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TMI Blog2017 (3) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... tion business throughout the country. At the relevant time, the appellant-Company was involved in the execution of civil work contracts for its client, viz., Tata Iron & Steel Company Ltd. (TISCO) and had been filing its returns under the Bihar Finance Act, 1981 (hereinafter referred to as 'the State Act') and also under the Central Sales Tax Act, 1956 (hereinafter referred to as 'the Central Act') in the Commercial Taxes Department, Urban Circle, Jamshedpur. (b) For the Assessment Year (AY) 1991-92, the appellant-Company filed returns under the State Act. However, the assessment proceedings in relation to the above period, i.e., AY 1991-92 was completed in the year 1996 and an assessment order dated 24.01.1996 was passed by the assessing authority. (c) After the assessment proceedings, an audit team of the Auditor General, Bihar, audited the assessment order dated 24.01.1996 and found that the dealer was allowed exemption of Rs. 3,12,47,916/-, being the amount of goods consumed by the appellant-Company during the course of execution of works contract. The appellant-Company claimed that such goods were purchased on payment of tax but no declaration in Form IX-C along with other e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by its very nature are goods used for own consumption. The assessment order dated 24.01.1996 rightly records the said fact. 6) Learned senior counsel further contended that the original assessment order specifically considered whether purchase tax is to be paid under the State Act on the disputed items and the same was decided in negative and hence taxing the items later on is a mere change of opinion by the Assessing Authority on the very same set of facts that were available on the date of passing the assessment order dated 24.01.1996. 7) Learned senior counsel further contended that non-filing of Form IX-C under Section 11 of the State Act read with Rule 12 of the Bihar Sales Tax Rules, 1983 (hereinafter referred to as 'the Rules') does not attract the levy in the facts of the present case as the goods are used for 'own consumption' and there is no sale or 'deemed sale' of the said goods involving a transfer of property in the said goods to anybody. 8) It was further contended that Section 19 of the State Act read with Rule 20 and Form XIV of the Rules specifically requires the satisfaction of the Prescribed Authority regarding requirement of re-assessment before the issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther it had satisfied itself before revising and the same can be seen from the fact that it had rejected part of the audit opinion and applied its mind before passing the order impugned. 13) Learned senior counsel for the respondent-State further submitted that the 'audit objection' in the present case is an 'information' within the meaning of Section 19 of the State Act and the competent authority has rightly re-assessed the turnover and demanded legally payable valid tax which was escaped. He further submitted that the word 'information' used in the Section is of the widest amplitude and comprehends variety of factors including information from external sources of any kind including discovery of new facts or information available in the record of assessment not previously noticed or investigated. 14) Learned senior counsel for the respondent-State submitted that if there is obvious mistake apparent on the face of the record of assessment, that record itself can be a source of information, if that information leads to a discovery or belief that there has been an escape of assessment. He finally submitted that there is no illegality in the re-assessment order dated 27.02.2006 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quote Section 19 of the Bihar Finance Act, 1981 which is as under:- "19. Turnover of registered dealer escaping assessment - (1) If upon information which has come into his possession, the prescribed authority is satisfied that reasonable grounds exist to believe that any turnover of a registered dealer or a dealer to whom grant of registration certificate has been refused under the third proviso to sub-section (2) of Section 14, in respect of any period has, for any reason, escaped assessment or any turnover of any such dealer or a dealer assessed under sub-section (5) of Section 17 has been under-assessed or assed at a rate lower than that which was correctly applicable or any deductions therefrom has been wrongly made, the prescribed authority may, subject to such rules may, be made by the State Government under this part, and - (a) Within eight years from the date of the order of the assessment or reassessment where the said authority has reasons to believe that the dealer has concealed, omitted or failed to disclose willfully the particulars of such turnover or has furnished incorrect particulars of such turnover and thereby returned figures below the reason amount, (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period has, for any reason, escaped assessment or any turnover of any such dealer assessed under sub-Section (5) of Section 17 has been under-assessed or assessed at a rate lower than that which was correctly applicable, may, within eight years from the date of order of assessment, proceed to assess or reassess the amount of tax in respect of such turnover. 20) For ready reference, the relevant portion of the assessment order dated 24.01.1996 is also extracted hereunder:- "The Company has used the following work under its Tender work on its level and if we separate the both, then it is like this. Camp equipments Rs. 227301.00 Electric goods for work site Rs. 773223.00 Electrode Welding Cable and Accessories Rs. 871294.00 Fuel & Lubricants Rs. 3189205.00 General Consumables Rs. 2945086.00 (Handgloves) contenvest Oxygen & D.A. Gas Rs. 21223.00 Plywood for Shuttering Rs. 2826674.00 Safety Appliances Rs. 408392.00 Spares Rs. 8232442.00 Staging Materials Rs. 3888798.00 Shuttering & Walk-way (For Timber) Rs. 4191982.00 Tools and Tackles Rs. 3672296.00 Total Rs. 3,12,47,916.00" 21) It is also pertinent to understand the meaning of the word 'information' in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and the High Court were in error in holding that the information given by internal audit party could not be treated as information within the meaning of Section 147(b) of the Income Tax Act. The audit party has merely pointed out a fact which has been overlooked by the Income Tax Officer in the assessment. The fact that the recognition granted to this charitable trust had expired on 22-9-1992 was not noticed by the Income Tax Officer. This is not a case of information on a question of law. The dispute as to whether reopening is permissible after audit party expresses an opinion on a question of law is now being considered by a larger Bench of this Court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law. The judgment under appeal is set aside to this extent." (emphasis supplied) 24) Similarly, in Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax had never been examined by the Appellate Assistant Commissioner in the income tax proceedings and therefore it could not be said that there had been escapement of income as a result of information derived from his order. The Appellate Assistant Commissioner apparently did not go into that question because the proceedings before him related to assessment of income tax. Section 10-A of the Act is a special provision which deals with the transactions designed to avoid or reduce liability to excess profits tax. The information which came into possession of the Excess Profits Tax Officer of partial partition having been effected was relevant for the purpose of Section 15 and once he had initiated proceedings under that section he was perfectly competent and had jurisdiction to examine for the purpose of Section 10-A whether partial partition had been effected for avoidance or reduction of liability to excess profits tax. The first question, therefore, should have been answered against the assessee and in favour of the Revenue." (emphasis supplied) 25) In M/s Phool Chand Bajrang Lal and Another vs. Income Tax Officer & Another (1993) 4 SCC 77 this Court has held as under:- "25.... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JU 848 (r) Nature of Business Works Contract Asstt. Year 1991-92 Date of Order 24.01.1996 G.T.O. Determined Rs. 17,57,01,372.00 Less: Sale of tax paid goods Rs. 1,31,75,779.63 Rs. 16,25,25,592.37 Less: Works done by sub- ontractor Rs. 27,17,304.00 Rs. 15,98,08,208.37 Less: Labour charges and overhead charges Rs. 11,91,66,742.38 Rs. 4,06,41,465.99 Tax was levied @ 4% on Rs. 17,48,096.90 Rs. 69,923.00 @ 8% on Rs. 1,96,71,099.14 Rs. 15,73,678.93 @ 9% on Rs. 1,45,34,488.10 Rs. 13,08,103.92 @ 10% on Rs. 2,048.00 Rs. 204.80 @ 11% on Rs. 4,82,125.70 Rs. 53,033.86 @ 12% on Rs. 42,03,608.15 Rs. 5,04,432.97 Rs. 35,09,387.36 Add: Tax @ 1% on Rs. 5,55,08,612.25 Rs. 5,55,086.12 Rs. 40,64,473.48 Surcharge @ 10% on Rs. 39,94,549.60 Rs. 3,99,454.00 Rs. 44,63,928.44 Penalty U/S 16 (8) Rs. 920.00 Rs. 44,64,848.44 The Scrutiny of assessment order revealed that the dealer was allowed exemption of Rs. 11,91,66,742.38 on account of labour charges and overhead charges claimed as detailed below: Labour Charges Rs. 7,02,77,549.00 Overhead charges Rs. 1,87,15,545.00 Goods consumed in course of exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bid was leviable. In this case, even if same charges like Electrodes, Welding Cables, welding appliances, fuel and lubricants, oxygen and P.A. Gas safety, safety appliances valued at Rs. 44,90,114.00 was not considered as taxable, the consumable goods worth Rs. 2,67,57,802.00 attracted levying of tax at specified rates. The case may please be re-examined in the light of above observation and levying of purchase tax amounting to Rs. 24,19,385.31 (including additional tax and surcharge) as calculated below may be considered under intimation to audit. S.No. Name of Goods Purchase value of goods Rate applicable Non-levy of purchase tax 1. Camp Equipment, general consumable, plywood for shuttering spares and staying material Rs. 1,81,20,301.00 8% Rs.14,49,624.08 2. Electrical Goods and Timber Rs. 49,65,205.00 12% Rs. 5,95,824.60 3. Tools & Tackles Addl. Tax @ 1% on 20,45,448.68 Surcharge @ 10% on 20,65,903.16 Rs. 36,72,296.00 4% Rs. 1,46,891.84 Rs. 21,92,340.52 Rs. 20,454.48 Rs. 22,12,795.00 Rs. 2,06,590.31 Rs. 24,19,385.31 The use of fuel and lubricants may please be bifurcated and value of lubricants only may be levied to tax. On being pointed out in audit, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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