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Judgment
V.C. Daga, J.—In S.T.R. No. 19/2003, the Maharashtra Sales Tax Tribunal ("Tribunal" for short) u/s 61(1) of the Bombay Sales Tax Act, 1959 ("Act" for short), by its order dated 7th June, 2002, has referred the following questions for the opinion of this Court:
Whether on the facts and circumstances of the case, and on a true and correct interpretation of the first proviso to Sub-section (4A) of Section 33 of the Bombay Sales Tax Act 1959 the Tribunal was justified in law in holding that the fresh assessment orders passed in the opponent dealer�s case were time barred as per the said proviso, when in fact, the case was not at all covered by Sub-section (4A) of Section 33 for the reason of the opponent dealer�s not having filed all the returns by the given date?
Whether on the facts and circumstances of the case and on a true and correct interpretation of the first proviso to Sub-section (4A) of Section 33 of the Bombay Sales Tax Act, 1959, the Tribunal was justified in law in holding that the applicability of the provisions of the said proviso is not limited only to the assessment cases covered by all the provisions of Section 33?
In S.T.R. No. 10/2006, the Tribunal has referred to following question for the opinion of this Court:
Whether on the facts and circumstances of the case and on a true and correct interpretation of the first proviso to Section 33(4A) of the Bombay Sales Tax Act, 1959, was the Tribunal justified in holding that the said proviso applies only when the assessee files all the sales tax returns in time?
Since the questions referred in both the references revolve around interpretation of first proviso to Section 33(4A) of the Act, both references were taken up together for hearing. For the sake of convenience the facts are borrowed from S.T.R. No. 19/2003.
The Facts:
The respondent-assessee carried on the business of selling parts of motor vehicles at Mumbai. He holds a registration certificate under the Act. From the period from 1st April, 1985 to 31st March, 1986, he had filed all the returns and also paid the tax according to the returns. He was called for assessment by the adjudicating authority i.e. the Assistant Commissioner of Sales Tax, Worli Division, Mumbai. However, he did not attend hearing since his accountant was indisposed. With the result, an ex parte order of assessment was passed on 23rd August, 1988 raising demand of Rs. 96,203/-.
Aggrieved by the aforesaid order of assessment, assessee filed an appeal before the Deputy Commissioner of Sales Tax (Appeals), who vide his order dated 29th November, 1989, set aside the ex parte assessment order and remanded the matter to the adjudicating authority for fresh assessment. Accordingly, the adjudicating authority issued fresh notice to the respondent-assessee calling upon it to remain present for assessment.
The respondent appeared and objected for fresh assessment raising a contention that the assessment was barred by limitation in view of the first proviso appearing after Explanation II of Sub-section (4A) of Section 33 of the Act as amended with effect from 1st July, 1981, since more than three years had been passed from the date of order in appeal. The contention of the respondent was rejected and again ex parte assessment order was passed raising a demand in the sum of Rs. 32,04,184/- in place of Rs. 96,203/-.
Aggrieved by the said order, the respondent filed an appeal before the Deputy Commissioner of Sales Tax (Appeals), who vide his order dated 31st March, 1995, held that fresh assessment was not barred by limitation as Section 33(4A) required that all the returns should have been filed within the prescribed time and that the return filed for the month of March, 1986 was late. The appeal was partly allowed. The assessment order was set aside for the reasons stated in the order. The case was remanded back to the assessing officer with direction to make fresh assessment following principles of natural justice. The part payment of Rs. 25,000/- made in appeal was directed to be considered while making fresh assessment.
Aggrieved by the aforesaid order, the Revenue preferred second appeals before the Tribunal. The Tribunal analysed the various provisions contained in Section 33 and felt inclined to accept the assessee�s contention. It was held that the statutory time limit contained in the first proviso to Section 33(4A) is applicable to all the assessment cases remanded for fresh assessment. Taking this view, the Tribunal allowed the second appeals and set aside the fresh assessment orders on the ground of their having been barred by limitation.
Not being satisfied with the said order, the Revenue applied for reference with a prayer to refer the questions of law to this Court. The Tribunal, accordingly, referred two questions extracted in the opening part of this judgment, for the opinion of this Court.
The Issue:
The only issue involved in these references is: whether the fresh assessment made is barred by limitation since it is passed after more than three years after the order passed in appeal, in view of the proviso appearing below Explanation II to Sub-section (4A) of Section 33 of the Act?
Rival Submissions:
Mr. Sonpal, learned Counsel for the applicant-Revenue submits that in the entire Section 33, which pertains to assessment of tax, the statutory time limit for completion of assessment is provided only for the cases covered by Section 33(4A) i.e. where all the returns are filed by the assessee before the due date meant for filing the last return of the particular period. In other cases of assessment, no statutory time limit for completion of assessment has been provided.
Mr. Sonpal further submits that though the time limit for assessment proceedings is prescribed under Sub-section (5) and (6) of Section 33, the Act does not require those assessments to be completed within a particular time frame. In that view of the matter, he submits that the explanations and provisos to Section 33(4A) provide for computing, extension etc., for the cases covered u/s 33(4A) only. He relied upon the larger bench judgment of the Tribunal dated 7th June, 2007 in the case of M/s. Bombay Stamping and cut Metal Corporation (S.A. No. 1518 and 1520 of 2004) in support of his submission.
Mr. Sonpal urged that time limit of 36 months, for completion of the post remand assessment, as provided in first proviso, applies only to the cases covered by Sub-section (4A) of Section 33 of the Act i.e. to those dealers who have filed their returns within the due date. It is, thus, not applicable to the dealers who are to be assessed under Sub-sections (5) and (6) of Section 33. In other words, dealers, who have not filed returns or who have filed returns late are not entitled to raise the plea of limitation since no time-frame is provided for them under the Act.
Mr. Sonpal reiterates that Sub-section (4A) of Section 33 of the Act prescribed time limit of three years for assessment under Sub-section (3) and (4) of Section 33 and that with regards to the assessments under Sub-sections (1), (2), (5) and (6), no time limit for assessment is prescribed. He has submitted that the legislature has made distinction between the cases falling under Sub-sections (1), (2), (5) and (6) of Section 33 and that of Sub-section (3) and (4) of Section 33.
Mr. Sonpal, on the above premise, submits that "the fresh assessment" referred to in the proviso cannot be applied to both the categories of assessments looking to the placement of proviso in Sub-section (4A) of Section 33 of the Act. According to him, had it been the intention of the legislature that it would cover all the assessments, then the proviso would have been placed at the end of Section 33. According to him, since the proviso is appended to Sub-section (4A), one has to infer that its application is restricted only to provisions contained in Sub-section (4A).
Per contra, Mr. Surte, learned Counsel for the respondent-assessee submits that on a plain reading of the proviso inserted on 1st July, 1981, it is clear that where a fresh assessment is required to be made to give effect to any finding or direction contained in any order made under this Act, or in any order of the Tribunal, High Court or the Supreme Court, then such assessment is required to be made within thirty six months from the date of such finding, direction or order. The provision does not refer only to the orders passed u/s 33(3) but it covers all orders passed u/s 33 as observed by the Tribunal.
Mr. Surte, on the above premises, submits that since the proviso applies to all the cases covered by the provisions of Section 33 of the Act, as such the question reframed needs to be answered in favour of the respondent-Assessee and against the Revenue. In support of his submissions, Mr. Surte has placed reliance on the judgment of the Apex Court in the case of State of Orissa v. Debaki Devi and Ors. (1964) 15 STR 153 (SC).
Statutory Provisions:
Before considering the rival submissions, it is necessary to turn to the statutory provisions relevant to the issues involved:
Assessment of taxes - (1) The amount of tax due from a dealer liable to pay tax shall be assessed separately for each year during which he is so liable:
Provided that, Commissioner may, subject to such conditions as may be prescribed and for reasons to be recorded in writing assess the tax due from any dealer during a part of year:
Provided further that, when a registered dealer fails to furnish any return relating to any period of any year, by the prescribed date, the commissioner may, if he thinks fit, assess the tax due from such dealer separately for different part of such year.
(2) If the commissioner is satisfied that the returns furnished by a registered dealer in respect of any period are correct and complete, he shall assess the amount of dues from the dealer on the basis of such returns.
(3) If the commissioner is not satisfied that the returns furnished by a registered dealer in respect of any period are correct and complete, and he thinks it necessary to require the presence of the dealer or the production of further evidence, he shall serve on such dealer in the prescribed manner a notice requiring him on a date and at a place specified therein either to attend and produce or cause to produce all evidence on which such dealer relies in support of his returns, or to produce such evidence as is specified in the notice.
On the date specified in the notice, or as soon as many be thereafter the Commissioner shall, after considering all the evidence which may be produced, assess the amount of tax due from the dealer.
(4) If a registered dealer fails to comply with the terms of any notice issued under Sub-section (3), the commissioner shall assess, to the best of his judgment, the amount of tax due from him.
(4A) Where all the returns are filed by a registered dealer for any year ending on or after the notified day by the prescribed dates, or on or before the date prescribed for filing the last return of that year, no order of assessment under Sub-section (3) and (4) in respect of that year shall be made after the expiry of three years from the end of the said year; and for if any reason such order is not made within the period aforesaid, then the returns so filed shall be deemed to have been accepted as correct and complete for assessing the tax due from such dealer.
Explanation-I - In the case of returns pertaining to the years ending prior to the notified day and filed on or before the notified day on or before any such other date thereafter as the State Govt. may be notification in the official Gazette specify in that behalf, the period of three years shall be computed from the notified date.
Explanation-II - In the case of return filed by registered dealer referred to in sub Clause (b) of Clause (37) of Section 2 and who has not opted for the financial year, the period of three years shall be computed from the end of the financial year in which the year, by reference to which the accounts of that dealer are maintained in his books ends.
Provided that where a fresh assessment has to be made to give effect to any finding or directions contained in any order made under this Act or any earlier law or to any order of Tribunal or the High Court or the Supreme Court, such assessment shall be made within thirty six months from the date of such finding, direction or order as the case may be:
Provided further that, in computing any period of limitation laid down in this section, the time during which the assessment remained stayed under the order of Tribunal or of the High Court or of the Supreme Court shall stand excluded:
Provided also that, the commissioner may, in the interest of the revenue or at the instance of the dealer, issue directions not to proceed with the assessment of any particular dealer or class of dealers for any particular period, if such assessment involves a decision on a point which is concluded against the state by a judgment of the Tribunal or the High Court and the State Govt., or the Commissioner has initiated any proceedings against such judgment before an appropriate forum. The period covered by such directions to stay the assessment proceedings shall be excluded in computing the period of limitation laid down in this section.
(5) If a registered dealer does not furnish returns in respect of any period by the prescribed ate, the commissioner shall, at any time within eight years from the end of the year in which such period occurs, after giving the dealer reasonable opportunity of being heard proceed to assess, to the best of his judgment, the amount of tax (if any) due from him.
(6) If the Commissioner has reason to believe that a dealer is liable to pay tax in respect of any period, but has failed to apply for registration or failed to apply for registration within time as required by Section 22, the commissioner shall at any time within eight years from the end of the year in which such period occurs, after giving the dealer reasonable opportunity of being herd, proceed to assess, to the best of his judgment, the amount of tax (if any) due from the dealer in respect of that period, and any period subsequent thereto.
(6A) Notwithstanding the forgoing provisions of this section, where the commissioner is not satisfied about the correctness of the completeness of the accounts of a dealer, or where no method of accounting has been regularly employed by a dealer, the commissioner may after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of tax due (if any) due from him.
(7) Any assessment made under this Section shall be without prejudice to any penalty of prosecution of an offence, under this Act.
(Emphasis supplied)
Consideration:
Having heard learned Counsel for the applicant-Revenue and learned Counsel for the respondent-Assessee and having gone through the text of Section 33 of the Act, merely because the aforesaid proviso has been inserted just below Explanation II of Section 33(4A) does not mean that it applies only to Section 33(4A). While interpreting any provision entire Section and the scheme engrafted therein need to be considered. The placement of the Section or Sub-section or proviso may be a small factor to be taken into account but that by itself cannot determine the scope of the statutory provision. The Apex Court in the case of Debaki Debi (supra) while dealing with the identical submissions observed as under:
It appears clear that the provision of a period of limitation of 36 months for the passing of an order of assessment of tax is really an independent legislative provision of the Act, and though it has been inserted by the draftsmen in the form of a proviso in Section 12(6), it is in substance not a real proviso to the main provision.
Mr. Sonpal has submitted that the time frame to complete reassessment is applicable to the cases wherein returns are filed well within the prescribed time limit and that it does not apply to the belated returns. However, the proviso nowhere refers to furnishing or non-furnishing of returns within prescribed time limit. In the questions framed, there is no reference to such returns. Even otherwise, the submission made by Mr. Sonpal making distinction on the basis of returns filed within time or beyond time is misplaced in view of the judgment of this Court in the case of Commissioner of Sales Tax v. Malabar Products (1995) 99 STC 546; wherein this Court ruled as under:
On a conjoint reading of Section 32, Sub-sections (2), (3), (4) and (5) of Section 33, Section 36(2)(c) and Explanations (1) and
(2) thereto, it is clear that all assessments made on consideration of the returns, whether furnished within the prescribed time or belatedly, and the evidence produced in support thereof, would be assessments under Sub-section
(3) of Section 33 of the Act and not under Sub-section (5) thereof. In such a case, even a best judgment assessment made on the failure of the assessee to produce evidence in support of his return in compliance with notice under Sub-section (3) of Section 33 would be an assessment under Sub-section (4) and not under Sub-section (5).
As a matter of fact, the questions referred are no more res integra in view of the judgment of the Hon''ble Supreme Court in the case of Debaki Debi (supra). The Apex Court in the said case whilst dealing with the pari materia provision of the Orissa Sales Tax Act, 1947; wherein identical proviso having similar placement in the statutory provision/section was a subject matter of interpretation and consideration, observed as follows:
The proviso is not in terms limited only to orders of assessment made u/s 12, but on its language applies to and governs any order assessing the amount of tax, which would manifestly include an assessment under any provision of the Act besides Section 12.
In the above view of the matter, the submission made by Mr. Surte deserves acceptance.
In the result, the questions referred stand answered in favour of the Assessee and against the Revenue. Both the References stand disposed of in terms of this order with no order as to costs.