Commercial Taxes Officer vs Metals and Alloys India Pvt. Ltd.

Vineet Kothari, J.—The Revenue has filed these revision petitions being aggrieved of the orders of Tax Board dated June 18, 2003, whereby, the Tax Board allowed the assessee''s three appeals for assessment years 1990-91, 1991-92 and 1992-93 and set aside the order dated February 16, 2001 passed by the Deputy Commissioner (Appeals). The learned Commercial Taxes Officer had passed the order on March 14, 1997 for these three assessment years invoking his powers u/s 9 of the Central Sales Tax Act, 1956 read with Section 12 of the Rajasthan Sales Tax Act, 1994 applicable to escaped turnover on the ground that inter-State sales made by the assessee during these period were sales not supported by "C" form required u/s 8(1) of the CST Act, therefore, exemption under the notification was not available to the assessee and the exemption wrongly availed was liable to be withdrawn and the assessee was liable to pay due CST applicable on such inter-state sales made by him.

In the first appeal before the Deputy Commissioner (Appeals), the Deputy Commissioner (Appeals) held in the order dated February 16, 2001 that the learned CTO could not invoke power u/s 12 of the Act applicable for reassessment but on the basis of judgment of the honourable Supreme Court in case of State of Rajasthan and Another Vs. Sarvotam Vegetables Products etc., learned assessing authority could invoke jurisdiction to rectify the mistake apparent on the face of record enshrined u/s 17 of the Act and thus the learned Deputy Commissioner (Appeals) rejected the appeal of the assessee. The assessee took the matter further in second appeal before the Tax Board which came to be allowed by the impugned order dated June 18, 2003 and learned Tax Board held that learned Deputy Commissioner (Appeals) could not convert the order passed u/s 12 of the Act on March 14, 1997 as one u/s 17 of the Act while passing the order dated February 16, 2001 as by that time the limitation u/s 17 had run out. The learned Tax Board also found that since no notice in prescribed form No. 33 for invoking the power u/s 17 of the Act was issued by the CTO but only a notice in the form 12A applicable to invoke the power u/s 12 of the Act was issued, therefore, the assessment could not be rectified by resort to Section 17 of the Act. Learned Tax Board, therefore, allowed the assessee''s appeal and set aside the order of the Deputy Commissioner (Appeals) dated February 16, 2001.

Being aggrieved by the said order of learned Tax Board, the Revenue is in revision before this Court.

Mr. Rishabh Sancheti for Mr. Vineet Mathur appearing for the Revenue submitted that lack of prescribed form or reference to wrong provision cannot invalidate the assessment and, therefore, the power to reassess or rectify the order to levy the tax in the absence of compliance with the mandatory provision of furnishing "C" form was not complied with by the assessee, the assessment to recover such revenue cannot be invalidated merely on the ground that notice was not issued in the prescribed form. He referred to the decision of the Supreme Court in case of State of Rajasthan and Another Vs. Sarvotam Vegetables Products etc., and submitted that the controversy relating to requirement of furnishing "C" form was put at rest while reversing the decision of the Rajasthan High Court in case of Shyam Oil Cake and by holding that such concession could be availed of only upon furnishing of "C" form. Admittedly, in the present case, "C" form was not furnished by the assessee despite grant of opportunity in the order dated March 14, 1997 which was passed following the aforesaid decision of the Supreme Court with reference to Section 12 of the Act. He also contended that resort to Section 12 by the learned CTO was correct in the facts and circumstances of the case. He, therefore, submitted that the impugned assessment order was wrongly set aside by the learned Tax Board by impugned order dated June 18, 2003 and the present revisions deserve to be allowed.

On the side opposite, Mr. Tribhuvan Gupta, learned Counsel appearing 5 for the respondent-assessee, urged that since no notice u/s 17 was given to the assessee the learned Tax Board had rightly held that assessment could not be rectified u/s 17 of the Act. He submitted that learned Tax Board has not erred in setting aside the order of the Deputy Commissioner (Appeals). He also submitted that since the assessee availed of the benefit under the Incentive Scheme of 1987, therefore, at a later stage the Revenue authority could not take back the said benefit on the ground of non-furnishing of "C" form as the said authority had never any occasion to consider this aspect of the matter. He, therefore, prayed for remand of case to the assessing authority.

I have heard learned Counsel at length and given my thoughtful consideration. Once it is not disputed and cannot be possibly disputed that exemption could not be availed of by the assessee without furnishing "C" form in question in respect of inter-State sales, reassessment for recovery of such exemption wrongly granted to the assessee in the original assessment, cannot be questioned. The enactment gives ample powers to the Revenue authority to reassess such cases and it is nothing but escapement of turnover in true sense, if exemption was allowed to the assessee without compliance with mandatory requirement of law by furnishing of "C" form in accordance with Section 8(1) of the CST Act.

In the opinion of this Court, learned assessing authority was perfectly justified in invoking Section 12 of the Act within limitation to reassess escaped turnover and withdrawing such exemption wrongly granted to the assessee in view of the binding decision of the Supreme Court in case of State of Rajasthan and Another Vs. Sarvotam Vegetables Products etc., Both the learned Deputy Commissioner (Appeals) as well as Tax Board have apparently fallen into error in holding that resort could be had in such circumstance to provisions of Section 17 of the Act applicable for -rectification of apparent mistake on the face of record. Though by some stretch of argument, such reassessment could also fall within the scope of rectification of apparent mistake as there is no water-tight compartment between the two powers, yet the learned Counsel for Revenue rightly contends that mention of wrong provision even it can be said to be so for withdrawing the exemption and recovering such taxes from the assessee would not vitiate the assessment order. A bare perusal of Section 19A of the RST Act would support this contention besides catena of judgments on this point.

In view of this, this Court is of the opinion that learned Tax Board has wrongly set aside the order of the Deputy Commissioner (Appeals) dated February 16, 2001 as well as order of learned assessing authority passed Section 12 of the Act dated March 14, 1997. The contention of learned Counsel for the respondent-assessee that since the assessee was availing of benefit under the Incentive Scheme of 1987 and, therefore, no such additional tax could be imposed upon him is also of no avail. The said Incentive Scheme operated in a different field for granting exemption from taxes on the basis of eligible investment made by the assessee during the operative period of the Scheme. Such exemption could not override the exemption wrongly granted to the assessee on account of non-compliance with the mandatory provisions of Section 8(1) of the CST Act by not furnishing "C" form as prescribed in law.

Consequently, this revision petition is allowed and the impugned order of Tax Board dated June 18, 2003 is set aside. The Revenue would be entitled to recover the due tax in pursuance of reassessment order dated March 14, 1997. No costs.