The Deputy Commissioner of Commercial Taxes, Assessment 3, Bangalore City Division-i, Bangalore vs M/s. Geminy Steel Tubes Limited, Bangalore

Ashok Bhan, J.-Aggrieved by the order of the learned Single Judge, State of Karnataka has filed these appeals arising from W.P. Nos. 27056 and 27057 of 1994.

In short, the facts are:

Respondent-writ petitioner (hereinafter referred to as the respondent) filed two writ petitions referred to above challenging the notices issued to him under Section 12-A of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the ''Act'') for the assessment years 1988-89 and 1989-90. Section 12-A provides for making of an assessment on the escaped turnover. The basis to initiation of proceedings under Section 12-A is the inspection report sent to the Assessing Authority on 11-5-1992.

Assessment for the year 1988-89 was framed on 10th of June, 1989. As the inspection report was not available on the date when the assessment was made for the year 1988-89, learned Single Judge came to the conclusion that there was fresh information made available to the Assessing Authority and therefore, it was open to the Assessing Authority to reopen the matter under Section 12-A. In view of this finding, W.P. No. 27056 of 1994 relating to the assessment year 1988-89 was dismissed.

So far as the assessment order 1989-90 is concerned, the assessment was framed on 19-4-1993. Learned Single Judge came to the conclusion that the inspection report which was sent to the Assessing Authority on 11-5-1992 was available to the Assessing Authority on the date of the framing of the assessment for the assessment year 1989-90 and therefore, there was no fresh material before the Assessing Authority to reopen the assessment under Section 12-A. Learned Single Judge was of the opinion that it would amount to change of opinion on the existing material and not a proceeding initiated on the basis of the material available for the first time which was not originally available to the Assessing Authority. In that view of the matter, the proceeding initiated under Section 12-A for the assessment year 1989-90 was quashed.

State of Karnataka was aggrieved against the order passed by the learned Single Judge for the assessment year 1989-90 and therefore filed an appeal relating to the said year only. It seems, by mistake, office has treated the appeal filed by the State of Karnataka to be two appeals relating to the assessment years 1988-89 and 1989-90. Appeal 107 of 1996 against W.P. No. 27056 of 1994 be deemed to be no appeal. Writ Appeal No. 108 of 1996 be treated to be the appeal against W.P. No. 27057 of 1994 which survives before us for consideration today.

With due respect to the learned Single Judge, we are unable to persuade ourselves to take the view taken by him. Section 12-A(1) reads as under:

"12-A. Assessment of escaped turnover.-(1) If the Assessing Authority has reason to believe that the whole or any part of the turnover of a dealer in respect of any period has escaped assessment to tax or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable under this Act or any deductions or exemptions have been wrongly allowed in respect thereof, the Assessing Authority may, notwithstanding the fact that the whole or part of such escaped turnover was already before the said authority at the time of the original assessment or reassessment but subject to the provision of sub-section (2), at any time within a period of eight years from the expiry of the year to which the tax relates, proceed to assess or reassess to the best of its judgment the tax payable by the dealer in respect of such turnover after issuing a notice to the dealer and after making such enquiry as it may consider necessary".

A perusal of this section would show that under Section 12-A, the Assessing Authority has been conferred with the power to re-frame the assessment notwithstanding the fact that the whole or part of such escaped turnover was already before the said authority at the time of original assessment. Sub-section (1) has been made subject to sub-section (2) which is relating to the period of limitation, with which we are not concerned. Learned Single Judge has proceeded on the assumption that in the absence of fresh material, the Assessing Authority could not reopen the assessment on a mere change of opinion on the basis of the reappraisal of the material which had been available to it at the time of the framing of the original assessment. Proceedings for reassessment can be initiated irrespective of the fact whether whole or part of such escaped turnover was already before the said authority at the time of original assessment or reassessment. With respect, the view taken by the Single Judge cannot be sustained on a plain reading of Section 12-A. A Division Bench of this Court in M/s. Kesoram Rayon v Commissioner of Commercial Taxes, Bangalore and Another, 1989(33) Kar. L.J. 149, while interpreting Section 12-A has held:

"5. In our opinion, language of Section 12-A of the Act is clear and unambiguous. It confers power on the Assessing Authority to make a reassessment even in cases where the entire turnover was before the Assessing Authority, but it had committed a mistake in the matter of rate of tax in that a lower rate of tax than the one at which the tax ought to have been levied had been levied. Therefore, the question set out first has to be answered in the affirmative and against the petitioners".

Learned Counsel for the petitioner-respondent contends that the order passed by the learned Single Judge is sustainable on the ground other than the one given in the order which have not found favour with us. According to him, there was no material before the Assessing Authority to believe that whole or any part of the of the dealer has escaped assessment. We do not agree with this contention. The material available for the assessment years 1988-89 and 1989-90 was the same. The inspection report has been taken and accepted to be relevant material for the assessment year 1988-89 against which no appeal has been filed. The order relating to the reopening of the assessment for the year 1988-89 has become final. It cannot be held that the material which was relevant for the assessment year 1988-89 would not be relevant for the assessment year 1989-90, the material for both the years being the same. When once it has been accepted for the year 1988-89 to be the relevant material, inescapably it has to be accepted to be the relevant material for the assessment year 1989-90 as well.

For the reasons stated above, we accept this appeal and set aside the order of the learned Single Judge relating to the assessment year 1989-90 as well. The Assessing Authority shall now proceed with the notice issued by it under Section 12-A and deal with it in accordance with law. Parties to bear their own costs.