P.P. Sons vs The Asst. Commissioner of Sales Tax and Others

Om Prakash, C.J.—Heard counsel for the parties.

The only question for consideration arising from the Original Petition filed by the Petitioner (Appellant herein) was whether there was any "proceeding recorded" within the meaning of Sub-section (1) of Section 36 of the Kerala General Sales Tax Act, 1963, enabling the Petitioner (hereinafter referred to as the Assessee) to file revision u/s 36 against Ext. P-11 demand notice.

The Assessee claimed refund of Rs. 23,364. By Ext. P-3 order dated 6th July 1982 the said refund was ordered by the Sales Tax Officer (Enquiry). Later by Ext. P-5 order dated 19th March 1983 adjustment of the refund due to the Assessee was ordered. By Ext. P-7 order dated 25th March 1983, the Assistant Commissioner (Assessment) II informed the Assessee that the Sales Tax Officer, IV Circle, Kozhikode had been instructed to refund the amount of Rs. 23,364. It is contended by the Assessee that refund order having been passed, he adjusted the amount of Rs. 23,364 and filed return accordingly. Thereafter assessment was made without taking notice of Rs. 23,364 being adjusted and demand was accordingly raised. It is further contended that pursuant to the assessment order Ext. P-11, demand notice was issued regarding the demand of interest u/s 23(3) of the Act. It is the contention of the Assessee that he disputed the said demand on the ground that refund of Rs. 23,364 was allowed to him. But despite that the said amount was not adjusted in the assessment order and the interest demand was wrongly raised.

Aggrieved the Assessee filed a revision u/s 36, which was dismissed by the authority saying that there being no order or recorded proceedings, the revision was not maintainable u/s 36.

The Assessee then took up the matter before this Court in the Original Petition under Article 226 of the Constitution. The learned Single Judge also took the same view that there was neither any order nor any proceedings and therefore the revision u/s 36 was not maintainable. The Original Petition was accordingly dismissed.

We have carefully gone through Ext. P-11 demand notice to which a note is appended as follows:

You have not paid the entire tax and S.C. due for the month of September, 1983. You are therefore liable to pay penalinterest on the balance amount of Rs. 23,188.85 as worked out below:

Bal. amount .... Rs. 23188.85 Delay since the issue of demand 25 months at the rate of notice 47 per cent Penal interest due .... Rs. 10898.75

Before us learned Counsel for the Assessee urges that there may not be any order, but surely the note appended to Ext. P-11 demand notice falls within the expression "proceedings recorded" occurring in Sub-section (1) of Section 36 of the Act, In AIR 1946 16 (Federal Court) the court held that action on the part of the income tax authorities for recovery could amount to proceedings for the collection of arrears. The Concise Oxford Dictionary gives the meaning of the "proceeding" as used in the legal sense as step taken in legal action. In Oriental Gas Co. Ltd. v. State of West Bengal (1973) 32 S.T.C. 141, the Calcutta High Court observed that the meaning that is given to the word "proceeding" occurring in one statute cannot be taken as a safe guide for ascertaining the true import of the word appearing in a different enactment. In some enactments this word means an action or that which initiates an action and in other enactments it may mean a step in an action. The Calcutta High Court further held that a proceeding under the Bengal Finance (Sales Tax) Act comprehends the whole procedure for the levy, assessment and collection of the tax liability of a dealer. By Ext. P-11 demand notice, it is certain that the departmental authorities took steps to recover the liability determined as sales tax and that was duly recorded in the demand notice itself. Ordinarily, a demand notice does not record any proceeding. But in Ext. P-11 demand notice, the Assistant Commissioner (Assessment), Sales Tax clearly recorded the proceedings to recover penal interest to the tune of Rs. 10,898.75. The note appended to Ext. P-11 demand notice was not seen or adverted to in the impugned judgment by the learned Single Judge. It leaves no room for doubt that proceedings for recovery of penal interest were duly recorded in Ext. P-11 demand notice by means of the note appended thereto.

We, therefore, do not enter into the controversy whether there was any ''order'' within the meaning of Section 36, but we conclude the case saying that surely there are ''proceedings recorded'' within the meaning of Section 36, which are fully reflected in the note, appended to Ext. P-11 demand notice. We therefore, hold that revision was maintainable against the proceedings recorded in Ext. P-11 demand notice itself u/s 36 of the Act.

In the result, the appeal succeeds and is allowed. The impugned judgment dated 13th January, 1994 and Ext. P-12 order passed by the revisional authority are set aside and the case is remitted to the revisional authority to decide the matter afresh on merits.