TMI Blog1983 (4) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner and got the same sealed, and recorded his statement. Further, the petitioner was called upon to pay a sum of Rs. 20,577 towards tax for the year 1980-81 and another sum of Rs. 52,158 towards tax for the year 1981-82. The petitioner alleges that the statement was got recorded by the 2nd respondent from the petitioner and his clerk by coercion. While so, the petitioner received summons on 22nd June, 1982, under rule 56 of the A.P.G.S.T. Rules from the 2nd respondent to produce account books for the year 1981-82 on 28th June, 1982, for verification. The petitioner has thereupon filed this writ petition contending that the 2nd respondent has no jurisdiction to assess the petitioner, and that the conferment of powers of assessment on the 2nd respondent is illegal and contrary to the statutory provisions and is also arbitrary and discriminatory offending article 14 of the Constitution, and that on the date of the inspection on 24th March, 1982, the 2nd respondent was not invested with the powers of assessment, and therefore, he could not exercise the powers of assessment over the petitioner. W.P. No. 4411 of 1982: The petitioner herein is a dealer carrying on business of man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner. Alleging that there are some variations in the stocks, the 3rd respondent coercively collected Rs. 11,850 towards tax and Rs. 3,000 towards compounding fee on 14th June, 1982. Thereafter, the 2nd respondent issued a show cause notice on 9th November, 1982, which was received by the petitioner on 26th November, 1982, proposing to make provisional assessment for 1981-82 disallowing the exemption claimed in the returns, and directed the petitioner to file his objections within seven days. He also issued another show cause notice dated 12th November, 1982, proposing to levy penalty of Rs. 38,08,404 being three times of the tax and called upon the petitioner to file his objections within seven days. The petitioner has filed this writ petition challenging the action of the 2nd respondent proposing to make a provisional assessment and also proposing to levy penalty, and the action of the 3rd respondent in collecting tax and compounding fee. W.P. No. 5864 of 1982: The petitioner was a dealer carrying on business in groundnut oil at Hyderabad. For the period 1st April, 1981, to 31st August, 1981, the petitioner filed monthly returns before the Commercial Tax Officer, 8th Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rabad, inspected the business premises of the petitioner on 21st October, 1981, and seized the books and records. The returns for September, 1981, were to be filed on 25th October, 1981. But, as the entire records were taken away by the respondent, the petitioner could not file the returns for September, 1981, and October, 1981, in time. He, however, filed approximate returns for September and October, 1981, before the Assistant Commercial Tax Officer, Circle No. 4, Secunderabad. On 14th May, 1982, the respondent issued a show cause notice to the petitioner and called upon him to submit his objections. As the petitioner's representation was not received by the respondent, he sent the same by registered post raising various objections to the assessment proposed to be made by the respondent. But the respondent without referring to the said objections proceeded with the assessment, and by the proceedings dated 9th June, 1982, determined the net turnover of the petitioner at Rs. 12,13,323.18 and levied tax of Rs. 1,13,446 at 8 per cent and called upon the petitioner to pay the sum within seven days. The petitioner has thereupon filed this writ petition challenging the said order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions within such local limits as the State Government, or any authority or officer empowered by them in this behalf, may assign to them." Section 12 provides for registration of dealers with the prescribed authority and for grant of a registration certificate. Under section 12(2)(d), where a dealer has more than one shop or place of business, he shall apply for registration and obtain a separate registration certificate in respect of each such shop or place of business. Rule 3(i) of the A.P.G.S.T. Rules prescribes the "registering authority" as the Assistant Commercial Tax Officer in whose jurisdiction the principal place of business of a dealer applying for registration under section 12 is situated. Rule 28 lays down the procedure for registration and the grant of a certificate of registration. Sub-rule (7) of rule 28 provides that where the dealer has more than one place of business, the registration certificate shall cover all such places of business. Section 13 requires every dealer who is liable to tax under the Act to submit such return or returns relating to his turnover in such manner within such periods and to such authority as may be prescribed. Rule 9 requires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions any suppression or omission (whether or not fraudulent or wilful) is detected by such officer or brought to his notice in any manner whatsoever". It has to be mentioned at this stage that the Government passed an order in G.O. Ms. No. 1091, Revenue, dated 10th June, 1957, exercising the powers conferred by section 2(1)(b) of the Act authorising certain officers to exercise the powers of an assessing authority. Initially, the assessing authorities are Deputy Commercial Tax Officer, Commercial Tax Officer and Commercial Tax Officer (Special) who are assigned local limits within which such officers have to perform the functions prescribed by the Government or any other authority or officer empowered by them in that behalf. In exercise of the powers conferred by section 4, the Government issued orders in G.O. Ms. No. 1130, Revenue, dated 18th July, 1964, published in the Andhra Pradesh Gazette dated 6th August, 1964, delegating "to the Board of Revenue the power to notify the local limits within which the Deputy Commissioners, Assistant Commissioners, Commercial Tax Officers and Deputy Commercial Tax Officers may perform the functions respectively conferred oil them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner and a Commercial Tax Officer specially appointed for the investigation of evasions, to exercise the powers of assessing authority over the entire State of Andhra Pradesh in cases of whose dealers in respect of whose transactions any suppression or omission, whether or not fraudulent or wilful, is detected by such officer or brought to his notice in any manner whatsoever. Another notification was issued under section 2(1)(b) by the Government in G.O. Ms. No. 1059, Revenue (S), dated 27th July, 1982, further amending the second proviso to para 2 of the G.O. Ms. No. 1091, Revenue, dated 10th June, 1957 as amended by G.O. Ms. No. 434 dated 30th March, 1982. By this amendment, the words "and shall always be deemed to have been so empowered to exercise " have been inserted in the second proviso, thereby intending to confer on the Joint Commissioner, Assistant Commissioner, Intelligence, and Commercial Tax Officer, Intelligence, the powers under the second proviso with retrospective effect. The third proviso introduced by G.O. No. 1059 provides that: "where any officer specified in the foregoing proviso undertakes the assessment of any dealer in pursuance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of assessment made by the said officers, and therefore, the rule is arbitrary and discriminatory and violative of the rights under article 14 of the Constitution. (3) The said second proviso to para 2 of G.O. 1091 as amended by G.Os. 434 and 1059, has no retrospective effect, and the officers mentioned therein cannot exercise powers of an assessing authority with respect to turnovers relating to periods prior to the coming into force of the said notification. (4) The provisions of G.O. No. 1091 as amended by G.O. No. 434 apply only to cases of dealers in respect of whose transactions any suppression or omission, whether or not fraudulent or wilful, is detected and not to cases where turnovers are disclosed and exemptions are claimed by the dealers from assessment but disallowed by the concerned assessing authority. We shall now consider the aforesaid points seriatim. Point No. (1): Sri S. Dasaratharama Reddi, the learned counsel for the petitioners, contended that while under section 2(1)(b), assessing authority is defined as any person authorised by the State Government or by any other authority empowered by them in this behalf to make any assessment under the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1(2), it is stated that the Act extends to the whole of the State of Andhra Pradesh. Thus, the legislature has itself drawn a distinction between the whole of the State of Andhra Pradesh and the local limits in the State of Andhra Pradesh. Necessarily, therefore, it follows that the local limits mentioned in the latter part of section 4 can only comprise an area or territory which is part of, but something less than the whole of the area or territory of, the State of Andhra Pradesh. While fixing the territorial jurisdiction of the officers mentioned in section 4 for the purpose of assessing dealers covered by the second proviso to G.O. No. 1091 as amended by G.O. No. 434, the State Government or any authority or officer empowered in that behalf can only fix a territorial jurisdiction which is less than the whole of the State of Andhra Pradesh. Moreover, according to the definitions of "Assistant Commissioner", "Commercial Tax Officer", "Deputy Commercial Tax Officer", "Deputy Commissioner", "Joint Commissioner", they are all persons appointed under section 4 and their powers are exercisable only within local limits to be fixed by the State Government or any authority or officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may cover more than one district." From this observation, it is sought to be contended by the learned Government Pleader that as the expression "local area" includes any part of a State, it means the whole of the State, and that a similar meaning should be given to the expression "local limits" occurring in the latter part of section 4 of the Act. But, we are unable to agree with this submission. Firstly, it cannot be said that the passage occurring in the Supreme Court decision extracted above, namely, "the expression 'local area' includes any part of a State and it may cover more than one district" would mean that it covers the whole of the State. We do not think that their Lordships of the Supreme Court intended to construe the expression "local area" as including the whole of the State. Further, in the instant case, the expression used in the latter part of section 4 is "local limits". Therefore, "local limits" means different territorial limits, and only different territorial limits can be fixed for each of the officers mentioned in the said section 4 for performing the functions respectively conferred on them by or under the Act. If plurality of officers are invested with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the territory of the whole of the State of Andhra Pradesh. If so, it follows that the two notifications issued by the Commissioner in C2/5065/80 and C2/1012/81-3 both dated 24th December, 1981, and published in the Andhra Pradesh Gazette dated 4th February, 1982, allocating jurisdiction over the entire State of Andhra Pradesh to the Assistant Commissioners (CT) (Intelligence) and Commercial Tax Officers (Intelligence) mentioned therein are ultra vires the powers of the Commissioner and cannot confer any jurisdiction on the said officers to exercise the powers of assessment under section 14 read with rule 31 of the Rules. Accordingly, we hold that the impugned proceedings taken by the Assistant Commissioner (Intelligence) or the Commercial Tax Officers (Intelligence) against the petitioners to make assessments are illegal and without jurisdiction. On this ground alone, the impugned proceedings taken by the said officers are liable to be quashed. But, as arguments have been advanced on the other points also, we shall consider the same. Point No. (2): By reason of conferment of powers of assessment on the three Assistant Commissioners (Intelligence) and ten Commercial Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) may exercise the powers of assessment, in the case of others, the Assistant Commissioners, Intelligence, or the Commercial Tax Officers, Intelligence may exercise such power and thus, the power to assess is capable of being exercised in a discriminatory manner. Further, the dealers carrying on business in a particular place are being subjected to assessment by the Assistant Commissioners, Intelligence, and Commercial Tax Officers, Intelligence, having their head-quarters in far off places, and this will certainly create hardship and inconvenience to the dealers with regard to appearing at distant places and production of books and accounts. Further, rule 33 which provides for appeals does not seem to provide for appeal against an assessment order made by the Assistant Commissioner, Intelligence, or Commercial Tax Officer, Intelligence. The learned Government Pleader contends that under rule 33(1)(c)(iii), an appeal lies against any assessment passed or proceedings recorded "by a Commercial Tax Officer having jurisdiction over the area of more than one division, to the Appellate Deputy Commissioner of Commercial Taxes specified by the Commissioner of Commercial Taxes", and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon which out of the several assessing authorities exercises the powers of assessment over the dealers, and thus the power of assessment is capable of being exercised in an arbitrary and discriminatory manner. For the foregoing reasons, we hold that the powers of assessment conferred on the Commercial Tax Officers, Intelligence, and Assistant Commissioners, Intelligence, by G.O. Ms. No. 1091 as amended by G.O. No. 434 dated 30th March, 1982, read with the Commissioner's notification dated 24th December, 1981, published in the Andhra Pradesh Gazette dated 4th February, 1982, are arbitrary and discriminatory and violative of the rights of the petitioners under article 14 of the Constitution. In Suraj Mall Mohta Co. v. Visvanatha Sastri [1954] 26 ITR 1 (SC) the constitutional validity of section 5(4) of the Taxation on Income (Investigation Commission) Act (30 of 1947) fell for consideration. Their Lordships held that some of the assessees can be dealt with under the provisions of Act 30 of 1947 at the choice of the Commission, though they could also be proceeded with under the provisions of section 34 of the Indian Income-tax Act, and that all the assessees had common characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g more prejudicial to the assessee than the other, and that they could not be allowed to operate on the same field in view of the guarantee under article 14 of the Constitution, and in that view, the provisions of section 5(1) of Act 30 of 1947 were held to be void and unenforceable. In Bidi Supply Co. v. Union of India [1956] 29 ITR 717 (SC) it was held by a majority that the order of transfer of the case of an assessee from the Incometax Officer, Calcutta, to the Income-tax Officer, Special Circle, Ranchi, passed under sub-section (7A) of section 5 of the Income-tax Act, "was calculated to inflict considerable inconvenience and harassment to the petitioner: the books of account would have to be produced hundreds of miles away from Calcutta, the partners or principal officer would have to be away from the head office to comply with the order, and extra expenditure would have to be incurred by way of railway fare, etc.; that 'the State' which included the Income-tax department had by an illegal order denied to the petitioner, as compared with other bidi merchants who were similarly situate, equality before the law and the assessee had the right to complain of an infraction of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further amended by G.O. Ms. No. 1059 dated 27th July, 1982, published in the Andhra Pradesh Gazette dated 28th July, 1982. can be given retrospective effect. The contention of the learned counsel for the petitioners is that the said officers mentioned in the second proviso to G.O. No. 1091 as amended by G.O. No. 434 and G.O. No. 1059 had no jurisdiction to exercise the powers of the assessing authority in respect of the period prior to the coming into force of G.O. No. 434 and G.O. No. 1059. It has to be noted that G.O. No. 434 dated 30th March, 1982, was published in the Andhra Pradesh Gazette dated 1st April, 1982, and G.O. No. 1059 dated 27th July, 1982, giving retrospective effect to G.O. No. 434 was published in the Andhra Pradesh Gazette dated 28th July, 1982; and therefore, the Assistant Commissioner, Intelligence, and Commercial Tax Officers, Intelligence, could only exercise the powers of an assessing authority with effect from 1st April, 1982, and that the Government has no power under section 2(1)(b) of the Act to authorise the officers mentioned in the second proviso as amended by G.O. No. 434 to exercise the powers of an assessing authority with retrospective effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect." In that view, their Lordships held that the notification impugned did not promulgate any rule, regulation or bye-law all of which had a definite significance, and that exercise of the power under section 2(44)(ii) was more of an executive than a legislative act. In that view, their Lordships held as follows: "Under section 2(44)(ii) the State Government could not invest the Tahsildar with the powers of a Tax Recovery Officer with effect from a date prior to the date of the notification and the action taken by the Tahsildar was not sustainable. The legal fiction that the new definition shall be and shall be deemed always to have been substituted could not be extended beyond its legitimate field and could not be construed as conferring power for a retrospective authorisation by the State in the absence of any express provision in section 2(44) of the Act itself. The exercise of the power under section 2(44)(ii) is more an executive than a legislative act." In Yemmiganur Spinning Mills Ltd. v. State of A.P. [1976] 37 STC 314, it has been held that unless emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch officer or brought to his notice in any manner whatsoever, and such a power cannot extend to cases where the turnovers are disclosed and exemptions are claimed but disallowed by assessing authority. But, the question whether there was suppression or omission, whether or not fraudulent or wilful or whether it was a case of disallowance of the exemption claimed, is a matter to be decided on the particular facts of each case, and therefore, we are not inclined to express any final opinion on this question. We also consider it not necessary to express any opinion on this question in the view we have taken that the Commissioner has no power to assign jurisdiction of the Assistant Commissioners, Intelligence, and Commercial Tax Officers, Intelligence, over the entire State of Andhra Pradesh, and that they have no jurisdiction to exercise the powers of the assessing authority, and that the impugned proceedings taken by the said officers against each of the petitioners in these writ petitions are illegal and devoid of jurisdiction. Now, we shall consider certain additional points raised in W.P. Nos. 5864 of 1982 and 8739 of 1982. W.P. No. 5864 of 1982: In this writ petition, firstl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner, Intelligence, Kurnool, issued a show cause notice on 9th November, 1982, proposing to make a provisional assessment on the ground that purchase vouchers relating to groundnut oil were not genuine and proposed to disallow exemption under section 14. He also gave a penalty notice on 12th November, 1982, under section 7-A(2). Further, the Assistant Commercial Tax Officer, Intelligence, Kurnool, collected compounding fee of Rs. 3,000 under section 32 on 14th June, 1982, from the petitioner for not maintaining the account books correctly under section 25. The learned counsel for the petitioner submits that the proposal to make a provisional assessment by the Assistant Commissioner, Intelligence, Kurnool, by the show cause notice dated 9th November, 1982, is clearly illegal, when a final assessment has already been made by the local Commercial Tax Officer on 26th June, 1982. We think this submission is well-founded. The question of the Assistant Commissioner making provisional assessment does not arise when a regular order of assessment was made by the concerned local Commercial Tax Officer. Therefore, the show cause notice proposing to make a provisional assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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