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TMI Blog1994 (4) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... il K. Jain, Advocates, for the respondets (dealers) in other appeals. A. Mariarputham and Ms. Aruna Mathur, Advocates, for the State of Tamil Nadu. -------------------------------------------------- The judgment of the Court was delivered by B.P. JEEVAN REDDY, J.-Rates of tax on sales effected in the course of inter- State trade or commerce are prescribed by section 8 of the Central Sales Tax Act, 1956. The rates prescribed vary depending upon the person to whom the goods are sold as well as the nature of the goods. A reading of sub-sections (1) and (2) yields the following position: (1) In the case of sale to Government of any goods, the rate is 4 per cent [section 8(1)(a)]. (2) On sale of goods of the description referred to in sub-section (3) to a registered dealer other than the Government-at 4 per cent [section 8(1)(b)]. (3) In the case of sales not falling under sub-section (1) of section 8, the tax on turnover shall be calculated at twice the rate applicable to the sale or purchase of such goods inside the appropriate State, if they are declared goods [section 8(2)(a)]. (4) In the case of sale of goods other than declared goods and not fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed particulars in the prescribed form obtained from the prescribed authority. The Rules made under the Act have prescribed the form in which such a declaration has to be issued by the purchasing dealer-it is called "form C". In case form D or form C is produced, the assessing authority would levy tax on inter-State sales at 4 per cent only; otherwise the sales will attract the higher rate of tax prescribed in sub-section (2). Before we deal with the proviso to sub-section (4), it would be appropriate to refer to the rule relevant in this behalf. It is rule 12. It is a lengthy rule containing as many as ten sub-rules. Sub-rule (1) says that the certificate and the declaration referred to in clauses (a) and (b) of sub-section (4) of section 8 shall be in forms D and C respectively. The other provisions in sub-ruIe (1) and sub-rules (2) to (6) deal with various aspects relating to the said forms which it is not necessary to refer to for the purpose of this case. Sub-rule (7) reads as follows: "(7) The declaration in form 'C' or form 'F' or the certificate in form 'E-I' or form 'E-II' shall be furnished to the prescribed authority up to the time of assessment by the first asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proviso says that if the prescribed authority is satisfied that the dealer was prevented by sufficient cause from furnishing such certificate "within the aforesaid time-limit" he may allow such certificate to be furnished within such further time as he may permit. Reading sub-rule (7) as a whole it follows that form C shall be furnished up to the time of assessment by the first assessing authority but in a proper case the prescribed authority (which means in the context the assessing authority) may permit such forms to be filed within such further time as he may permit. This necessarily means that the assessing authority will complete the assessment but at the same time permit the dealer to file form C within the time specified by him. In case the dealer files the form C within the time specified, it is obvious, the assessing authority will revise the order of assessment granting the requisite relief. Having noticed the relevant provisions of law, we may now turn to the question arising in these matters. It is this: where a dealer does not furnish form C before the first assessing authority up to the time of assessment, can he be permitted to file the said forms in the appeal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal confined to certain aspects. The learned counsel for the dealers point out that no particular sanctity attaches to the use of the appellation "first assessing authority" in sub-rule (7) of rule 12. They also point out that the Andhra Pradesh Sales Tax Appellate Tribunal is expressly empowered by the Regulations made under the Act to receive additional evidence which too indicates the power of the Tribunal to receive form C by way of additional evidence. Almost all the High Courts except the Madhya Pradesh High Court have upheld the contentions urged by the dealers. In Madras High Court, a Bench had taken the view in State of Tamil Nadu v. Chellaram Garments (P) Ltd. [1979] 44 STC 239 that the appellate authority has no such power and that the only course open to it in such a case is to send the matter back to the assessing authority for the purpose of considering the entertainability of form C. [Indeed, this appears to be the view taken by the Madras High Court in two earlier decisions, viz., Deputy Commissioner (Commercial Taxes), Coimbatore Division, Coimbatore v. Parekutti Hajee Sons [1962] 13 STC 680 and Deputy Commissioner of Commercial Taxes, Madras Division v. Manohar B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. Sub-section (3) of section 36 again is in the same terms as sub-section (3) of section 31 and sub-section (3) of section 31-A. The position under the Andhra Pradesh General Sales Tax Act is no different. Section 19 provides for an appeal to the specified authority. Sub- section (3) of section 19 [which corresponds to sub-section (3) of section 31 in the Tamil Nadu Act] reads: "(3) The appellate authority may, after giving the appellant an opportunity of being heard and subject to such rules of procedure as may be prescribed: (a) confirm, reduce, enhance or annul the assessment or the penalty, or both or (b) set aside the assessment or penalty, or both, and direct the assessing authority to pass a fresh order after such further enquiry as may be directed; or (c) pass such other orders as it may think fit." Sub-section (4) says that before passing orders under sub-section (3), the appellate authority may make such enquiry as it thinks fit or remand the case to any subordinate officer or authority for inquiry and report on any specified point or points. Section 21 provides for a second appeal to the Appellate Tribunal and sub-section (4) of section 21 is again in the same ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax [1957] 31 ITR 909 (Bom) that: "........... in giving the power of enhancing the assessment, the Legislature has strikingly deviated from the ordinary principles that govern the court of appeal. Although the Department cannot appeal against the order of the Income-tax Officer and although the appeal is only by the assessee, even so the Legislature confers upon the Appellate Assistant Commissioner the power to make an order which is obviously to the prejudice of the appellant. Therefore, although the appellant may only complain of particular points in the assessment and he may be satisfied with regard to the rest of the assessment, the Appellate Assistant Commissioner's powers are not confined to consider only these points about which the assessee has a grievance but he may consider those points about which the assessee is satisfied and order the enhancement of the assessment. Now, it is clear that going by the plain words used by the Legislature there are no words of limitation or qualification upon the power of the Appellate Assistant Commissioner in enhancing the assessment or setting aside the assessment and directing a fresh assessment to be made by the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. We may elaborate. Section 13 of the Indian Income-tax Act, 1922 (corresponding to section 145 of the present Act) read as follows: "13. Income, profits and gains shall be computed, for the purposes of sections 10 and 12, in accordance with the method of accounting regularly employed by the assessee: Provided that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Income- tax Officer may determine." Relying upon the words "in the opinion of the Income-tax Officer" occurring in the proviso to section 13, it was contended by the assessee that the power or duty of rejecting the method of accounting on the ground that income, profits and gains cannot be properly deduced therefrom is given to the Income-tax Officer alone and not to any other authority in the hierarchy of authorities mentioned in section 5 of the Act. On the other hand, the contention of the Revenue was that reading section 13 together with section 31(3), it should be held that the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of tax determined'. Why can he not then interfere with the opinion of the Income-tax Officer under the proviso to section 13? It is contended that both sub-sections (3) and (4) of section 23 prescribed objective conditions for the exercise of the power referred to therein. It is true that under both sub-sections the assessment must be a fair and honest estimate and not arbitrary or capricious. Apart from that, however, we do not see what other distinctive, objective conditions there are which put those sub-sections in a different category. The words 'in the opinion of the Income-tax Officer' are not to be construed in the sense of a mere discretionary power; but in the context of the words used in the proviso to section 13 they impose a statutory duty on the Income-tax Officer to examine in every case the method of accounting and to see (i) whether or not it is regularly employed, and (ii) to determine whether the income, profits and gains can properly be deduced therefrom. Section 30 of the Act gives the assessee a right of appeal in respect of certain orders including an order of assessment made under section 23. Section 31 deals with the hearing of an appeal and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler for not producing them earlier. It is necessary to reiterate that receipt of those forms in appeal cannot be a matter of course; it should be allowed only where sufficient cause is established by the dealer for not producing them before the first assessing authority as contemplated by rule 12(7). The requirement of the said sub-rule cannot be excluded from consideration by the appellate court, while judging the sufficiency of the cause shown. It must be remembered that that is the primary obligation of the dealer and his failure to abide by it must be properly explained. Insofar as the Sales Tax Appellate Tribunal under the Andhra Pradesh Act is concerned, it is governed by regulation 11(1) referred to hereinabove which again is nothing but a reiteration of the very same power. The reasoning in the decision of the Full Bench of the Madras High Court in Arulmurugan & Co. [1982] 51 STC 381 is practically on the same lines as indicated above. We are in agreement with the said view. It is also brought to our notice that the Andhra Pradesh High Court has taken the same view in Rajeswari Stone Polishers v. State of Andhra Pradesh [1983] 52 STC 268. For the above reasons, the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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