TMI Blog2001 (2) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... exures 10 to 13 are held to be invalid, the subsequent notices merely repetition of earlier one will have no better consequence. Hence validity of notices annexures 10 to 13 only need be examined on merit and annexures 16 to 19 need not be examined independently. 2.. These notices were initially challenged by way of writ petition before this Court as D.B. Civil Writ Petition No. 136 of 1995 on 11th January, 1995 which on constitution of the Rajasthan Taxation Tribunal under a special enactment stood transferred to that Tribunal where certain amendments were made in the petition. However, on abolition of the Tribunal, the petition again stood transferred to this Court and this is how the matter is before this Court. 3.. The notices have been challenged primarily on three grounds. (i) Firstly that the notices have been issued merely on the change of opinion as entire material relevant for the assessment has been disclosed by the assessee during the original assessment and it is after considering all the aspects of the matter the value of goods involved in execution of works contract by the assessee in its business of retreading tyres have been subjected to assessment by exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions for levy of penalty for non-disclosure of material facts under section 16(1)(i) of the Rajasthan Sales Tax Act, 1954 corresponding to section 65 of the Rajasthan Sales Tax Act, 1994. 4.. In addition to the aforesaid grounds common to all notices relating to four assessment periods, it has been urged by the learned counsel for the petitioner that at any rate the notice under section 12 for the assessment period 1988-89 is barred by time under the provisions of section 12 itself as it stood at the relevant time issuing notices and therefore notices annexure 10 issued by respondent No. 3 as well as annexure 16 issued by respondent No. 5 suffers from inherent lack of jurisdiction on the face of it. 5.. Taking up last additional contention in the first instance, it may be noticed that with effect from April 1, 1991 sub-section (2) of section 12 of the Act of 1954 which was amended with effect from April 1, 1991 reducing the period within which the assessing officer could exercise his authority for reopening the completed assessment from 8 years to 5 years. Sub-section (2) of section 12 of the Act of 1954, when power to initiate proceedings thereunder was exercised, reads as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate action could be exercised, no benefit can be drawn from provisions of General Clauses Act to result in any fruitful proceedings, on expiry of such period. 7.. We are in agreement with the aforesaid view. There cannot be any doubt about the fact that if sub-section (2) of section 12 applies to all the actions initiated after April 1, 1991, the notice issued in respect of assessment year 1988-89 is clearly barred by time inasmuch as proceedings in respect of assessment year 1988-89 could have been initiated latest by March 31, 1994 and not thereafter. Therefore, the notices issued on August 31, 1995 must be held to be without jurisdiction which the concerned Commercial Taxes Officer after March 31, 1994 had no jurisdiction to issue for reassessments of turnover of financial year 1988-89 under the amended provision. For this reason, annexures 10 and 16 which relate to assessment year 1988-89 must be held to be invalid and deserve to be quashed. Whether mere change of opinion can be ground of reopening? 8.. The contention that there can be no recourse to power under section 12 for reopening the concluded assessments on mere change of opinion on principle appears to be justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functions, and balancing between the interest of Revenue to bring home the levy intended under the statute according to the provisions of the Act, time and again the courts while holding that the limitation provided under the provisions requiring reassessment of the earlier assessment is not of a law of repose but such limitations are intended to give a quietus to the concluded proceedings and protection against harassment that may be caused to the tax-payer by subjecting him to proceedings in the same matter, again and again. 11.. However wider or narrower view of the expression used in such provisions are taken, in our opinion, there is no warrant for contention that mere change of opinion on the same facts, without anything more vests the assessing authority with power to reopen a closed assessment as and when he changes his mind. When we say mere change of opinion, we say on the premise that the matter has been directly received the attention of the assessing officer on earlier occasion and after due application of mind to that issue he has reached his conclusion on earlier occasion than if on the very officer or his successor in office, by simply taking different view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or has been under-assessed. The approach in this matter has to be practical and not pedantic. Any view which would make the opening words of section 12(8) unworkable has to be avoided." 14.. In Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Dhanalakshmi Vilas Cashew Co. [1969] 24 STC 491 (SC) in the context of the provisions of reassessment, the court pointed out that "the reason which gives jurisdiction to the assessing authority to have recourse to the provisions for reassessment must exist on material de hors the records of the proceedings and not from the records of the assessment proceedings". Meaning thereby that mere change of opinion cannot be held to be a reason having nexus with the escapement of the assessment which has earlier taken place after due application of mind to the question which is again sought to be re-decided without anything more. It was a case in which the Commissioner had resorted to his power for revising the order passed by an assessing officer which he thought was erroneous from the perusal of the record. The assessee challenged the authority of the revising authority to have recourse to the provisions of revision and conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under clause (f) of section 24(2). That rule enables the assessing authority within the prescribed period to determine to the best of its judgment the turnover of a 'dealer' which has escaped assessment. 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. As has been observed in the State of Kerala v. M. Appukutty [1963] 14 STC 242 (SC) in which similar provisions relating to the Madras General Sales Tax Act came up for consideration, the Deputy Commissioner while exercising revisional jurisdiction would be restricted to the examination of the record for determining whether the order of assessment was according to law. 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." 16.. It may be noticed that like the provision with which we are concerned, rule 33(1) of the Kerala General Sales Tax Rules, 1950 also provided that "if for any reason the whole or any par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar Agricultural Income-tax Act which has used the words "any reason" instead of "reason to believe". The court expressed its opinion that the use of the words "any reason" which are of wide import dispenses with those conditions by which section 34 of the Indian Income-tax Act is circumscribed and held that for the Income-tax Officer is competent under section 26 of the Bihar Agricultural Income-tax Act to assess an item of income which he had omitted to tax earlier, even though in the return that income was included and the Agricultural Income-tax Officer then thought that it was exempt. However, we do not find any such observation that mere change of opinion was held by the court to be a ground falling within the term "for any reason". 19.. In this connection reference may be made to a later decision of the Supreme Court in Commissioner of Agricultural Income-tax, Trivandrum v. Lucy Kochuvareed [1976] 103 ITR 799 (SC) wherein the court referred to both the judgments of Maharaj Kumar Kamal Singh v. Commissioner of Income-tax referred to above reported in AIR 1959 SC 257 and distinguished the case of Kameshwar Singh v. State of Bihar [1959] 37 ITR 388 (SC); AIR 1959 SC 1303 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court said that even if we apply the principles laid down in National Clinic v. Assistant Commercial Taxes Officer, Sri Ganganagar (1966) RLW 257, then also, on the facts of this case, it cannot be said that it is a case of mere change of opinion. What is reasonable and what is not reasonable would depend on the circumstances of each case. It will not be always possible to put all the circumstances in a straightjacket. The court also relied on a decision in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, Bihar and Orissa AIR 1959 SC 257 that the term "information" will also comprehend knowledge about a state of law or a decision on a point of law. In view of the aforesaid conclusion, the court did not exercise its jurisdiction to interfere in the notices on merit inasmuch as in its opinion it was not a case of mere change of opinion. Thus, the case turned on the facts of its own and does not lay down as a proposition of law that in all cases where the assessment proceedings have been reopened merely for change of opinion, and no more, would give jurisdiction to the assessing officer to have resort to the proceedings under section 12. 22.. Another decision on which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No writ of prohibition, therefore, lies. A writ of certiorari is a discretionary writ and the High Court is not bound to interfere when there is adequate alternative provided under the Act." 26.. In Akbarali Amanatali's case 1976 WLN 815, to which the reference has been made in Rajasthan Felts Manufacturing Co.'s case [1980] 45 STC 274 (Raj) as having been overruled by that decision, in our opinion appears to be obiter dicta and also per incuriam. Firstly, in Akbarali Amanatali's case 1976 WLN 815 no conclusion has been reached as to the jurisdiction of the Sales Tax Officer to initiate proceedings merely on the basis of change of opinion, secondly no reference has been made to the earlier Bench decision of this Court in National Clinic's case (1966) RLW 257 referred to by us above but two decisions of the Supreme Court for the purposes of distinguishing those cases whether the Rajasthan Act provides for a complete machinery in itself or not, and thirdly the challenge was against the final assessment order after the stage for issuance of a writ of prohibition has ceased to exist for challenging the authority of the notice at that stage and this is apparent from the fact that af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judicial pronouncement is against inferring any power for having recourse to the reopening of assessment on mere change of opinion on the same set of the fact on the same issue without anything more. The decision of the Gujarat High Court in VXL India Ltd. v. Assistant Commissioner of Income-tax [1995] 215 ITR 295 may be noticed. After considering the provisions of section 147 of the Income-tax Act, 1961 as they now exist which has done away with the requirement of receipt of an information as it existed before and after taking into consideration the provisions of Explanation II giving much wider scope for bringing certain earlier decisions of the assessing authority within the scope of reassessment proceedings, the court held: "We are also of the opinion that, howsoever wide the scope of taking action under section 148 of the Act, it does not confer jurisdiction on change of opinion on the interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion whether there has been excessive loss or depreciation allowance or there has been under-assessment or assessment at a lower rate or for applying other provisions of Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared which is also known as tread rubber in the market. The title of the property in the goods, viz., tyres or retreaded tyres vest with the original owner and not with the petitioner. All that the petitioner does is to retread tyres by using natural rubber, carbon black and other chemicals and receives retreading charges from the owner of the tyres and re-export the retreaded tyres outside the State of Rajasthan in case the job-work is done for the persons situated outside the State of Rajasthan. These transactions which involve the customers from outside the State of Rajasthan, movement of goods from outside Rajasthan and from within the State of Rajasthan fall properly within the scope of interState trade. According to the petitioner, the volume of such job-work consists about 60 to 75 per cent of the total business. Likewise for doing vulcanising job-work the petitioner receives either from within Rajasthan or from outside by way of inter-State transaction first skived at a place where foreign particle has penetrated inside the tyre carcass, then it is filled with cushion gum and cured by putting in vulcanising machine, after that chemical patch is applied to the repaired spot. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s purchased on "C" forms in the course of interState trade or on "D" forms the tax was paid in the State of Rajasthan. Thus they also became fully tax paid. Hence on that basis earlier assessments were completed. This plea of the assessee was accepted to some extent. The raw material purchased by the assessee was found to be fully tax-paid and involved in the execution of the works contract. The transfer of property in such goods did not involve transfer on which tax was not paid and no tax was levied. However, on remainder, if any, the tax was levied on purchase of the raw material without taking into consideration the value of the goods at the time of its involvement in the execution of the works contract but at stage of the purchase. 36.. The assessments of 1987-88, 1988-89 and 1989-90 were completed by assessment orders dated June 7, 1990, May 13, 1992 and June 30, 1992 respectively. The assessment orders go to show that the assessing officer after taking note of the job receipts had found that total purchases made by the assessee of raw materials which came in the form of tread rubber before the same was appropriated in retreading amounting to Rs. 13,88,481 and then dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration, was not at all in the minds of the assessee or the assessing officer at the time of assessment. It is a question independent of the issues which were before the assessing officer. May be in respect of the same material, but as a question of law whether the value of the property in goods which has been transferred on their being involved in the execution of works contract is to be determined on what principle, viz., at the purchase price of the basic raw material by the assessee or at the value of the goods as intermediary stage at which they have reached at the time of actual appropriation in execution of works contract by the assessee. 39.. We would refrain from expressing any opinion on the merits of this issue at this stage as it would not only require collection of necessary material as an assessing officer but also to go into different aspects of the terms of contract and the process used in execution of works contract, when it can be said that the goods are involved in the execution of works. This enquiry cannot be equated with the case "on mere change of opinion" so as to deprive the assessing officer from going into such questions by having recourse to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 3, 4 and 5 of the Central Sales Tax Act, 1956. 42.. No authority has been conferred on the State Legislature to make laws to impinge upon those principles and to define sale for its own purpose and to levy tax solely on the basis of situs of sale by creating a legal fiction to that effect as a non obstante provision by deeming any sale to be deemed to have taken within the State of Rajasthan on the basis of the place of appropriation without excluding from within its purview the transaction which properly can be considered as sale or purchases within the course of inter-State trade and commerce, or in the course of export outside or import in India, or sale outside State as per the provisions of the Central Sales Tax Act, 1956. 43. Sub-section (3) of section 5 of the State Act as it existed originally was declared to be invalid and void and ultra vires the provisions of Constitution on the ground of making no provision for excluding such sale and purchases and making the entire category of purchases and sales as taxable. Section 5(3) of the Rajasthan Act was held to be ultra vires by the Supreme Court in Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that works contract." 44.. Explanation I brings within the definition of "sale" the transfer of property in goods whether as goods or any other form involved in execution of works contract and deems such sale or purchase to take place within the State of Rajasthan if at the time of its application or use in the execution of works contract such goods are in Rajasthan irrespective of the place where the agreement for such works has been made or from where the goods are transferred or delivered for use in the works contract. 45.. Explanation II, in the like manner, envisaged a legal fiction that sale shall be deemed to take place within the State of Rajasthan only if goods involved in execution of works contract at the point of their appropriation were in Rajasthan irrespective of place of agreement for the execution of works contract, and irrespective of the fact that in pursuance of such contract the goods moved from one State to another. 46.. Apparently such legal fiction is directly repugnant to the provisions made under the Central Sales Tax Act laying down the principle when any sale shall be considered to take place outside the State or in the course of inter-State tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deeming provision in section 2(o) of the Act, 1954 in form of Explanations I and II thereto referred to above. To that extent the assessing officer cannot be permitted to include such sales or purchases which have taken place in the course of inter-State trade or commerce, or outside State or in the course of export outside or import inside India within the meaning of the Central Sales Tax Act, 1956 as a taxable transaction within the Rajasthan Sales Tax Act solely on the basis of situs related to appropriation of goods in execution of works contract within the State. 51.. So far as levy of penalty is concerned, we find from the language of section 12 itself that there is no warrant for issuing notice under that provision for levy of penalty at the outset when assessments are reopened for assumed non-disclosure of facts. Whether the assessee has disclosed fully and truly all material facts for assessment or not, particularly, in the present facts and circumstances of the case cannot be assumed at the outset of the proceedings to threaten the assessee with the penalty proceedings for non-disclosure or concealing particulars at this stage. It can only arise during the course of as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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