TMI Blog1992 (2) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to tax under the Gujarat Sales Tax Act in respect of the sales effected by it within the State of Gujarat. It appears that, some transactions, which the petitioner described as "branch transfers", are considered by the department as inter-State sales and possibly to find out the real nature of those transactions, a search was carried out on February 3, 1983 and large number of account books and other records had been seized by the department. Meanwhile, for the assessment period September 1, 1976 to August 31, 1977, respondent No. 1, the concerned Sales Tax Officer, prepared a draft assessment order and served the same on the petitioner on August 10, 1982. The petitioner has filed its objections on August 26, 1982. On February 12, 1985, the 1st respondent issued a show cause notice, calling upon the petitioner to show cause why the branch transfers earlier accepted in the draft assessment order should not be disallowed and also submitted a revised draft assessment order. On March 15, 1985, the petitioner objected to the same. Thereafter, hearings were fixed, but, according to the petitioner, no effective hearing has taken place so far. It is the petitioner's case that, simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the impugned order was really passed on August 31, 1987, then, in that case, it would have been served upon the petitioner on August 31, 1987 and the department would not have waited for that purpose till September 22, 1987. If the order was really passed on August 31, 1987, then, the Sales Tax Inspector would not have asked the petitioner to put the date August 31, 1987, on the receipt acknowledging service of that order. These two circumstances are relied upon by the learned counsel in support of his submission that, in fact, the order was not passed on August 31, 1987. One B.L. Modak, Assistant Commissioner of Sales Tax (Appeals), Division I, Ahmedabad, has filed a reply on behalf of the respondents. He has asserted therein that the impugned order was, in fact, passed on August 31, 1987. He has further stated that, possibly because of negligence on the part of the Inspector the said order was not immediately served on the petitioner. Though the Assistant Commissioner has not produced any documentary evidence in support of the statement made in his affidavit, we have no reason to doubt the correctness of his statement, as he has made that statement after verifying the record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout bias and give sufficient opportunity to the assessee to place his case before the department; he must conduct himself in accordance with the principles of justice, equity and good conscience. The A.O. cannot rely on any evidence or any fact in arriving at his conclusions without first pointing out the same to the assessee and giving him a reasonable opportunity of meeting the case which is ultimately made out in the assessment order. He also drew our attention to the decision of the Supreme Court in State of Orissa v. Chakobhai Ghelabhai and Co. [1960] 11 STC 716, wherein it is observed that the assessing authorities including the Assistant Collector of Sales Tax and the Collector of Commercial Taxes were not courts in the strict sense of the term "Court", though they exercised quasi-judicial functions under the Orissa Sales Tax Act. Our attention was also invited to another decision of the Supreme Court in Commissioner of Income-tax v. Simon Carves Ltd. [1976] 105 ITR 212, wherein it is observed that the taxing authorities exercise quasijudicial powers and in doing so they must act in a fair manner. The learned Advocate-General appearing for the respondents did not dispute th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and, conversely, legislative activity tends to fade into and present an appearance of an administrative or quasi-judicial activity. Any attempt to draw a distinct line between legislative and administrative functions, it has been said, is 'difficult in theory and impossible in practice'. Though difficult, it is necessary that the line must sometimes be drawn as different legal rights and consequences may ensue. The distinction between the two has usually been expressed as 'one between the general and the particular'. 'A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases; an administrative act is the making and issue of a specific direction or the application of a general rule to a particular case in accordance with the requirements of policy'. 'Legislation is the process of formulating a general rule of conduct without reference to particular cases and usually operating in future; administration is the process of performing particular acts, of issuing particular orders or of making decisions which apply general rules to particular cases'. It has also been said 'rule making is normally directed towards the formulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication, or it may be applicable to a single assessee. The order contemplated by the proviso can hardly be regarded as an instrument creating rights or liabilities or rules of conduct. It is difficult to appreciate how an order staying proceedings in case of an individual assessee on the special facts of the case can be said to be a rule of conduct either for assessees or sales tax authorities as a whole or with respect to a class of dealers or class of authorities. As rightly pointed out by the learned counsel for the petitioner, there is no requirement of publishing such order and such orders are, in fact, not published. He also rightly pointed out that the requirement of recording reasons for passing such an order is not consistent with the said order being legislative in character. We also see some force in the contention of Mr. Kaji, learned counsel for the petitioner that such power has been vested in two authorities and as the power given to the Commissioner can be exercised only subject to conditions prescribed by the State Government, a function to be performed by them cannot be regarded as legislative function. For these reasons, we are not inclined to accept the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer, it creates a corresponding right in favour of the assessee of not being subjected to assessment thereafter. In support of this contention, the learned counsel invited our attention to the decision of the Supreme Court in S.S. Gadgil v. Lal and Co. [1964] 53 ITR 231. That was a case arising under section 34 of the Indian Income-tax Act, 1922, which provided for time, within which notices could be issued by the Income-tax officer for assessment or reassessment under observed that the period prescribed for assessment is not a period of limitation. Such a provision was regarded as a fetter upon the power of the Income-tax officer to bring to tax income escaping assessment. It was considered as a provision prescribing different periods in different classes of cases for enforcement of the right of the State to recover tax. This decision, therefore, is not of much help to us, because the provision with which we are concerned specifically provides a period of limitation for completion of assessment. But it can certainly be said that, if the period of limitation is permitted to expire, then, in that case, the assessing officer will have no power thereafter to complete the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture also simultaneously provided for stay of assessment proceedings of a dealer or class of dealers, if considered necessary by the State Government or the Commissioner. The Legislature also simultaneously provided that in computing the period of limitation for the purpose of section 42, any period, during which assessment proceedings are stayed under the first proviso or by an order or injuction of any court or authority, shall be excluded. Therefore, while trying to find out the nature and extent of right or the protection given to the assessee by the said provision, we will have to read it as a whole. If the said provision is read in this manner, then, it becomes apparent that the assessment proceedings will become time-barred on expiry of two years, provided within that period, they are not stayed. In other words, if the assessment proceedings are stayed before the expiry of the period of limitation, then, in that case, the assessment proceedings will not become time-barred immediately on expiration of the said period of two years, as the period during which the proceedings remained stayed will have to be excluded while computing the period of limitation. If assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved either by the State Government or by the Commissioner while staying the assessment proceeding. The effect and consequences which may follow will not be as a result of any resolution of a dispute, but because of operation of other provisions of law. As pointed out earlier, while providing three years' time-limit, a balance was sought to be struck between the difficulties of the department in completing assessment proceeding expeditiously and the likely harassment or hardship to be suffered by the assessee if the assessment proceedings linger on for a long time. Therefore, the Legislature, while providing for the time-limit, also provided for stay of assessment proceedings and exclusion of the period, during which assessment proceedings remained stayed while computing the period of limitation. The assessment proceedings may be required to be stayed not only because of any difficulty in completing assessment proceeding individually, but all assessments generally. Faced with an emergency or some unexpected situation, it may become necessary for the Government or the Commissioner to stay the proceedings in order to save the period of limitation. A war or a strike by the Officers o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a prior notice to the assessee or to give him an opportunity of hearing. No doubt, the Government or the Commissioner will have to record reasons for passing such an order. Such an order can be passed only if passing such an order is found necessary and thus, what was the necessity will have to be indicated in the order. As the assessment proceeding will get stayed as a result of the order, we are of the view that such an order, containing reason, has to be served upon the assessee. In our opinion, this is the only requirement of principles of natural justice, which can be read into the provision. After we dictated this judgment in open court, but before we could sign it, the learned advocate for the assessee filed a note for rehearing of this petition on the ground that some judgments, which he ought to have cited, were not cited at the time of hearing of the petition. In view of that note, this petition was again listed before us on July 16, 1992. On that day Mr. Doshit, learned advocate appearing for the respondents, submitted that no rehearing of the petition is required. We have carefully gone through the decisions on which Mr. Kaji wanted to rely and after going through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, while interpreting sections 14(1) and 14(3) of the Andhra Pradesh General Sales Tax Act, 1957, held that while a dealer who files a return within the prescribed period acquires immunity against assessment on the expiry of four years from the last date of the assessment year, a dealer who fails to file a return within the prescribed period has to wait for six years to be over to acquire such immunity. It is difficult to appreciate how this decision can have any bearing on the question with which we are concerned. The learned counsel relied upon two more decisions of the Supreme Court in Ajantha Industries v. Central Board of Direct Taxes [1976] 102 ITR 281 and Commissioner of Income-tax v. Oriental Rubber Works [1984] 145 ITR 477. In Ajantha Industries' case [1976] 102 ITR 281 (SC), a question had arisen as to whether non-communication of the reasons in the order passed under section 127(1) of the Income-tax Act, 1961, was such an infirmity as would render the order invalid. The Supreme Court held that non-communication of the reasons in the order passed under section 127(1) was a serious infirmity and the order was invalid. In Oriental Rubber Works' case [1984] 145 ITR 477, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
