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Judgment
This application under article 226 of the Constitution, of India is at the instance of a dealer under the provisions of the West Bengal Sales Tax Act, 1994 and is directed against an order dated February 25, 2011 (Angus Jute Works of the Angus Co. Ltd. v. Jt. Commr., C T. [2012] 53 VST 99 (WBTT)) passed by the West Bengal Taxation Tribunal in Case No. RN-568/2010 thereby dismissing the application u/s 8 of the West Bengal Taxation Tribunal Act, 1987 filed by the petitioners before us challenging the order of imposition of penalty u/s 76(1)(b) of the West Bengal Sales Tax Act 1994 on rejection of the application in revision u/s 81 of the West Bengal Sales Tax Act, 1994. Being dissatisfied, the dealer has come up with the present writ application.
The writ petitioners as an occupier of the jute mill and the registered dealer, submitted the return for four quarter ending on March 31, 2003 with the declaration that the gross purchase of raw jute for the relevant period was to the time of Rs. 41,97,00,192. It was also disclosed that the raw jute to the tune of Rs. 18,75,95,975.32 was purchased from outside the State of West Bengal. The Joint Commissioner, West Bengal Corporate Division, however, disbelieved the claim of the inter-State purchase of raw jute to the tune of Rs. 14,46,93,149.32 observing that the raw jute worth Rs. 14,46,93,149.32 had been purchased by the petitioners within the State of West Bengal and accordingly, levied huge purchase tax thereon.
Challenging the aforesaid order dated June 30, 2005 for the aforesaid period covering four quarter ending on March 31, 2003, the writ petitioners preferred an appeal.
During the pendency of the appeal, the Assistant Commissioner, Commercial Tax, West Bengal Corporate Division, initiated a proceeding u/s 76 of the West Bengal Sales Tax Act, 1994 alleging that the writ petitioners had furnished incorrect particulars regarding the purchase of raw jute during the relevant period in the return submitted by them based on the finding recorded in the assessment order dated June 30, 2005.
Ultimately, the Assistant Commissioner on March 17, 2006 imposed penalty of Rs. 58,18,784. The writ petitioners being dissatisfied with the aforesaid order of imposition of penalty preferred a revisional application.
During the pendency of the aforesaid revisional application against the order of imposition of penalty, the writ petitioners decided to resolve the dispute arising out of the order of assessment dated June 30, 2005, against which the writ petitioners had already preferred an appeal and such appeal was pending by taking recourse to the West Bengal Sales Tax (Settlement of Dispute) Act, 1999 ("the SOD Act").
It appears from record that the said application for settlement under the SOD Act ended in a certificate issued by the State Government.
Notwithstanding the settlement of the aforesaid appeal against the order of assessment dated June 30, 2005, which is the source of initiation of proceeding u/s 76 of the West Bengal Sales Tax Act, 1994, the revisional authority affirmed the order of penalty.
Being dissatisfied, the writ petitioners preferred a second revisional application against such order under the provisions of section 81 of the West Bengal Sales Tax Act, 1994, but the said revisional authority affirmed the order of penalty earlier imposed.
As indicated earlier, being dissatisfied, the writ petitioners preferred an application u/s 8 of the West Bengal Taxation Tribunal Act, 1987 and by the order impugned in this writ application, the said Tribunal has modified the order of penalty by reducing the same from Rs. 58,18,784 to Rs. 20,00,000.
Being dissatisfied, the present writ application has been filed.
Mr. Bhattacharjee, the learned advocate appearing on behalf of the writ petitioners, has taken a pure question of law in support of the writ application.
According to Mr. Bhattacharjee, once the State Government has decided to resolve the dispute arising out of the order of assessment, which was then pending in a regular appeal, it necessarily follows that there is no scope of further proceeding with the proceedings for imposition of penalty, which is based on the finding of the assessment order, which has since been settled by the State Government.
In other words, according to Mr. Bhattacharjee, the moment the dispute arising out of the original order of assessment has been resolved ending in a certificate of settlement issued u/s 8(1) of the SOD Act, the said certificate should be conclusive as to the dispute to which it related and no matter covered by such certificate of settlement should be reopened in any proceeding or review or revision or in any other proceeding under the Act of 1994.
Mr. Bhattacharjee, therefore, contends that, the learned Tribunal below acted illegally in merely reducing the amount of penalty by overlooking the fact that there was no scope of imposition of any penalty whatsoever after the State had decided to resolve the dispute by issuing the certificate.
Mrs. Roy, the learned advocate appearing on behalf of the State/respondents, has, on the other hand, opposed the aforesaid contention advanced by Mr. Bhattacharjee and has contended that the settlement of dispute in terms of the SOD Act has nothing to do with the proceeding for penalty for concealment of sale or furnishing of incorrect particulars of sale or purchase as provided in section 76 of the Act. Mrs. Roy submits that by the settlement order, only the amount mentioned in the assessment order has been reduced to some extent, but the penal provision contained in section 76 of the Act of 1994 cannot be settled by taking aid of the SOD Act.
Mrs. Roy, therefore, submits that the learned Tribunal below rightly turned down the point raised by the writ petitioners in this writ application.
Therefore, the only question that falls for determination in this writ application is whether in the facts of the present case, by virtue of the settlement of the dispute in the appeal preferred against the original order of assessment dated June 30, 2005, the proceeding for penalty arising therefrom also abated.
In order to appreciate the aforesaid question, it will be appropriate to refer to the following provisions of the SOD Act, which are quoted below:
Eligibility for settlement.--(1) Subject to the other provisions of this Act, an applicant shall be eligible to make an application for settlement of arrear tax, penalty or interest in dispute in respect of any period for which an assessment has been made under the relevant Act and (an appeal or revision relating thereto which has been filed on or after the 1st day of April, 2003 but is pending on the 30th day of November, 2006), before any appellate authority or revisional authority, as the case may be.
(2) Notwithstanding anything contained in sub-section (1), an applicant shall not be eligible to make an application for settlement of arrear tax, penalty or interest in respect of any period under the relevant Act for which the appeal or revision has been finally heard by the appellate authority or the revisional authority, as the case may be.
Explanation.--For the purpose of this section, no appeal or revision shall be deemed to have been heard only by reason of any stay order having been passed by any appellate or revisional authority in connection with such appeal or revision.
Application by the applicant.--(1)(a) An application for the purpose of section 4 shall be made to the designated authority by an applicant in such form, and in such manner, as may be described, on or before (the 30th day of June, 2007), or by such later date as the State Government may, by modification in Official Gazette, specify from time to time.
(b) An application for the purpose of section 4A shall be made to the designated authority by an application in such form, and in such manner, as may be prescribed, on or before (the 30th day of June, 2007) or by such later date as the State Government may, by notification in the Official Gazette, specify from time to time.
(2) A separate application shall be made by an applicant for different periods, under each of the relevant Acts.
(3) The applicant shall send a copy of the application made under sub-section (1) to the appellate authority, or the revisional authority before whom the appeal or revision, as the case may be, is pending, within seven days from the date of making such application before the designated authority:
Provided that in a case where the provisions of sub-section (4) apply, the applicant shall also send a copy of the application made under sub-section (1) to the revisional authority before whom the revision is pending for the same period.
(4) Where an appeal is pending before the appellate authority, and a revision is pending before the revisional authority, in respect of one and the same period, an application referred to in sub-section (1) shall only be made in respect of the pending appeal.
(5) Where a certificate of settlement has not yet been issued under sub-section (1) of section 8 in respect of any application under sub-section (1) made before coming into force of this sub-section in respect of any period, the applicant may, on fulfilling the conditions and in the manner prescribed, apply for settlement of arrear tax, penalty or interest in dispute in respect of such period:
Provided that upon making of an application under this subsection, the application made before coming into force of this subsection, shall be deemed to have been withdrawn by the applicant.
Payment of amount payable by applicant.--(1) Save as otherwise provided in the proviso to sub-section (1) of section 8, every applicant shall, before making the application u/s 5 for the settlement of any arrear tax, penalty or interest in dispute for any period, pay the amount calculated at the rate specified in section 7 into the Reserve Bank of India or any appropriate Government Treasury in such manner as is specified in the relevant Act.
....
Settlement of dispute and issue of certificate of settlement.-- (1) The designated authority shall, within seven working days of the receipt of the application u/s 5 along with the copy of duly receipted challan showing payment of the amount payable for settlement, issue a provisional certificate of settlement to the applicant in such form as may be prescribed.
Provided that where no payment is required to be made by an applicant, the designated authority shall issue ''a provisional certificate of settlement within seven working days of the receipt of the application u/s 5, notwithstanding ''that'' rib receipted copy of challan has been furnished along with the application u/s 5:
Provided further that the designated authority may, within a period of three months following the month in which the application u/s 5 is made, verify the correctness of the declaration made and the amount paid on the basis of such declaration, and if the designated authority finds any discrepancy in the declaration or finds any short-payment of the amount payable for settlement, such authority shall issue a notice to the applicant asking him to rectify the discrepancy or to make payment of the amount short-paid:
Provided also that, where-
(a) the notice referred to in the second proviso is not issued, the provisional certificate of settlement issued to the applicant shall, on the expiry of the period referred to in the proviso, become final and the dispute in respect of which the application has been made shall be deemed to have been settled for the purpose of this Act and the relevant Act;
(b) the notice referred to in the second proviso is issued, the dispute shall not be deemed to have been settled until the discrepancy, or the short-payment, mentioned in that notice is rectified or made to the satisfaction of the designated authority and the designated authority signifies such satisfaction to the applicant in writing;
Provided also that in a case where the provisions of sub-section (4) of section 5 apply and a provisional certificate is issued under this sub-section in respect of the appeal pending for a period, the revision pending for such period shall also be deemed to have been settled under clause (a) of the third proviso on expiry of the period mentioned in the second proviso.
(2) The designated authority, for reasons to be recorded in writing, may refuse to settle a dispute, or rectify or amend a certificate of settlement issued under sub-section (1):
Provided that no order adversely affecting the appellant shall be passed without allowing the appellant a reasonable opportunity of being heard.
Bar on reopening of settled cases.--A certificate of settlement issued under sub-section (1) of section 8 shall be conclusive as to the dispute to which it relates, and no matter covered by such certificate of settlement shall be reopened in any proceeding of review or revision or in any other proceeding, under the relevant Act.
Withdrawal of appeal and revision.--Notwithstanding anything to the contrary contained in any provision in the relevant Act, the appeal or revision for any period pending before the appellate or the revisional authority or the Tribunal or the High Court or the Supreme Court, as the case may be, in respect of which a certificate of settlement, is issued under sub-section (1) of section 8, shall be deemed to have been withdrawn by the applicant from the date of making of the application by the applicant under sub-section (1) of section 5:
Provided that where the provisions of sub-section (4) of section 5 apply, and a certificate of settlement is issued under sub-section (1) of section 8, in respect of the appeal pending for any period, the revision pending for such period shall also be deemed to have been withdrawn by the applicant upon the issue of such certificate of settlement from the date of making of the application by the applicant under sub-section (1) of section 5.
Appellate and revisional authority not to proceed in certain cases.--No appellate authority or revisional authority shall proceed to decide any appeal or revision or both, as the case may be, under the relevant Act relating to any period in respect of which an application has been made by an applicant u/s 5:
Provided that such authority shall proceed to decide such appeal or revision or both, as the case may be, for such period in accordance with the provisions of the relevant Act, if a certificate of settlement referred to in sub-section (1) of section 8 is refused to the applicant by an order passed by the designated authority in writing under subsection (2) of section 8.
Revocation of certificate of settlement.--(1) Notwithstanding anything contained in section 9 or section 10, where it appears to the designated authority that an applicant has obtained the benefit of settlement under this Act by suppressing any material information or particulars or by furnishing any incorrect or false information or particulars, such designated authority may, for reasons to be recorded in writing and after giving the applicant a reasonable opportunity of being heard, revoke the certificate of settlement issued under subsection (1) of section 8.
(2) If a certificate of settlement is revoked under sub-section (1), the appeal or revision, or both, as the case may be, under the relevant Act, covered by such certificate of settlement, shall, notwithstanding the provision of section 9 or section 10, stand revived or reinstated immediately upon such revocation, and such appeal or revision or both, as the case may be, shall be decided in accordance with the provisions of the relevant Act, as if no settlement of the arrear tax, penalty or interest in dispute in such appeal or revision or in both, as the case may be, has ever been made under this Act.
On a plain reading of the aforesaid provisions contained in the SOD Act, it is clear that by virtue of the aforesaid provisions, the State Government, offers for settlement of any dispute, which is the subject-matter of any pending appeal or revision.
If the dealer complies with the provisions of the SOD Act for arriving at such settlement the State Government can agree to such settlement and even can refuse to settle the dispute notwithstanding the fact that the dealer is willing to comply with the provisions contained in the SOD Act. It, further, appears that even after the settlement of dispute, the State Government has the authority to revoke such settlement in case of detection of any fraud, etc., on the part of the dealer, but once such settlement has been arrived at and the said settlement has not been reopened by the State Government, section 9 of the SOD Act makes it clear that a certificate of settlement issued under sub-section (1) of section 8 should be conclusive as to the dispute to which it relates.
In other words, in the present case, once the State Government has accepted the settlement, the appeal, which was then pending, against the final order of assessment dated June 30, 2005 has abated and the assessment proceeding has been compromised on payment of the amount offered by the dealer in terms of the provisions of the SOD Act.
There is no dispute that the basis of initiation of the proceeding for imposition of penalty is the finding of the assessing authority by virtue of the order dated June 30, 2005; The moment the appeal preferred by the writ petitioners against such order was settled by virtue of issue of the certificate, we find substance of the contention of Mr. Bhattacharjee that such certificate is conclusive as to the dispute to which it relates and no matter including the question of imposition of penalty can be proceeded with or given effect to, pursuant to any order passed in review, revision or under any other provisions under the Act of 1994.
In case before us, there is no dispute that if the order of assessment dated June 30, 2005 was not passed against the writ petitioners, there was no occasion for initiation of the proceeding u/s 76 of the Act and the same was consequential to the order passed by the assessing officer.
The moment the appeal against the order of the assessing officer has been settled by the State Government, it implies that the State has decided to conclude the entire dispute arising out of the order of assessment, which was the subject-matter of the appeal.
We find no substance in the contention of Mrs. Roy that the State Government can, in one hand, settle the dispute by accepting the amount and at the same time, can also proceed against the dealer for imposition of penalty, although by accepting the offer of settlement, the pending appeal of the dealer has since abated.
We have already pointed out that the State Government has discretion not to settle a dispute in a given case, where the allegation is serious in nature. Since the State Government has not exercised its discretion of not settling a dispute in the facts of the present case, it is also precluded from proceeding with the course of action u/s 76 of the Act notwithstanding the fact that the basis of such proceeding is settled.
We, thus, set aside the proceeding for imposition of penalty in view of the clear bar created u/s 9 of the SOD Act and hold that on a certificate of settlement being issued u/s 8(1) of the SOD Act, there was no further scope of proceeding against the writ petitioners for penalty for suppression of the material fact on the basis of the finding recorded by the assessing officer in his order dated June 30, 2005.
Consequently, we set aside the order of the learned Tribunal and quash the proceeding for penalty. The writ petition is, thus, allowed to the extent indicated above.
Since the subject-matter of the next writ application, being WPTT No. 21 of 2011, is similar to the present one, we also allow the said writ application by setting aside the order dated February 29, 2011 passed by the West Bengal Taxation Tribunal in Case No. RN-568/2010 and quashing the imposition of penalty dated March 17, 2006 passed by the Assistant Commissioner, which was reduced to Rs. 21,00,000 by the order impugned. The said proceeding u/s 76 of the West Bengal Sales Tax Act, 1994 is also quashed.
Both the writ applications are, thus, disposed of by this common order.
In the facts and circumstances, there will, however, be no order as to costs. Xerox certified copy of this order, if applied for, be given to the learned counsel appearing for the parties within a week from the date of filing of the application.