TMI Blog2010 (1) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2004 set aside the order of reassessment dated July 29, 2002 affirmed by the first appellate authority by order dated September 30, 2002 passed by the Commissioner of Sales Tax, Borivali, Mumbai, wherein the reassessment for the period of April 1, 2004 to March 31, 1995 was affirmed. The Tribunal, under order dated May 7, 2005 rejected the application for rectification moved by the Commissioner of Sales Tax under section 62 of the Bombay Sales Tax Act,1959 (for short, the BST Act ). Factual background The respondent-assessee herein, M/s. Ketan Enterprises, is a registered dealer under the BST Act. The respondent-assessee is a reseller in sulphur and iron and steel. The respondent-assessee filed a return under the BST Act for the period 1994-95, i.e., for April 1, 1994 to March 31, 1995 showing turnover of sales at Rs. 1,83,63,441, resale claim at Rs. 1,83,63,441 and turnover of purchases at Rs. 1,69,60,887. However, while passing the order under section 33(2) of the BST Act in form A, the Sales Tax Officer had shown turnover of sales as nil. The respondent-assessee was assessed for nil tax under section 33(2) of the BST Act vide order dated June 4, 1996. The Sales Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how-cause notice for enhancement of the penalty. The first appellate authority, after hearing the respondent-assessee, increased the said penalty to Rs. 1,25,000 under section 36(2)(c), Explanation 1, vide order dated September 30, 2002. Aggrieved by the aforesaid order, the respondent-assessee carried second appeal before the Tribunal. The Tribunal, by a detailed reasoned order was pleased to quash and set aside the order of reassessment dated July 29, 2002 and the order of the first appellate authority dated September 30, 2002 including that of penalty levied on the respondent/assessee. The appeal was allowed with directions to the assessing officer to give credit of Rs. 1,84,000 with consequential relief as per the provisions of law. The Commissioner of Sales Tax not satisfied with the above order of the Tribunal, holding belief that the Tribunal had decided the case against the Department without considering the ratio laid down by the High Court of Allahabad in the case of Allahabad Milling Co. Private Ltd. v. Sales Tax Officer II, Allahabad [1966] 17 STC 211, invoked the jurisdiction of the Tribunal under section 62 of the BST Act and prayed for rectification of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment so as to justify the reassessment on merits. He thus, prayed for setting aside the impugned order and for restoration of the order of the first appellate authority. Per contra, Mrs. Badekha, learned counsel appearing for the respondent, at the out set, raised a preliminary objection with regard to the maintainability of the petition contending that the petition is filed against a trade name, whereas the dealer is an individual living person, i.e., Mr. Bharat K. Mehta registered as dealer in his personal capacity, as such the petition under trade name is not maintainable. Mrs. Badekha also contends that the alternate remedy by way of reference under section 61 of the Act was very much available to the petitioner. No such reference application was filed under section 61 of the Act, consequently, the impugned order has become final and conclusive. In her submission, the petition is not tenable. Reliance is placed on the Division Bench judgment of this court in the case of Shankar Dhawan v. Sales Tax Officer [1964] 15 STC 292. The another objection relates to the delay and latches in invoking writ jurisdiction of this court contending that the time lost in pros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are necessary to decide the issues involved in the petition. Statutory provisions In the case in hand, we are concerned with the operation of sub-section (1) of section 35 of the BST Act, which reads as under: 35. Reassessment of turnover escaping assessment, under-assessed, etc. (1) If, after a dealer has been assessed under section 33 or under section 4 or under section 41, for any year or part thereof, the Commissioner has reason to believe that any turnover of sales or turnover of purchases of any goods has in respect of that year or part thereof escaped assessment, or has been under-assessed or assessed at a lower rate, or that any deduction has been wrongly made or any drawback, set-off or refund has been wrongly granted then the Commissioner may, (b) where he has reason to believe that the dealer has concealed such sales or purchases or any material particular relating thereto, or has knowingly furnished incorrect returns, at any time within eight years, and (c) in any case, at any time within five years, of the end of that year, after giving the dealer a reasonable opportunity of being heard, proceed to assess or reassess, to the best of his judgment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spicion, gossip or rumour. It cannot be merely a pretence. Reason to believe is a common feature in taxing statutes. It has been considered to be the most salutary safeguard on the exercise of power by the officer concerned. It is made of two words reason and to believe . The word reason means cause or justification and the word believe means to accept as true or to have faith in it. Before the officer has faith or accepts a fact to exist there must be a justification for it. The belief may not be open to scrutiny as it is the final conclusion arrived at by the officer concerned, as a result of mental exercise made by him on the information received. But the reason due to which the decision is reached can always be examined. The existence of reason(s) to believe is supposed to be the check, a limitation upon the power to reopen the assessment (see the leading decision on this subject in Barium Chemicals Ltd. v. Company Law Board [1966] 36 Comp Cas 639 (SC); [1966] Suppl SCR 311 at 361; AIR 1967 SC 295 at 324). The power conferred upon the Sales Tax Officer by section 35(1) is thus not unbridled one. It is hedged with several safeguards conceived in the interest of elimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to be found. Notings do not show that he had independently gone through the material brought to his notice by the Sales Tax Officer (Enforcement Branch) and applied his mind to form the belief that the assessee needs to be reassessed under section 35 of the BST Act. There is nothing to show that the Sales Tax Officer took any step to ascertain the factual matrix before issuing notice in form No. 28. In our considered opinion, the proceedings for reassessment in the case in hand were initiated without application of mind and without ascertaining facts and without recording reasons in support of the belief formed by the Sales Tax Officer under section 35 of the BST Act. The assessing officer has assumed jurisdiction by initiating reassessment proceedings not as per law. The assessment order was thus rightly set aside by the Tribunal for the reasons recorded therein. Having examined and recorded the above positive findings in respect of erroneous assumption of jurisdiction, we do not think it is necessary for us to deal with the preliminary objections raised in detail. However, since the matter was argued by the parties at length, we may observe that alternate remedy, by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
