materially erred in holding that the exercise of powers by the Sales Tax Officer was beyond the period of limitation. It is submitted that if the Tribunal would have treated the order under section 67 of the Act, applicability of the period of limitation mentioned under section 72 of the Act would not have arisen and, therefore, it is requested to answer the questions in favour of the appellant and against the respondent.

Though served, nobody appears on behalf of the respondent.

Heard Shri Jaimin Gandhi, learned Additional Government Pleader appearing on behalf of the appellant and perused the impugned orders passed by the Sales Tax Officer, first appellate authority as well as the judgment and order passed by the Tribunal. The short question, which is posed for the consideration of this court is, whether in the facts and circumstances of the case, the Tribunal was justified in treating the exercise of powers by the Sales Tax Officer under section 72 of the Act and consequently holding that such exercise of powers was beyond the period of two years as provided under section 72 of the Act?

It is the case on behalf of the appellant that as the Sales Tax Officer issued the notice in form No. 45, which was in the form of revision, the Tribunal ought to have treated such exercise of powers under section 67 of the Act. The aforesaid cannot be accepted. It is not in dispute that the notice was issued by the Sales Tax Officer and not by the Commissioner. If the authority, who have exercised the revisional power under section 67 of the Act, would have been the Commissioner and/or its delegate, then it was a different case but that is not the case here. It is not the case on behalf of the appellant that any such powers were delegated to the Sales Tax Officer to exercise the revisional jurisdiction and, therefore, the only power, which could have been available to the Sales Tax Officer was under section 72 of the Act only.

In view of the aforesaid facts and circumstances, it cannot be said that the Tribunal has committed any error in considering and/or treating the power exercised by the Sales Tax Officer levying the interest under section 72 of the Act. Under the circumstances, the question No. (a), which is referred to this court is answered against the appellant.

Now so far as question No. (b) is concerned, it would be a consequential question. Once it is held that the powers were exercised by the Sales Tax Officer under section 72 of the Act, such powers of rectifying its own mistake were required to be exercised within a period of two years. In the present case, it has been found that the powers were exercised by the Sales Tax Officer beyond the period of two years. Under the circumstances, no error has been committed by the Tribunal in allowing the appeal and quashing and setting aside the order passed by the Sales Tax Officer and confirmed by the first appellate authority. Under the circumstances, question No. (b) is held against the appellant. In view of the above, both the questions referred to this court are held against the appellant and consequently the present reference is dismissed.