S.R. Traders vs Assistant Commissioner of Commercial Taxes IV and Others

S.V. Maruthi, J.—As the issue invoked in these two writ petitions is one and the same, they are disposed of by common judgment.

The prayer in the writ petitions is for a direction declaring the action of the 1st respondent for having collected tax from the petitioners by way of cheques on February 21, 1993, without any assessment proceedings as illegal, arbitrary and without jurisdiction and consequently direct the respondents not to encash the cheques.

Both the petitioners-firms deal in oil business at Tuni of East Godavari district. On February 21, 1993, the Assistant Commissioner of Commercial Taxes No. IV (Enforcement) - 1st respondent visited the premises of the petitioners-firms and inspected the business and recorded the statements of the proprietors of the firms. He verified the books of accounts of business and found that the transactions were recorded in the accounts. The 1st respondent after verification and inspection of the records directed the petitioners-firms to issue cheques for Rs. 2,36,474 and Rs. 25,664 respectively on the ground that the petitioners have evaded the payment of the said tax. When the petitioners have expressed that they do not have any balance in the bank account, 1st respondent forced the petitioners to issue the cheques on the bank account M/s. S. Reddy Oil Mills and Refinery. No notice was issued nor any assessment proceedings were conducted for the payment of the alleged tax due.

Counsel for the petitioners contended that in Sri Balaji Rice Company v. Commercial Tax Officer [1984]55 STC 292 this Court held that the powers conferred on the Assistant Commissioner of Commercial taxes on whom the jurisdiction over the entire State to assess dealers in respect of whose transactions suppessioner Commissioner detected were held to be ultra vires u/s 4 of the Andhra Pradesh General Sales Tax Act, 1957. Therefore, the 1st respondent has neither jurisdiction to assess nor have any authority to collect tax by way of cheques without assessment and demand notice. He also contended that subsequent to the judgment referred to above, section 4 of the Andhra Pradesh General Sales Tax Act was amended. The amended section 4 was again considered by this Court in McDowell & Co. Limited v. Commercial Tax Officer [1998]68 STC 124; (1987)5 APSTJ 246 and in view of the decision of this Court in the said case, the 1st respondent cannot recover the tax much less forcibly by threat and coercion.

The learned Government Pleader for Commercial Taxes, submitted that section 4 was amended with retrospective effect and the fact that it was amended with retrospective effect was not brought to the notice of the learned Judges in the second decision, viz., Mcdowell and Co. Limited Vs. Commercial Tax Officer, .

The question for consideration is, whether the Assistant Commissioner, Commissioner Taxes (Enforcement Wing), 1st respondent, has jurisdiction to issue the impugned proceedings.

In Sri Balaji Rice Company v. Commercial Tax officer [1984] 55 STC 292, this Court held that conferment of power upon certain officers over the entire State is inconsistent and that conferment of concurrent jurisdiction on several officers in respect of the same area is likely to result in discriminatory consequences and hence violative of article 14 of the constitution. Thereafter, by Amendment Act 18 of 1985 section 4 of the Act was amended. The amended provision came up for consideration in Mcdowell and Co. Limited Vs. Commercial Tax Officer, . His Lordship Jeevan Reddy, J. (as he then was) speaking for the Bench, observed that the said amendment rectified only the first part of the defect mentioned in the decision of Sri Balaji Rice Company Vs. Commercial Tax Officer No. I, Nellore and Others, , but no provision was made in the amendment to rectify the second part of the defect mentioned in the said decision. Therefore, the learned Judge held that the notification would not validate the impugned notice therein because the notification delimiting the areas of jurisdiction cannot have retrospectively validate the impugned notice. In other words, accordingly to the learned Judge, the amendment brought in by Act 18 of 1985 did not rectify the second part of the defect pointed out in the earlier decision, viz., conferment of concurrent jurisdiction on several officers in respect of the same area which is violative of article 14 of the Construction of India.

In this context, we may refer to the amendment issued in Act No. 18 of 1985 to the extent relevant for the purpose of this case. Sub-section (4) of section 38 of the Act which was brought into force with retrospective effect by the Amendment Act No. 18 of 1985 reads as follows :

"(4) Notwithstanding anything contained in any order or judgment of any court, the amendment made by G.O. Ms. No. 434, Revenue dated the 30th March, 1982 and by G.O. Ms. No. 1059, Revenue dated the 27th July, 1982, shall always be deemed to have been incorporated in Notification-II of G.O. Ms. No. 1091, Revenue, dated the 10th June, 1957 and no assessment made, no demand raised, no seizure effected and no action connected with or incidental to the above actions shall be deemed to become invalid on any ground whatsoever."

Admittedly, the above provision was not brought to the notice of the learned Judge in the decision Mcdowell and Co. Limited Vs. Commercial Tax Officer, to the effect that retrospective was not given to the amendment. Therefore the judgment of the learned single Judge is per Incurian as it has not taken into account sub-section (4) of section 38 of the Act, brought into by the Amendment Act 18 of 1985.

In view of the above, the contention of the petitioners that section 4 of the Act was again struck down by this Court in the decision McDowell & Co. Limited v. Commercial Tax Officer [1988] 68 STC 124; (1987) 5 APSTJ 246 is not sustainable.

Further, we find from the statements filed by the petitioners that "Further on verification of our books of accounts, you have noticed that we have recorded above transactions in our books of accounts, we have recorded above transactions in our books of accounts, we have not reported in return and paid taxes to the department. The table rates as per our books of the account is worked out as under : We are herewith pay the tax of Rs. 2,36,474 on above turnover, vide cheques No. 981177 dated 21st February, 1983". In respect of the petitioner in W.P. No. 2444 of 1993 also, a similar statement was recorded. In other words, they have admitted that the transactions recorded in books of account have not been reported in the returns filed by them. Having accepted before the authority that they have suppressed the inclusion of transaction in the returns and having paid the tax by way of cheques, to avoid the seizure of stocks and seal of the business premises, it is now not open to the petitioners, to seek for a direction not to encash the cheques issued by them. It is open to the petitioners to raise the objection before the assessment authorities.

Both the writ Petitions are, therefore, deviod of any merits and are accordingly dismissed. There will be no order as to costs.

Writ petitions dismissed.