9911796707
TMI Blog1995 (9) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... 983, in compliance to notice under section 8(2) of the Act, the petitioner-company produced its books of account before the respondent No. 2, the Superintendent of Taxes in support of the returns filed. On examination of the accounts and documents, the respondent No. 2 completed the assessments of the above periods, vide orders of assessment dated March 19, 1983, under section 8(3) of the Act. In the assessment orders, the respondent No. 2 recorded its finding that the dealer purchased pine square beams only during the period concerned and that the purchases were recorded properly and also supported by audited balance sheet. The turnover shown in the returns was accepted and demand of taxes was raised at the rate of 15 per cent of the said turnover. The rate of 15 per cent tax was applied as applicable to converted timber under the Act. Rate of tax as prescribed by the Schedule to the principal Act as amended from time to time was raised on the petitionercompany since it had paid the demanded tax already as admitted taxes along with the returns filed. The assessment order is quoted below: "Shri A.P. Singh, Accountant of the dealer appeared in compliance to the notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writing so as to reach this office on or before August 23, 1988 as to why the aforesaid assessment orders should not be cancelled and order for a fresh assessment be passed as per provision of section 41(1) of the Meghalaya Purchase Tax Act." Thereafter the time for submission of reply was extended up to October 28, 1988 by the respondent No. 3 vide his letter dated September 6, 1988. The petitioner-company filed a reply to the show cause notice vide its petition dated October 6, 1988/October 24, 1988, submitting that pine square beams purchased by it were converted timber and the original assessment were properly made. The aforesaid reply is annexure III to the writ application and that is quoted below: "We are in receipt of your above quoted letter allowing time up to October 28, 1988, in the above matter. This is to submit before your honour that we purchased pine square beams which are classified as roughly converted timber. In support of such contention, we enclose herewith a photo copy of a letter No. MFS: SF: 87-88: Seedling, dated Shillong the September 26, 1988, from the Conservator of Forests, Social Forestry Circle, Meghalaya, Shillong which states as follows: 'With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d September 26, 1988, issued by the Conservator of Forests, Meghalaya, stating that pine square beams are classified as roughly converted timber. (ii) Letter dated September 14, 1988, issued by the officer-in-charge, Composite Wood Branch, Government of India, Forest Research Institute P.O. New Forest, Dehradun (U.P.) clarifying the classification of timber in the commercial sense into three categories which were quite different and distinct from each other. (iii) The respondent No. 3 vide his letter dated December 31, 1988 (annexure IV) cancelled the original assessments with a direction to make fresh assessments by holding that pine square beams were unconverted timber and the tax rate of 15 per cent was wrongly applied. That annexure IV is quoted below: "Dealer is absent. Heard the dealer and perused the case record with reference to the documents furnished by him. Perused also the assessment order for the period from April 1, 1981 to December 31, 1982, in which the dealer has been assessed to tax at the rate of fifteen paise per rupee value at which the taxable goods were purchased. The relevant rates of tax as per the Schedule of taxable goods attached to the Meghalaya Pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial articles different from timber logs. The meaning must be given as understood in common parlance and in this connection the decision of the Supreme Court in Ganesh Trading Co. v. State of Haryana reported in [1973] 32 STC 623 is very relevant. In this case, the Supreme Court has firmly held that in finding out the true meaning and entries mentioned in the Sales Tax Act, what is relevant is not the dictionary meaning, but how these entries are understood in common parlance specially in commercial circles. As such, the pine square beams purchased by the dealers cannot, therefore, be equated with converted timber such as plank, scantlings, etc., which are commercial articles different from pine square logs or pine square beams from which they are sawn. Therefore, there is no doubt, whatsoever that pine square beams are logs and unconverted timber taxable at the rate of 30 per cent for the period from April 1, 1981 to July 19, 1982 and at the rate of 50 per cent for the period from July 20, 1982 to December 31, 1982. In this connection in reply to the letter received from the Honorary General Secretary, Frontier Chamber of Commerce, Shillong, the then Commissioner of Taxes, Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: Rs. Turnover 3,30,671.00 Tax at 15 per cent 49,600.65 Tax paid vide: (a) Ch. No. 1024/B dated March 24,1982 (b) Ch. No. 654/B dated June 21, 1982 40,627.00 Tax due 8,973.65 Surcharge 485.00 Surcharge paid Nil Surcharge due 496.00 Interest 11,453.64 Interest paid Nil Interest due 11,453.64 Assessment under section 8(3) Draw up assessment order and issue Demand notice Sd/D.R. Lanong 25-4-1983 Superintendent of Taxes, Meghalaya, Shillong." Similar order was passed in the other civil rules. The petitioner-firm filed revisions against the assessment orders dated April 25, 1983, before the respondent No. 3 under section 41(2) of the Act. Prayer for stay was also made. The respondent No. 3 vide order dated November 7, 1983 (annexure II) stayed the payment of the disputed demand. On December 2, 1985 the respondent No. 3 vide order dated December 2, 1985 rejected the revisions by holding inter alia, as follows: In period ending December 31, 1980 and March 31, 1981: Interest is found to have been levied as per provisions of law. Contentions of petitioner against levy of interest cannot be entertained. In period ending June 30, 1981: (1) Superintendent of Taxes was right in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of tax due as per return. I have heard Mr. J.P. Bhattacharjee, learned counsel for the petitioner in both the group of civil rules and Mr. N.M. Lahiri, learned Advocate-General, Meghalaya for the respondents in both the groups of civil rules. The contentions of Mr. Bhattacharjee in C.R. No. 547 of 1989 group are as follows: 1.. The impgned order is arbitrary, illegal, without jurisdiction and not tenable in law. Pine square beams are converted timber and not logs. So, tax payable on it as per entry No. 5(a) shall subsist at the rate of 15 per cent. 2.. The earlier order cannot be cancelled by resorting to suo motu power of revision under section 41(1) of the Act without any reasonable ground, process or material. 3.. Pine logs cannot be square shape in any circumstances. Pine logs can be square shape only after conversion. 4. The petitioner-company purchased pine square beams and not pine logs. So the question of levying 30 per cent of tax by applying entry 5(b) does not arise. In C.R. No. 915 of 1987 group regarding interest the petitioner-company relies on the case of India Carbon Ltd. v. State of Assam reported in (1990) 1 GLR 239 wherein rule 42A of the Assam Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20 or any instalment of the tax within the extended date as per proviso to sub-section (1) of section 23 of the Act, interest as provided in sub-section (1) shall be payable from the first day of the month next following the said date by the dealer upon the amount by which the tax, if any, paid falls short of the amount of tax payable under the Act." Rule 22 of the Rules reads as follows: "22. If a dealer does not submit the return and pay the amount of tax due from him within the date specified in rule 16, he shall be liable to pay a simple interest at the rate of six per cent per annum on the amount of tax assessed from the first day of the second month of the end of the quarter or period, as the case may be, to which such return may relate; the rate of interest shall be nine per centum per annum from the first day of the third month and twelve per centum per annum from the first day of the fourth month and twenty-four per centum per annum from the first day of the fifth month and the succeeding months of the period, during which the tax payable for the quarter/period remains unpaid. Provided that where a dealer has paid a part of the tax due on any date after the expiry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nomenclature of converted wood varies but broadly speaking, the following are the most common terms used: (1) Squares or baulks .. These may be with or without wane. (2) Beams .. Usually rectangular and free from wane. Rough conversion in the forest: Timber can be squared in the forest by means of an axe into baulks or rough squares, when a special demand exists for this class of produce or when it is necessary to reduce the weight of timber to facilitate transport. Rough squaring is usually done in the Himalayan forests. This is, however, a wasteful process and should be avoided as far as possible." 4.. The meanings of the words 'beams', 'log' and 'square' are given in Concise Oxford Dictionary, Eleventh Edition and they are quite distinguished from each and other. The admitted position in these two groups of cases is that the dealers purchased pine square beams and pine square beams is not available in the natural stage and it will require some amount of conversion to make it pine square beams and it will be converted timber whether it is rough conversion or not is a different question altogether. Even the Conservator of Forests, S.F. Circle, Meghalaya, Shillong admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot overstep a section, in my opinion, rule 42A has to read down in the sense that interest has to be determined on the basis of the return filed and not on the basis of the tax assessed. Another overstepping of the rule which has been brought to my notice is that the rule applies to all dealers whereas the section speaks of registered dealer. As to this the submission of Shri Talukdar is that section 9 of the State Act visualises compulsory registration also not much difference has been created by the two different terminology used in the two provisions. Though this submission of Shri Talukdar has force inasmuch as the liability to submit return is on the person who is liable to pay tax in which case registration is compulsory and under section 10 of the State Act the Commissioner may himself register a particular dealer, yet the rule could not have imposed the liability on every dealer as the section speaks of registered dealer." and in para 62(3) it was held as follows: "Rule 42A of the Assam Sales Tax Rules, 1947 is ultra vires, section 35A of the State Act to the extent that the former visualises charging the interest on the tax assessed as distinguished from the tax d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons provide the machinery for the levy and collection of the tax. In order to ensure prompt collection of the tax due certain penal provisions are made to deal with erring dealers and defaulters and these provisions being penal in nature would have to be construed strictly. But the machinery provisions need not be strictly construed. The machinery provisions must be so construed as would enable smooth and effective collection of the tax from the dealers liable to pay tax under the statute. Section 11B provides for levy of interest on failure of the dealer to pay tax due under the Act and within the time allowed. Should this provision be strictly construed or should it receive a broad and liberal construction, is a question which we will have to consider in determining the sweep of the said provision. We will do so at the appropriate stage but for the present we may notice the thrust of this Court's decision in the case of Associated Cement Co. Ltd. [1981] 48 STC 466" (para 9) "It is well-known that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be construed as a substantive law and not adjectival law. So construed and applying the normal rule of interpretation of statutes, we find, as pointed out by us earlier and by Bhagwati, J. in the Associated Cement Company's case [1981] 48 STC 466 (SC), that if the Revenue's contention is accepted it leads to conflicts and creates certain anomalies which could never have been intended by the Legislature." and he submits that on the authority of this case, the question of declaring this rule 22 to be ultra vires of section 21 does not arise. But as indicated above, I am bound by the judgment in (1990) 1 GLR 237 (India Corbon Ltd. v. State of Assam). In view of that matter, I declare that rule 22 of the Meghalaya Purchase Tax Rules is ultra vires of section 21 to the extent that the Rule visualises charging of interest on tax assessed as distinguished from the tax due as per return. As a result, interest can be realised only on the basis of tax due as per return, and that too from registered dealers. The levy of interest as done in these cases shall stand quashed. All the civil rules shall stand disposed of as indicated above holding that pine square beams are converted timbers ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
