Rohil Zinc Limited vs The State of Maharashtra and Others

The application bearing Reference Application No. 30 of 2015 arising out of Appeal No. 32 of 2013 decided on 1st December, 2014, has been rejected by the impugned order. The applicant-dealer before us prays that the questions at page Nos. 6 and 7 of the paper-book and formulated by the applicant are all questions of law. Each of them should have been referred for the determination and answer by this Court.

Mr. Thakar, learned counsel appearing in support of the application, firstly submitted that Rule 54 of the Bombay Sales Tax Rules, 1959, do not require a dealer like the applicant to maintain records of past transactions for more than five years. The five year period, according to him, should be reckoned from the last day of the financial year concerned. In the instant case, he would invite our attention to the admitted facts to submit that an assessment order in Form-A under section 33(2) of the Bombay Sales Tax Act, 1959, was made on 30th November, 1995. That itself would indicate that the period covered was 1st April, 1992 to 31st March, 1993. The product in question is zinc oxide, a chemical covered by Schedule Entry C-II-102 and, according to the Revenue, liable to tax at 10% with effect from 1st June, 1992. The assessment in the case of the petitioner resulted in only a demand of Rs. 6524/- being raised. According to the Tribunal, the scrutiny of the case records pertaining to the underlying assessment order was undertaken and which resulted in a revisional exercise. The Revising Authority held that the applicant is dealing in zinc oxide covered by the Schedule entry and is liable to tax at 10% but that taxable sales were disclosed for the same period in the returns furnished by the petitioner and the petitioner had computed the amount at the rate of 4% and paid taxes accordingly. Since the returns were wrongly accepted, there was short levy of sales tax at Rs. 1,60,180/- and additional tax at Rs. 19,222/-. The short levy of interest, according to the Revenue, under sections 36(3)(b) of the Bombay Sales Tax Act, 1959 (for short "BST Act"), is Rs. 1,14,817/-. The total levy or tax amount of Rs. 2,94,219/- was to be recovered. In order to set right these mistakes, a revision was proposed. That was to revise the assessment order under section 57 of the BST Act. That is how Notice in Form 40 was issued and served upon the dealer on 7th December, 1998, calling upon him to remain present on 28th December, 1998. However, on that date the dealer did not remain present. That is why the matter was adjourned. On 6th December, 2000, in the absence of the dealer and his representative, the file was closed and the subject order dated 7th December, 2000, came to be passed.

In challenging that order, Mr. Thakar would submit that a specific contention about applicability of Rule 54 was raised. The Tribunal has failed to answer it. That failure to answer resulted in the Reference Application being filed, but the Tribunal rejected it erroneously. All the questions that were proposed are questions of law, but in a cryptic order, the Tribunal has rejected them. It is in these circumstances that Mr. Thakar would submit that we should entertain this application and direct the Tribunal to forward the questions accordingly.

Reliance is placed, inter-alia, on the phraseology of Rule 54 and a Division Bench judgment of this Court reported in the case of Commissioner of Sales Tax vs. Ramdas Laxmidas Vol. , 38 STC 354.

On the other hand, Mr. B.B. Sharma appearing on behalf of the Revenue would submit that none of these questions can be termed as questions of law. This is an attempt at reappreciation and reappraisal or revisiting factual findings. There is no prohibition in law for exercise of the revisional power provided the statutory stipulations are maintained. The exercise of revisional power is not dependent upon the act of the assessee or the dealer either maintaining or refusing to maintain or produce the relevant record. The Revisional Authority, however, found that several opportunities were given, but the assessee-dealer could not satisfy it as to why the assessment order made should not be revisited on the basis of the records then available with the Assessing Officer. It is that exercise which was undertaken and there is absolutely no prejudice, for the dealer got all opportunities available to him in law. For all these reasons and bearing in mind the tax liability, Mr. Sharma would oppose this application and pray for its rejection.

We have heard both sides at length.

We are mindful of the fact that in Ramdas Laxmidas this Court was considering a question wherein the Department sought a Reference to this Court. The question of law was whether in view of Rule 41-A of the then Bombay Sales Tax Rules, 1946, the lower authorities were justified in demanding the production of declarations as required under Rule 26(2) of the said Rules after a lapse of three years from 31st March, 1950, and that as such, the claim of the dealer under section 6(3)-Rule I(ii) for the period 1st April, 1948 to 31st March,1950, must be accepted. The dealer before the Court was registered under the then Bombay Sales Tax Act, 1946. It was not disputed that for the period, namely 1st April, 1948 to 31st March, 1952, i.e., much after it duly and legally filed the returns, it received a notice on 12th December, 1953, calling upon it to attend the Sales Tax Office in respect of the assessment. The order of assessment, which was one composite order for the entire period, was made on 27th April, 1954. In their returns and in the course of assessment, the respondents claimed to deduct the turnover of certain sales from their gross turnover of sales. Some of the deductions so claimed were allowed by the Sales Tax Officer, while others were rejected. The only deductions with which the court was concerned in the said case were the one referable to section 6(3)-Rule I(ii)(a). That permits a deduction from the gross turnover in respect of all sales or supplies of goods in respect of the period in question to a registered dealer holding a licence under section 8B of the goods certified by him as being intended for resale or for use as containers and other materials for the packing of goods to be sold or supplied by him. Rule 26(2) required that a dealer who wished to claim deduction from his gross turnover under the above Rule shall, on demand, produce in respect of the sale for which the deduction is claimed, the documents which are referred more particularly in this Court''s judgment at page 355 of the Law Report.

It is in dealing with this controversy that the Division Bench held that when the dealer is called upon to produce such documents during the course of assessment which he was not obliged to maintain, then, it would not be possible for him to produce them and to answer or satisfy the queries of the authorities. The finding was that the dealer is not required thereafter to preserve his books of accounts, duplicates and cash memos, certificates and declarations given to him by those dealers who purchased goods from him until the expiry of the period of limitation for the initiation of suo moto revision proceedings or reassessment proceedings, or, when no period of limitation is prescribed, for the initiation of such proceedings for all times, and if he does not preserve such documents, no adverse inference can be drawn against him by the reassessing or revising authority nor can such authority in suo moto revision or reassessment proceedings cancel, withdraw or disallow any deduction or exemption allowed to him in his assessment proceedings on the strength of such documents produced in the course of his assessment proceedings or in appeal or revision proceedings arising therefrom. There is no statutory obligation on a dealer to preserve these documents. To hold otherwise on the grounds of an implied obligation or as a rule of prudence would run counter to common sense and the notions of justice, equity and good conscience. Therefore, the findings of this Court are not in the abstract, but in furtherance of the answer and opinion of this Court on the question of law arising out of a peculiar controversy.

We do not see how any assistance can be derived from this judgment in the present case.

This is not a case where any order to the prejudice of the applicant-dealer has been passed because of non availability or non production of the records. The Second Appellate Order initially passed on 23rd June, 2010, recites the facts. The Revisional Authority passed the order ex-parte on scrutiny of the case records underlying the assessment order dated 30th November, 1995. Thus, the records before the Assessing Authority were taken into consideration. The dealer was called upon on the basis thereof to satisfy the Revisional Authority as to why the assessment order should not be revised. There was absolutely no prejudice, therefore, to the dealer and he could have, on the basis of the order of assessment, opposed the exercise of the Revisional power. In considering the contentions as raised before us by Mr. Thakar and answering them, we do not find that the Tribunal referred to any obligation or called upon the dealer to discharge it to its prejudice. The argument has been considered and answered essentially in the backdrop of the assessment by rendering a factual that the exercise of the Revisional proceedings was within the period of limitation. In exercising that power, no prejudice is caused. The judgment in the case of Ramdas Laxmidas (supra) was expressly cited and referred. That it was held to be inapplicable in the backdrop of the above, therefore, raises no question of law.

We are not impressed by the argument that the other questions as produced at page Nos. 6 and 7 of the paper-book are also questions of law. We do not think that in an assessment and pertaining to years as old as 1992-1993, that we should exercise any powers and direct the Tribunal to refer any questions when all that has been done is to find out as to whether the Revisional Authority has rightly exercised the power vested in it. That exercise of the power by the Revisional Authority was questioned by the applicant-dealer in a substantive appeal. That has been decided by the initial order of 23rd June, 2010. In deciding the Reference Application, we find that the same reasons and conclusions have been reiterated. Once other questions that are proposed raise mixed issues, then, all the more we are disinclined to exercise our powers under section 61 of the Bombay Sales Tax Act, 1959.

We are of the view that the Application has no merit. It is, accordingly, dismissed.