TMI Blog1985 (2) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... ron and steel products obtained out of iron scrap the sale value of which was put by the petitioner at Rs. 82,50,000. The second item related to the sale of iron and steel products obtained out of billets the sale value of which was put by the petitioner at Rs. 61,74,781.39. The Deputy Commercial Tax Officer, Visakhapatnam, who was the assessing authority, by his order dated 9th November, 1974, had allowed the claims of the petitioner to an extent of Rs. 53,24,000 with respect to the abovementioned first item of sales. Those iron products were claimed by the petitioner to have been made out of iron that had already suffered sales tax in the State. According to the legal view then prevalent, the sixteen heads of iron and steel products enumerated in the above entry 2 to the A.P. General Sales Tax Act as well as the Central Sales Tax Act should be regarded as belonging to one and the same taxable commodity, namely, iron and steel. On that basis, it was thought that the enumerated items found mentioned in entry 2 of the Third Schedule to the State Act should not be subject to any further sales tax, provided the iron out of which those products were made had already suffered sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder was passed by the Sales Tax Appellate Tribunal on 27th July, 1976. Against these orders of the Sales Tax Appellate Tribunal, the petitioner filed T.R.C. No. 67 of 1977 to this Court which was disposed of by this Court by its order dated 25th January, 1977. By that time, the Government of Andhra Pradesh had issued G.O. Ms. No. 1050 dated 20th September, 1976 exempting sales of enumerated iron and steel products from liability to pay sales tax, provided the sales of those iron products were effected during the period of 1st April, 1970 and 31st March, 1976 and those iron products were made out of tax suffered iron and steel. Clearly, the above Order of the Government is intended to give relief to the dealers from the declaration of law made by the Supreme Court provided the conditions mentioned in the above G.O. were complied with. As the question whether the G.O. was complied with by the petitioner or not, required investigation into the facts, the High Court directed the Sales Tax Appellate Tribunal to dispose of the petitioner's tax appeal according to law. The High Court clearly meant to direct the Tribunal to apply the aforementioned G.O. to the facts of the petitioner's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been mentioned in sub-section (4) for the application of sub-clause (cc) are not present in this case. He argued that under section 14, sub-section (4) of the Act, the assessing authority can assess the correct amount of tax payable only in a case where the turnover of the dealer escaped assessment or any deduction or exemption had been wrongly allowed. On that basis, he contended that it cannot be said in this case that the turnover had escaped assessment or any exemption had been wrongly allowed to the petitioner. The learned counsel argued that the impugned notice was issued merely because of a change in the opinion of the assessing authority. He also argued that the notice was issued proposing withdrawal of exemption merely because the petitioner failed to maintain its accounts as required by rule 45, clause (7) of the A.P. General Sales Tax Rules. Now the question is whether the Commercial Tax Officer had issued the impugned notice calling for objections of the petitioner without jurisdiction. It must be noted at the outset that what the Commercial Tax Officer proposed to do is only to hold an enquiry into the question whether the earlier exemptions which had been granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, should be rejected. In the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Dhanalakshmi Vilas Cashew Company [1969] 24 STC 491, the Supreme Court observed, referring to section 15(1) of the Kerala General Sales Tax Act: "Section 15(1) is meant for interference when there is some illegality or impropriety or irregularity in the order of the assessing authority which has to be set right. It can hardly be said to cover those cases in which the turnover has escaped assessment.......... The rule which confers power to assess escaped turnover is normally to be exercised 'on matters de hors the record of assessment proceedings' before the assessing authority." (emphasis* added) Those observations of the Supreme Court would show that the power under sub-clause (cc) of sub-section (4) of section 14 of the Sales Tax Act *Here italicised. can be exercised de hors the record of assessment proceedings before the assessing authority. We, therefore, hold that section 14 confers on the assessing authority ample power to assess the correct amount of tax payable in all cases where exemptions have been wrongly allowed. The judgment of Rajamannar, C.J., reported in Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted to the assessee without calling upon him to furnish necessary proof of the facts. In other words, the proposal to hold enquiry is based upon the allegation that the conditions laid down by G.O. Ms. No. 1050 were not shown to have been complied with by the petitioner. The judgment of this Court in Fatechand and Sons v. Commercial Tax Officer, V Circle, Hyderabad [1983] 54 STC 166 must be referred in this context. Those observations dealing with the powers under section 14, sub-section (4), sub-clause (cc) of the Sales Tax Act are to the following effect: "..........That provision applies to a situation where on a finding of fact arrived at with reference to the goods in question, the assessing authority has come to a particular conclusion as to whether it falls under one or the other items of the various Schedules, but in granting exemption, has committed some mistake or error, it is only that 'wrongful' exemption that could be rectified under section 14(4)(cc) of the Act.........." The above judgment is a clear authority to show that under section 14(4)(cc) wrongly allowed exemption can be set aside and rectified. The observations in the judgment to the effect that a ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14(4)(cc) of the Act. That is a question which can be decided only after holding an enquiry. Similarly the question whether the petitioner has been wrongly granted exemption cannot be decided at this stage. This is also a question which can be decided only by going through the process of an enquiry. To say, as the learned counsel says, that it must, at this stage of the inquiry, be shown by the department that the petitioner's turnover has already escaped assessment or suffered under-assessment or he has been granted exemption wrongly even before holding any enquiry, appears to us to put the cart before the horse. The statute imposes no pre-conditions for the exercise of the powers by the authority under section 14(4)(cc) of the Act. In view of the above, we reject the arguments of the petitioner. We, however, draw the attention of all the authorities administering the Sales Tax Act that they should keep in mind the well drawn distinction between those provisions which impose tax liability that should be interpreted strictly and those provisions which merely provide for quantification and collection of the tax liability that should be interpreted liberally. It is the legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving the claim for exemption, where such claim is not founded upon the plain and clearly expressed intention of the taxing power." The only real question of juridical importance which can be said to arise in this case is whether the proposed assessment is barred by limitation or not? In considering that question, we have to note that section 14, sub-section (4-A) imposes for the exercise of powers under sub-section (4) a period of limitation of four years from the date on which any order of assessment or levy was served on the assessee. The question is whether the proposed action is within time. We think that the impugned action is well within time. Assuming that the power under section 14(4)(cc) should be exercised within the said period of four years, it must be noted that by reason of sub-section (7) of section 14, that period of limitation gets enlarged. The period between the date of the order of such assessment and the date on which it has been set aside either by a court or by other competent authority starts off a fresh period of limitation. Such a period of time should be added to the four year period in computing the period of those four years specified by sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nearly a decade, what is being leisurely agitated in courts by the petitioner, presumably by spending the interest amount earned on the sum of money saved on tax does not relate to the above turnover of Rs. 53,24,000. It is, therefore, argued that the order made by the Tribunal on 14th July, 1978 remanding the matter to the Commercial Tax Officer for fresh consideration, cannot be held to relate to the order of assessment made on 9th November, 1974 with respect to Rs. 53,24,000. In order to appreciate the correctness of this somewhat attractive argument, we have to examine the statutory language a little more closely. Before that we must note that law of limitation in the Sales Tax Act relates only to orders of assessment. Section 14, sub-section (7) would apply only to orders of assessment which had been set aside by a court or other competent authority. It should follow that mere granting of exemption to a part of turnover has any relevance in rejecting application of section 14(7) of the Act. Can the order made on 9th November, 1974 by the assessing authority granting exemption to a part of the turnover of the petitioner be said to be an order of assessment at all? What is the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to that item of turnover. The amount of tax which should be paid by the assessee can only be determined on the total turnover. Each component of the total turnover accepted or rejected by the assessing authority cannot be treated as a separate order of assessment. They are various orders made for computing the total turnover on which alone a single assessment can be made. We are, therefore, of the opinion that the provisions contained in section 14(7) would be attracted to the entire assessment proceedings including the first item in this case by reason of the fact that the Sales Tax Appellate Tribunal had set aside the order of assessment on 14th July, 1978. For the aforesaid reasons, we cannot agree with assumption underlying the learned counsel's argument that there can be any number of separate assessments. The learned counsel relied upon the judgment of the Supreme Court reported in State of Madras v. Madurai Mills Co. Ltd. [1967] 19 STC 144. The question that fell for consideration of the Supreme Court in that case was whether the order of the Board of Revenue dated 25th August, 1958 was illegal because that order was made after a period of four years from 28th N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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