State of Tamil Nadu vs G.S. Raheem

In both these revisions, the State is the petitioner. The assessee is Modern Electrical, Chengam. The assessee was finally assessed by the

Deputy Commercial Tax Officer II, Enforcement, Tiruvannamalai (hereinafter referred to as ""the D.C.T.O."") u/s 16 of the Tamil Nadu General

Sales Tax Act, 1959 (hereinafter referred to as ""the Act""), for the assessment year 1974-75 on an escaped turnover of Rs. 7,600 at 9 per cent.

besides levying penalty of Rs. 513 u/s 16(2) of the Act on the suppressed turnover of Rs. 3,800. For the assessment year 1975-76, the assessee

was assessed on an escaped turnover of Rs. 4,200 at 8 per cent. besides levy of penalty of Rs. 250 being 1(1/2) times the tax due on the turnover

actually suppressed being Rs. 2,100.

Aggrieved assessee filed an appeal before the Appellate Assistant Commissioner, before whom it was submitted that there was no assessment

u/s 12 of the Act and therefore, the assessment u/s 16 of the Act cannot be made. Since there was no assessment, made u/s 12 of the Act, the

Appellate Assistant Commissioner came to the conclusion that the assessment u/s 16 of the Act is not possible. Therefore he held that the

assessment made u/s 16 of the Act is without jurisdiction. Accordingly, he remanded the assessments back to the territorial officer for making fresh

assessments.

Aggrieved assessee filed second appeals before the Tribunal. The Tribunal also came to the conclusion that inasmuch as the assessment u/s 12

of the Act was not made, the assessment u/s 16 of the Act could not be made. Therefore, the Tribunal held that the assessment made u/s 16 of the

Act was without jurisdiction. Accordingly, the assessments were set aside by the Tribunal. The Tribunal also pointed out that there is no case for

remanding the matter to the assessing authority for making fresh assessments. It is against the order passed by the Tribunal in the assessment year

under consideration, the State in revision before this Court.

The learned Additional Government Pleader (Taxes) submitted as under : In the present case, in the assessment years under consideration, as

per the entries made in the ""A"" register, assessments u/s 12 of the Act were made and since the assessments were stated to be ""nil"" assessments,

the order of assessment was not communicated to the assessee. Therefore, it was submitted that the assessment made by the enforcement officials

u/s 16 and section of the Act on the escaped turnover is perfectly justifiable. It was pointed out that the Tribunal was not correct in stating that no

assessment was made in the case of he assessee u/s 12 of the Act. Therefore, it was submitted that the assessment made by the D.C.T.O., u/s 16

of the Act in the assessment years under consideration and the levy of penalty u/s 16(2) of the Act, are in order.

However, the learned counsel for the assessee submitted that the assessment made u/s 12 of the Act was not brought to the notice of the

Tribunal at the time when the appeals were heard. Therefore, accordingly to the learned counsel for the assessee, no assessment was made in the

case of the assessee u/s 12 of the Act. It was further submitted that without making an assessment u/s 12 of the Act, the assessment u/s 16 of the

Act or u/s 16-A of the Act of the escaped turnover cannot be made. ""It was also submitted that inasmuch as the assessment made u/s 12 of the

Act was not served on the assessee, it will be deemed to be not exiting in the eye of law. It was, therefore, pleaded that the order passed by the

Tribunal setting aside the assessments made by the D.C.T.O. II, Enforcement Wing, Tiruvannamalai, is in order.

We have heard the rival submissions. For the assessment years 1974-75 and 1975-76, the D.C.T.O. made an assessment u/s 16 of the Act on

the escaped turnovers. Penalties were also levied u/s 16(2) of the Act for the suppressed turnover. According to the assessee, the assessment u/s

16 or 16-A of the Act cannot be made for the first time and the assessment can be made under the aforesaid sections only after the original

assessment was made u/s 12 of the Act or the assessment made u/s 16-A of the Act should again be ratified by an assessment made u/s 12 of the

Act.

Section 12 of the Act prescribes the procedure to be followed by the assessing authority while making an assessment. Section 16(1)(a) of the

Act states that where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing

authority may, subject to the provisions of sub-section (2) at any time within a period of five years from the expiry of the year to which the tax

relates, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making

such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment. Section

16(1)(b) of the Act states that where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate

lower than the rate at which it is assessable, the assessing authority may, at any time within a period of five years from the expiry of the year to

which the tax relates, reassess the tax due after making such enquiry as it may consider necessary and after giving the dealer a reasonable

opportunity to show cause against such reassessment.

Therefore, u/s 12 of the Act, original assessment can be made and u/s 16 of the Act, assessment can be made on the escaped turnover.

Assessing authority"" u/s 2(c) of the Act means, any person authorised by the Government or by any authority empowered by them, to make any

assessment under this Act. In the present case, there is not dispute with regard to the fact that the D.C.T.O. II, Enforcement Wing, Tiruvannamalai,

was empowered to assess as per the Notifications No. 2437 of 1962, No. II(1)/CTRE/116/77 dated April 16, 1977 and No.

II(1)/CTRE/59(a)/80 dated February 15, 1980. Under these notifications, any officer of the Intelligence Wing above the rank of a D.C.T.O., is

empowered for assessment of escaped turnover under sections 16 and 16-A of the Act.

In the present case, the learned Additional Government Pleader (Taxes) brought to our notice that as per the entries made in the ""A"" register for

the assessment year 1974-75, the assessment was completed on August 2, 1975. It was a ""nil"" assessment. So also for the assessment year 1975-

76, the assessment was completed on December 31, 1976. This is also a ""nil"" assessment. Therefore, in the case of the assessee, in both the

assessment years under consideration original assessments u/s 12 of the Act were said to have been made. It is true that the copy of the copy of

the assessment orders were not served on the assessee. According to the learned Additional Government Pleader (Taxes), since the assessment

order was not served on the assessee, that would not lead to the conclusion that the assessment itself would become invalid.

After the original assessments were made u/s 12 of the Act in the assessment years under consideration, the D.C.T.O., II, Enforcements Wing

Tiruvannamalai, u/s 16 of the Act completed the assessments on the escaped turnovers and also levied penalties on the suppressed turnovers u/s

16(2) of the Act. Therefore, the assessments made on the escaped turnover by the D.C.T.O. II, Enforcement Wing, Tiruvannamalai, are valid

assessments, and that the same cannot be considered as invalid assessments on the allegation that no assessment was made u/s 12 of the Act

originally in the case of the assessee for the assessment years under consideration.

A similar question came up for consideration before this Court in the decision reported in Joint Commercial Tax Officer-II, Tuticorin v.

Ekambareeswarar Coffee and Tea Works 1991 83 STC 457 wherein this Court held that ""the order of assessment made after assessing the

turnover which had escaped assessment includes within it the original turnover as also the original assessment."" Accordingly, we hold that the

Tribunal was not correct in setting aside the assessments made and the penalty orders passed by the D.C.T.O. II, Enforcement Wing,

Tiruvannamalai, u/s 16 and 16(2) of the Act for the assessment years under consideration. In that view of the matter, the common order passed by

the Tribunal in both the assessment years under consideration is set aside and the orders passed by the D.C.T.O. II, Enforcement Wing,

Tiruvannamalai, stand restored. Both the revisions are allowed. No costs.

Petition allowed.