TMI Blog1987 (2) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee the "original assessment order should be considered to remain intact as nothing is added or altered in pursuance of the order under section 21 of the Act". - Civil Appeal No. 625 of 1986 - - - Dated:- 3-2-1987 - VENKATARAMIAH E.S. AND MURARI MOHAN DUTT JJ. -------------------------------------------------- Appeal by special leave from the judgment and order dated November 20, 1985, of the Allahabad High Court in S.T. Revision No. 318 of 1985. The judgment of ANSHUMAN SINGH, J., of the Allahabad High Court in Commissioner of Sales Tax v. Kundan Lal Shrikishan (Sales Tax Revision No. 318 of 1985 dated 20th November, 1985), runs as follows: ANSHUMAN SINGH, J.- The respondent-assessee carried on the business in foodgrains, oil-seeds, gur, etc. For the year 1975-76 the books of account of the assessee were accepted and the Sales Tax Officer assessed the turnover including purchases amounting to Rs. 51,54,813.04 made on behalf of the ex-U.P. principals. Subsequently a notice under section 21 of the U.P. Sales Tax Act (hereinafter referred to as the Act) was issued to the assessee on the assumption that the amounts relating to commission charges a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling an application under section 22 of the Act is three years and in view of the two dates mentioned above the application was clearly barred by time. On the other hand Mr. Bharatji Agarwal, learned counsel for the assessee, submitted that since the original order of assessment was reopened under section 21 of the Act, it merged in the order dated 18th January, 1980, passed under section 21 of the Act and the application under section 22 of the Act having been moved on 4th November, 1982, the same was within the period of three years and could not be dismissed as barred by time. In support of his contention he placed reliance on a decision of this Court in Commissioner of Sales Tax v. Durga Metal Works 1983 UPTC 1138 in which it was held that the original order of assessment ceases to exist on the initiation of proceedings under section 21 of the Act and a fresh order of assessment has to be made. The facts of the said case were that the assessee filed a return and disclosed a turnover of inter-State sale of Rs. 20,29,236.68, which figure was accepted by the assessing authority and tax was levied at the rate of 3 per cent on the turnover of Rs. 20,36,414.18. Subsequently on examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once a notice for reassessment is issued, the original order of assessment ceases to exist and the period of limitation will start from the date of passing of the fresh assessment order. A careful reading of the said case indicates that even in that case the controversy regarding scope of order under section 154 of the Indian Income-tax Act was involved and fresh orders of reassessment were passed. In the case on hand no fresh order of assessment was passed and after scrutinising the record of the assessee it was held that no turnover of the assessee had escaped assessment. Much emphasis has been placed on the words "initiation of proceedings under section 21" and it is on that score it has been canvassed by the assessee that once a notice under section 21 of the Act is issued the order of assessment ceases to exist. If this argument is accepted in the circumstances of this case it would create an anomalous situation. Even if it be taken that the original assessment order dated 7th February, 1979, stood merged in the order dated 18th January, 1980, passed in proceedings under section 21 of the Act which resulted in the discharge of the notice, the result would be the same. The o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover of the appellant for the year 1975-76 by the Sales Tax Officer, Sector 2, Mathura under the Act on February 7, 1979. Thereafter on January 8, 1980, the Sales Tax Officer issued a notice to the appellant under section 21 of the Act proposing to make a reassessment in respect of the said assessment year, i.e., 1975-76 on the ground that the mandi cess and arhat (commission) which should have been included in the turnover had escaped assessment and directed the appellant to appear before him along with its account books on January, 18, 1980. After looking into the books of accounts and hearing the advocate who appeared on behalf of the appellant, the Sales Tax Officer passed the order under section 21 of the Act on the same date holding that the appellant was not liable to pay any more tax under the Act. The order passed by the Sales Tax Officer reads thus: "Office of the Sales Tax Officer Sector 2, Mathura S/Shri Kundan Lal Srikishan Lala Ganj, Mathura Year: 75-76 Section 21 ORDER UNDER SECTION 21 The original tax assessment order in respect of you was passed on 7-2-79. The audit, however, had objected that the businessman's arhat (commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment and was thus barred by limitation. Aggrieved by the order of the appellate authority dismissing the appellant's appeal arising out of the application for rectification of the assessment order passed in respect of the assessment year 1975-76, the appellant preferred a second appeal before the Sales Tax Tribunal, Uttar Pradesh. The department also preferred second appeals against the orders of rectification passed by the appellate authority in respect of the orders of assessment for assessment years 1976-77, 1977-78 and 1978-79. The Tribunal disposed of all the appeals by a common order dated February 26, 1985 by which it allowed the appeal of the appellant and dismissed the appeals filed by the department. The Tribunal held that the appellant was entitled to succeed on merits in each of the appeals and further held that the rectification application made in respect of the assessment order for the assessment year 1975-76 was within limitation as the original order dated February 7, 1979 passed in respect of the said assessment year had ceased to exist on the reopening of the assessment by the notice issued under section 21 of the Act and the final order under that section h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he instant case should be the date of the original assessment order, i.e., February 7, 1979 or whether it should be the date of the order passed under section 21 of the Act, i.e., January 18, 1980. On behalf of the appellant it is contended before us that on the issue of the notice under section 21 of the Act the original assessment ceased to be in force and that the only order of assessment in respect of assessment year 1975-76 which should be taken into consideration for all purposes including the application for rectification of mistake is the order dated January 18, 1980. In support of the above plea the appellant has relied upon the decision of this Court in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu [1977] 39 STC 177 (SC); [1977] 2 SCR 593 which was a case arising under the Mysore (Karnataka) Sales Tax Act, 1957. In that case the original assessment order had been passed on March 21, 1963. Thereafter there was an order of reassessment made under section 12A of the Mysore (Karnataka) Sales Tax Act, 1957 on June 8, 1966 because certain amounts had escaped assessment under the original assessment order. Thereafter on June 28, 1967 the Deputy Commissioner of Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for assessment ceases to be operative. The effect of reopening the assessment is to vacate or set aside the initial order for assessment and to substitute in its place the order made on reassessment. The initial order for reassessment cannot be said to survive, even partially, although the justification for reassessment arises because of turnover escaping assessment in a limited field or only with respect to a part of the matter covered by the initial assessment order. The result of reopening the assessment is that a fresh order for reassessment would have to be made including for those matters in respect of which there is no allegation of the turnover escaping assessment. As it is, we find that in the present case the assessment orders made under section 12A were comprehensive orders and were not confined merely to matters which had escaped assessment earlier. In the circumstances, the only orders which could be the subject-matter of revision by the appellant were the orders made under section 12A of the Act and not the initial assessment orders." In reaching the above conclusion the Court relied upon three decisions of this Court, namely, V. Jaganmohan Rao v. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red on its behalf the Sales Tax Officer was of the view that the assessee had already included in its taxable turnover the arhat (commission) and mandi cess amounts and therefore, no extra tax was leviable under section 21 of the Act. Even so, it has to be held that the order dated January 18, 1980 is an order of reassessment notwithstanding the fact that a regular order of reassessment has not been passed. The order passed on January 18, 1980 should be construed as a fresh order of assessment passed under section 21 of the Act and the initial order of assessment dated February 7, 1979 should be deemed to be the order passed again on January 18, 1980. If the assessee is able to show any error apparent on the record from the order of assessment dated February 7, 1979 which as we have observed earlier should be deemed to have been passed again on January 18, 1980, the appellant is entitled to succeed in its application for rectification provided it is made within the prescribed time, i.e., three years from the date of the order passed under section 21 of the Act. We do not find any merit in the submission made on behalf of the depart- ment that the order passed on January 18, 1980 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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