Raj Trading Company vs State of Andhra Pradesh

Syed Shah Mohammed Quadri, J.—These two tax revision cases are filed by the same assessee and the questions raised in the tax revision cases are also identical. They are, therefore, disposed of by this common judgment. T.R.C. No. 202 of 1989 is directed against the order of the Sales Tax Appellate Tribunal dated July 19, 1989 in T.A. No. 688 of 1985. T.R.C. No. 205 of 1989 is directed against the order of the Sales Tax Appellate Tribunal dated July 19, 1989 in T.A. No. 487 of 1986.

Mr. Murthy, learned counsel for the petitioners, raised two contentions, viz., (i) the proceeding was initiated for reopening the assessment u/s 14-B of the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act") and as that section was introduced in 1985, the reassessment proceedings and the consequential penalty proceedings are wholly illegal; and (ii) even if the assessment is taken u/s 14(4) of the Act, then there was no new material for the Deputy Commissioner to reopen the case and for making reassessment of the alleged escaped turnover.

To appreciate the contentions advanced by the learned counsel it would be necessary to refer to the facts giving rise to these tax revision cases. The assessee is a trader in wines. The transactions relate to the turnovers of beer for the assessment years 1980-81 and 1981-82. During these assessment years, what the assessee did was that he sold the beer bottles to a sister concern at a low price and repurchased the same from it at a higher price and sold them in the market. Thus it showed the first sale at low price to reduce the turnover and as the second sale was not taxable it showed the actual price for the turnover of the second sale. This scheme of the petitioner was noticed by the Deputy Commissioner who issued notice u/s 14(4) of the Act for reopening the assessment. He accordingly made the reassessment and initiated penalty proceedings.

We may point out here that in so far as the question relating to the assessment of tax is concerned it has become final as the tax revision cases (Nos. 204 and 210 of 1989) filed by the petitioner challenging the assessment have been dismissed by this Court on March 30, 1990. The question that survives in the present tax revision cases concerns levy of penalty.

In so far as the first contention of the learned counsel is concerned, we may point out that the turnovers that were subjected to penalty relate to the assessment years 1980-81 and 1981-82. The proceedings for reopening of the assessment were initiated u/s 14(4) of the Act but not u/s 14-B. Further there was no estimation of price u/s 14-B; it was a case of ignoring the first sale as not being genuine. Therefore, the first contention is wholly misconceived and untenable. In so far as the second contention is concerned, inasmuch as the proceedings relating to reopening of the assessment had become final, the petitioner cannot reopen the question in the penalty proceedings as to whether the reopening itself was unsustainable in law. It is not disputed that the penalty proceedings are valid. The Deputy Commissioner who reopened the assessment, levied the penalty at three times the tax due on the escaped turnover. The Tribunal reduced it to two times the tax due. We do not find any illegality in the orders to warrant our interference in these tax revision cases. They are accordingly dismissed. No costs.

Petitions dismissed accordingly.