Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (4) TMI 485 - BOMBAY HIGH COURT

2016 (4) TMI 485 - BOMBAY HIGH COURT - [2016] 91 VST 262 (Bom) - Validity of Tribunal's order - Order proceeds on a complete misconception of law and misread the definitions and substantive provisions of the BST - Manufacturer of nail cutters - Department submitted that if the Tribunal's view is accepted, that would mean that a dealer and who is defined to mean a person cannot be a sole proprietor, none of the transactions of sale and purchase and undertaken by the sole proprietor can be brought .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

basis of the transactions of sale and purchase of goods undertaken by him/her and that section also enables the Commissioner to carry on best judgment assessment, then, merely because the notice under sub-section (6) addressed and sent to the dealer is in the trade name and not the sole proprietress that would not be fatal. The Tribunal has referred, to the definitions and which, according to it, are relevant. Tribunal's order requires a registered dealer to furnish returns and if non filing of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ake every part or prescription thereof mandatory and incapable of substantial compliance. Such provisions do not mandate strict compliance and are capable of substantial compliance. It cannot be that the trade name is mentioned and not that of the sole proprietor or proprietress that the proceedings can be flawed to such an extent as to term them as incurable. This is not a fundamental flaw or defect going to the root of the case. It will have to be established and proved that there is a prejudi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it cannot be said that the proceedings suffer from a fundamental or incurable defect and therefore non-est. The proceedings and the orders therein cannot be termed as void ab initio or null from inception. - The Tribunal should have noted the basic facts in this case, the context and the backdrop in which the Division Bench concluded that the notice issued under the trade name would not suffice. Pertinently, the Division Bench does not hold that the sole proprietor or the business carried o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

venue - Sales Tax Reference No. 4 of 2009, Reference Application No. 114 of 2005 - Dated:- 15-3-2016 - S. C. Dharmadhikari And A. A. Sayed, JJ. For the Petitioner : Ms. Uma Palsuledesai - AGP For the Respondent : None SALES TAX REFERENCE NO. 66 OF 2009 IN REFERENCE APPLICATION NO. 111-112 OF 2005 WITH SALES TAX REFERENCE NO. 88 OF 2009 IN REFERENCE APPLICATION NO. 121 OF 2005 WITH SALES TAX REFERENCE NO. 91 OF 2009 IN REFERENCE APPLICATION NO. 118 OF 2005 WITH SALES TAX REFERENCE NO. 97 OF 2009 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ENCE APPLICATION NO. 120 OF 2005 JUDGMENT ( Per S. C. Dharmadhikari, J. ) 1) In all these applications, the Tribunal has referred the following question of law for opinion and answer of this court:- Whether on facts and circumstances of the case, the Tribunal was justified in law in holding that the assessment orders were non-est orders even though the person Mrs. Janaki Soman, proprietress of the business has accepted the notices, attended the assessment proceedings as well as the first appeal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed and absent, was a dealer. The respondent was carrying on business in the trade name and style as M/s. Klip Nail Care and manufacturing nail cutters under this name and style. The respondent was registered as a dealer and holding a registration certificate under both, the Bombay Sales Tax Act, 1959 (for short the BST ) and the Central Sales Tax Act, 1956 (for short the CST ). The registrations were ultimately cancelled with effect from 1st April, 2000 owing to losses in the business. The asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

toilet articles within the meaning of Entry 86 of Schedule C part II and attract sales tax at the rate of 15%. He, therefore, initiated revisional proceedings taking recourse to section 57 by issuing a notice in form 40. As the dealer failed to respond to the notice, the matter proceeded ex-parte and that is how original assessment came to be revised. Being aggrieved and dissatisfied by this revisional order, the dealer preferred First Appeal before the Deputy Commissioner of Sales Tax (Appeals .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

revisional order dated 31st March, 1999 came to be set aside. 4) The Revenue sought reference of the above question to this court and by the order passed on 19th January, 2007, the Tribunal referred the above question and common to all the applications, for answer and opinion of this court. 5) The Second Appeals of the dealer came to be allowed not on consideration of merits thereof, but on a singular ground stated to be of law, namely, the assessment proceedings were vitiated for, notice has b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t. That part of the reasoning of the Tribunal reads as under:- 6. We have heard both the counsels. Perused the record. In view of the rival submission, it is felt necessary instead of looking to the merits of the case first to consider the additional plea taken on behalf of the appellant. It is needless to say that there is no impediment to take the new ground in the appeal on the point of law. A perusal of the registration certificate record certainly reveals that the appellant firm M/s. Klip N .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e passed against the dealer . Issuing assessment notice in form 27 under rule 33 for initiation of assessment under section 33 of the Bombay Act is mandatory. The dealer has been defined in section 2(11) of the Bombay Act. Accordingly, the dealer means any person, who carries business of buying and selling goods for commission, remuneration or otherwise. In the case in hand, the proprietor namely Mrs. Janaki Soman is a person carrying on business under the trade name Klip Nail Care . It was ther .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g of the law and therefore a notice used in the trade name is not either to person to a dealer and the entire proceedings founded upon such a notice are invalid. Following the said decision, this Tribunal in the case of M/s. Kiran Oil Mills (supra) held that notices issued and the assessment order passed in the trade name are bad in law and the orders passed by the lower authorities were set aside on that ground. 7. Smt. Deshpande has further rightly pointed out that as the impugned assessment o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evision orders passed against such assessment orders which were passed after expiry of the limitation period are held to be without jurisdiction. In this context, the Tribunal has observed that even though the appellant has not challenged either the assessment notices, or the assessment orders, the facts remains that the assessment orders having been passed without valid jurisdiction were non-est or nullify and therefore, they were certainly assailable even in the collateral proceedings like rev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

en by this Tribunal in the case of M/s. Parwani Builders (supra). 6) Ms. Palsuledesai appearing for the Revenue/applicant in this case would submit that the Tribunal's order proceeds on a complete misconception of law. She would submit that the Tribunal has misread the definitions and the substantive provisions of the BST to arrive at the above conclusion. She would submit that if the Tribunal's view is accepted, that would mean that a dealer and who is defined to mean a person cannot be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alsuledesai, then, none of the transactions of sale and purchase and undertaken by the sole proprietor can be brought to tax. That could never the intent of the legislature for, everybody who is answering the definition of the term dealer as also the word person can be registered under section 22. After being so registered, the liability to pay tax in terms of the law would arise. Once that arises, then, the law enables the Department/Revenue to proceed by issuing notice even against a sole prop .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he contentions of Ms. Palsuledesai. The Tribunal, though seized and possessed of Second Appeals, choses not to go into any other grounds and questions raised for its consideration, but disposes of the appeals simply on the above ground. It takes up the ground as if it goes to the root of the case or matter and would enable it to dispose of the appeals themselves. In the facts and circumstances of the case, that was an incorrect approach. 8) Section 22 falling in Chapter IV of the BST provides fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

period specified in subsection (6) of section 19, carries on such business. Now, this provision enables registration and of a dealer. The word dealer is defined in section 2(11) in the following manner:- 2 (11) dealer means any person who whether for commission, remuneration or otherwise carries on business of buying or selling goods in the State, and includes the Central Government, or any State Government which carries on such business, and also any society, club or other association of perso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

; Exception - (III) - A transporter holding permit for transport vehicles (including cranes) granted under the Motor Vehicles Act, 1988, which are used or adopted to be used for hire shall not be deemed to be a dealer within the meaning of this clause in respect of sale or purchase of such transport vehicles or parts, components or accessories thereof. Explanation - For the purposes of this clause - (i) each of the following persons and bodies who dispose of any goods including goods as unclaime .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

orities; (c) Railway administration as defined under the Indian Railway Act, 1890; (d) Shipping and construction companies; (e) Air transport Companies and Airlines; (f) ***** (g) Maharashtra State Road Transport Corporation constituted under the Road Transport corporation Act, 1950; (h) Customs Department of the Government of India administering the Customs Act, 1962; (i) Insurance and financial corporations or Companies and Banks included in the Second Schedule to the Reserve Bank of India Act .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncipal, shall, notwithstanding anything contained in clause (5A) or any other provisions of this Act, be deemed to be a dealer; (iii) a factor, broker, commission agent, del credere agent or any other mercantile agent, by whatever name called, who carries on business of buying, selling, supplying or distributing goods belonging to any principal or principals whether disclosed or not, shall, notwithstanding anything contained in clause (5A) or any other provisions of this Act, be deemed to be a d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

disposing any goods and to be deemed as a dealer for the purpose of such disposal. That again specifies incorporated or unincorporated society, club or other association of persons. 10) If any clarity was necessary in the view of the Tribunal, then, it should have referred to other definitions. The other definitions are of the term person appearing in section 2(19). The word person is an inclusive definition, including any company or association or body of individuals whether incorporated or no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Tribunal's order and that reads as under:- S. 33. Assessment of taxes. - (1) The amount of tax due from a dealer liable to pay tax shall be assessed separately for each year during which he so liable: Provided that, the Commissioner may, subject to such conditions as may be prescribed and for reasons to be recorded in writing, assess the tax due from any dealer during a part of a year: Provided further that, when a Registered dealer fails to furnish any return relating to any period of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pect of any period ending on or before the 31st March, 1995 have not been filed by him and if the dealer proves to the satisfaction of the Commissioner that he has filed such returns on or before the 30th June 1995 and furnishes copies thereof, then, notwithstanding anything contained in the said notice, the Commissioner may, if he is satisfied that such returns are correct and complete, assess the amount of tax due from the dealer on the basis of such returns. (3) If the Commissioner is not sat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the notice. On the date specified in the notice, or as soon as maybe thereafter the Commissioner shall, after considering all the evidence which may be produced, assess the amount of tax due from the dealer. (4) If a Registered dealer fails to comply with the terms of any notice issued under sub-section (3), the Commissioner shall assess, to the best of his judgment, the amount of tax due from him. (4A) Where all the returns are filed by a Registered dealer for any year ending on or after the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he years ending prior to the notified day and filed on or before the notified day or on or before any such other date thereafter as the State Government may by notification in the Official Gazette specify in that behalf, the period of three years shall be computed from the notified day. Explanation II. - In the case of returns filed by a registered dealer referred to in sub-clause (b) of clause (37) of section 2 and who has not opted for the financial year, the period of three years shall be com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

direction or order, as the case may be: Provided further that , in computing any period of limitation laid down in this section, the time during which the assessment remained stayed under the order of the Tribunal or of the High Court or of the Supreme Court shall stand excluded: Provided also that, the Commissioner may, in the interest of the revenue or at the instance of the dealer, issue directions not to proceed with the assessment of any particular dealers or class of dealers or any partic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng contained in this section, the assessment shall be completed within a period of eighteen months from the date of such order of revocation as referred to in the third proviso to subsection (4A) and the period of limitation laid down in this section shall be deemed tobe modified accordingly. (4C) Notwithstanding anything contained in this section or any other provisions of this Act, where the assessment involves a decision on the point which is concluded against the State by a judgment of the T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed dealer does not furnish returns in respect of any period by the prescribed date, the Commissioner shall, at any time, within eight years from the end of the year in which such period occurs, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment, the amount of tax (if any) due from him. (6) If the Commissioner has reason to believe that a dealer is liable to pay tax in respect of any period, but has failed to apply for registration or fa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not safisfied about the correctness or the completeness of the accounts of a dealer, or where no method of accounting has been regularly employed by a dealer, the Commissioner may, after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of tax (if any) due from him. (6B) If, during the course of any proceedings under section 49, in case of any dealer or person, the Commissioner, on the basis of evidence available to him, is of the opinion t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ich may be made in respect of the said period under other provisions of this section, to the best of his judgment, the amount of tax, if any, due from him on such transaction: Provided that tax on such transaction and penalty and interest, if any, consequent upon such tax, will not be levied or demanded when the dealer or person is assessed to tax under the other provisions of this section in respect of the same period. (7) Any assessment made under this section shall be without prejudice to any .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion 22, the Commissioner shall at any time within eight years from the end of the year in which such period occurs, after giving the dealer a reasonable opportunity of being heard, proceed to assess, to the best of his judgment, the amount of tax (if any) due from the dealer in respect of that period, and any period or periods subsequent thereto. 13) We do not see how within the meaning of sub-section (1) of section 33 and in the light of the above clear legal provisions, a sole proprietor/deale .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are relevant. We have reproduced that paragraph of the Tribunal's order and which requires a registered dealer to furnish returns and if non filing of returns and non registration of a dealer enable the Commissioner to carry out best judgment assessment, that any notice being addressed and sent in the above manner would be an illegality and of such nature as to be termed as incurable. The Tribunal's opinion is that this is an incurable defect and not a mere irregularity. The Tribunal ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sment of tax. - The notice required by sub-section (3) of section 33 shall be in form 27 and the date fixed for compliance therewith shall not be earlier than fifteen days from the date of service thereof. R. 33. Notice under sub-section (5) and (6) of section 33. - The Commissioner shall before proceeding to assess the dealer to tax under sub-section (5) or (6) of section 33 call upon him by a notice in Form 27 to show cause as to why he should not be assessed. The date for compliance with the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hereof. Form 27 is referable to Rules 32 and 33 and sets out the format of the notice. We have carefully perused the Rules and the Form so also the contents thereof. We do not think that description by the trade name is a contravention of these Rules or the Form. Eventually, procedural rules and matters of Form cannot be elevated to such a status and position as would make every part or prescription thereof mandatory and incapable of substantial compliance. Such provisions do not mandate strict .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ealer was prevented from contesting the proceedings or the exercise carried out by the commissioner under sub-sections (5) or (6) of section 33. Eventually, the dealer must be put to notice. The form is not mandatory and the requirement of notice may be such. Therefore, absence of notice by such mis-description would have to be established and proved by the dealer, else it cannot be said that the proceedings suffer from a fundamental or incurable defect and therefore non-est. The proceedings and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

usiness owned by one person. Therefore, a notice addressed to the sole proprietary firm can be in a trade name or in the name of the sole proprietor but merely because it is addressed in the former name does not mean that no notice was issued. The Tribunal has gone by the form and missed the substance. In the case Bhagabandas Agarwalla vs. Bhagwandas Kanu and Ors. AIR 1977 SC 1120 in the context of a notice to quit under section 106 of the Transfer of property Act, 1882, the Hon'ble Supreme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by pedagogic pendantism or over refined subtlety, but it must be construed in a common sense way. See Harihar Banerji v. Ramsashi Roy, 45 Ind App 222 = (AIR 1918 PC 102). The notice to quit in the present case must be judged for its validity in the light of this well recognised principle of interpretation. 16) In reaching the conclusion as above, the Tribunal referred a Division Bench judgment of this Court in the case of Shankar Dhawan and Ors. vs. Sales Tax Officer, Circle II, Nagpur and An .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

31st December, 1958 and Laxmi Stores was made liable to pay sales tax and penalty. Yet, for further period from 1st January, 1959 to 14th May, 1959 this business was assessed to tax and even a penalty was levied. The Division Bench noticed that part of the later period is after the death of Basantlal on 28th January, 1959. The most salient feature of the case was that the entire process commenced and concluded after the death of Basantlal and orders assessing the business to tax were passed on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he person involved was late Basantlal. M/s. Laxmi Stores cannot be said to be a person. It is that fundamental fact which had not been properly grasped and that is why the Division Bench concluded that the notice in the name of Laxmi Stores cannot be the basis for initiation of the proceedings and therefore, the entire proceedings deserve to be quashed. 17) The Tribunal should have noted the basic facts in this case the context and the backdrop in which the Division Bench concluded that the noti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version