TMI Blog2001 (7) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 to raise the arbitrary demand of about Rs. 19 lakhs. The issue involved in the assessment is relating to the claim of set off made by the petitioner on nonrefined sunflower oil from the tax payable on refined sunflower oil in terms of G.O. Ms. No. 191, dated April 6, 2000. The provisional assessment notice is issued alleging that since the petitioner purchases raw material within and outside Andhra Pradesh the setoff under the G.O. must be allowed on proportionate basis. In order to claim set-off of tax, the petitioner maintains separate stock registers and separate storage tanks in respect of local purchases and outside purchases of sunflower oil and the disposal of the refined sunflower oil is also effected in segregated manner. The petitioner is entitled to claim set-off of entire tax paid on local purchases against the tax payable by the petitioner. The provisional assessment orders for 1999-2000 (April to July, 2000) restricting the set-off on pro rata basis was set aside by the appellate authority by its order dated February 26, 2001 holding that proportionate basis need not be adopted in view of the storage facilities and segregated accounting. Therefore, the show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said firm has filed monthly returns disclosing gross and exempted turnover of Rs. 4.64 crores from June, 2000 to November, 2000. The NTO reported is Nil. It was informed to the Commercial Tax Officer, Maharajgunj, during enquiry by the accountant of the building, who collects the rent, that there is only one chair and table in the room. The dealer has not disclosed any godown. The proprietor of the M/s. Shyambaba Agro Tech produced certain books of accounts, namely, purchase register, sales register and cash entry register maintained in the form of computer printouts before the Commercial Tax Officer, Maharajgunj. When asked for purchase invoices the proprietor disappeared from the office leaving the books. When the computer printouts were carefully examined the fonts, mode of entry and method of maintenance of accounts exactly tallied with that of M/s. Sheetal Refineries Private Limited. The Commercial Tax Officer, Maharajgunj, further informed that there is no proof as could be seen from the bank extracts that the payments were made to the sellers at different places from where sunflower/sunflower refined oil was alleged to have been purchased. He has also informed that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in M/s. Sheetal Refineries Private Ltd., before doing commission business. From this it is established that M/s. Sheetal Refineries Private Limited has floated M/s. Shyambaba Agro Tech, Hyderabad, for the purpose of obtaining purchase invoices without involving the movement and delivery of goods for indulging in large scale clandestine trade in vegetable oils, thereby detruding the Government of its legitimate taxes due to the State. 5.. In the above circumstances, the first respondent states, there was no other alternative to the department than to disallow exemption/set-off claimed by M/s. Sheetal Refineries Private Limited, Hyderabad, i.e, petitioner, on the alleged sales of sunflower refined oil against the purchase of raw/refined sunflower oil from M/s. Shyambaba Agro Tech., Hyderabad. Accordingly a provisional show cause notice dated February 27, 2001 was served on them on February 27, 2001, directing them to file their objections if any against the proposed turnovers within 15 days from the date of receipt of the notice. Instead of filing objections, the petitioner has been seeking adjournments on some pretext or other. In view of the above, Commercial Tax Officer, Enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d attachment notice and that indicates that the first respondent may not consider the objections filed by the petitioner against the show cause notice fairly and objectively. Although the learned counsel initially contended meekly that since section 17-B provides that provisional attachment of the property belonging to the assessee can be made only in the prescribed manner and since the manner in which the property provisionally be attached is not yet prescribed, invocation of section 17-B would be illegal, however, in the course of the argument, the learned counsel told us that he would not press that contention into service. Therefore, there is no need for us to deal with that contention. The learned counsel would also submit that there is absolutely no satisfactory materials available with the first respondent to form opinion that it was necessary for him to attach the property of the petitioner in order to protect the interests of the revenue. 7.. On the other hand, the learned Special Government Pleader for Taxes would contest the tenability of the contentions of the learned counsel for the petitioner and would support the impugned action of the first respondent. Learned Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er away or secrete his resources out of the reach of the Commercial Tax Department when the assessment or reassessment is completed. The expression "for the purpose of protecting the interests of the revenue" occurring in section 17-B of the Act is very wide in its meaning. For that reason as a safeguard, prior approval of a higher authority like the Commissioner, has been made a necessary condition. Further, the orders of provisional attachment must be in writing. There must be some material on record to show that the assessing authority had formed an opinion on the basis thereof that it was necessary to attach the property in order to protect the interests of the revenue. The provisional attachment provided under section 17-B is more like an attachment before judgment under the Code of Civil Procedure. It is a liability on the property. However, the power conferred upon the assessing authority under section 17-B is very drastic, far-reaching power and that power has to be used sparingly and only on substantive weighty grounds and for valid reasons. To ensure that this power is not misused, a number of safeguards have been provided in the section 17-B itself. One thing is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty" fell for consideration by the courts while interpreting that term in article 300-A of the Constitution of India in many cases. In the light of the judgments of the Supreme Court in Charanjit Lal Chowdhury v. Union of India AIR 1951 SC 41, Dwarkadas Shrinivas v. Sholapur Spinning Weaving Co. Ltd. AIR 1954 SC 119; [1954] SCR 674, Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt [1954] SCR 1005; AIR 1954 SC 282 and State of West Bengal v. Subodh Gopal Bose [1954] SCR 587; AIR 1954 SC 92, it can be said that the term "property" means only that which can by itself be acquired, disposed of or taken possession of. Subject to this limitation, it is designed to include private property in all its forms and must be understood both in a corporeal sense as having reference to those specific things that are susceptible of private appropriation and enjoyment as well as in its juridical or legal sense of a bundle of rights which the owner can exercise under the municipal law with respect to the user and enjoyment of those things to the exclusion of all others. The Supreme Court in Bombay Dyeing Manufacturing Co. Ltd. v. State of Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged under section 17-B of the Act unless demand is raised. The language used in sub-section (1) of section 17-B of the Act is quite clear, plain and unambiguous and it does not admit more than one meaning. The power conferred upon the assessing authority under section 17-B could be invoked during the pendency of any proceeding for the assessment or reassessment of any turnover. The first condition to invoke the power under section 17-B is that the proceedings for assessment or reassessment should be pending on the date of the provisional attachment. In the instant case, admittedly the assessment proceedings were pending on the date of the impugned proceeding by issuance of notice dated February 27, 2001. The other condition which should be satisfied for invoking section 17-B is that the assessing authority should form opinion, that resort to section 17-B procedure is necessary to protect the interest of the revenue. If these two conditions co-exist, technically there cannot be any objection to invoke the power conferred upon the assessing authority under section 17-B of the Act with prior permission of the Commissioner. Therefore, it cannot be contended that the assessing authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was made earlier by the first respondent for the period April 1, 1996 to November 30, 1996. The same was questioned before the Appellate Deputy Commissioner, Kakinada. One of the items of dispute was regarding the levy of additional tax under section 5-A on the turnover of about Rs. 3.59 crores. The appellate authority by his order dated March 19, 1998 granted relief in so far as this item of dispute is concerned. He held that, 'as long as the purchase of milk is liable to tax at the last purchase, the turnover tax will not be applicable'. The appeal was thus partly allowed. It is strange that the first respondent resorted to provisional assessment fastening the liability of tax under section 5-A despite the appellate authority's orders covering a part of the period (i.e., the period of seven months). It amounts to flagrant violation of the order of the appellate authority by which he is bound under the scheme of the Act. This is a typical example of arbitrary exercise of power by a quasi-judicial authority. Whatever may be said about the period not covered by the appellate order, there is absolutely no justification in making an assessment for the very same period over again so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay tax of Rs. 19 (nineteen) lakhs, the same can be recovered by initiating appropriate proceedings against the immovable properties and the assets of the petitioner-company. Having regard to the facts and circumstances of this case and particularly having regard to the fact that the provisional assessment made by the first respondent in respect of previous block period of the same assessment year is already set aside by the appellate authority and in the light of the judgment of this Court in Smithkline Beecham Consumer Healthcare Ltd. v. Assistant Commissioner (CT) (Int.) [2000] 117 STC 393, we are inclined to think that the impugned action taken by the first respondent in attaching the bank overdraft account of the petitioner is not in consonance with the principles of fair-play in action, reasonableness and non-arbitrariness and consequently not justified. We think that the interest of the revenue would be protected by directing the petitioner-company to furnish security of immovable properties for a sum of Rs. 19 lakhs to the satisfaction of the first respondent. We think that such a direction would meet the ends of justice as regards both the parties. Although, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
