TMI Blog2023 (8) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... JVAT Act? - HELD THAT:- The Hon ble Supreme Court, in the case of Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT] , has clearly laid down that the phrase levy and collection indicates that all the steps in making a man liable to pay a tax and exaction of tax from him must be in accordance with law. All steps must be taken according to statutory provisions and no one can be subjected to levy and collection of tax without authority of law. It is a settled law that completion of assessment of an assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act. Pior to insertion of Section 42(3), the Assessing Authority, could have treated audit objection as an information and could have initiated re-assessment proceeding. However, Section 42(3) provides that when information is received by way of observation/objection from the Comptroller and Auditor General of India, the Assessing Authority has to proceed to re-assess the dealer. Thus, what is dispensed with under Section 42(3) is recording of reasons to believe by the Assessing Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... District Cooperative Milk Producers Union Ltd. [ 2007 (10) TMI 300 - SUPREME COURT] wherein Hon ble Apex Court, while examining the provisions contained under the Punjab General Sales Tax Act conferring power of suo-motu revision upon the Commissioner, held that although said Section prescribed no period of limitation but the same would not mean that suo-motu power can be exercised at any time. The Hon ble, in the said Judgment, held that if no period of limitation is prescribed, statutory authority must exercise jurisdiction within reasonable time and the reasonable period would depend upon the nature of the statute, liabilities and other relevant factors. In the said Judgment, Hon ble Supreme Court, while examining the scheme of Punjab General Sales Tax Act, held that revisional power should ordinarily be exercised within a period of three years and, in any event, the same should not exceed the period of five years. Said finding was given by the Hon ble Apex Court by considering various provisions of the Punjab Act which contains provision of limitation varying from three years to five years from the end of the tax period. Similarly, under the scheme of JVAT Act also, prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was disputed that assesse was not entitled to purchase goods at concessional rate for manufacturing and processing activity. The assesse-Petitioner, therefore, cannot be said to have falsely represented knowingly and willfully with guilty mind and, thus, we are of the opinion that the order of penalty levied against the assesse is not sustainable. Application allowed. - HON BLE MR. JUSTICE RONGON MUKHOPADHYAY AND HON BLE MR. JUSTICE DEEPAK ROSHAN For the Petitioner : Mr. Sumeet Gadodia, Advocate Mrs. Shilpi Sandil Gadodia, Advocate Mr. Ranjeet Kushwaha, Advocate For the Respondent-State: Mr. Rajiv Ranjan, Advocate General, Mr. Ashok Yadav, Sr. S.C.-1, JUDGMENT 1. Since both these writ applications pertain to common Assessee raising common question of law and were heard analogous with the consent of the parties and as such both are being disposed of by this common Judgment. 2. The brief facts of the case are that the original company H.V. Transmissions Limited was engaged in the business of manufacturing and processing of axles and its spare parts on job work basis for Tata Motors Limited. The original company, pursuant to amalgamation order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tools', 'spares' and 'consumables' for use by the company in 're-sale' and/or 'for manufacturing'. 4. The periods in dispute in the two writ petitions pertain to the Assessment Year 2008-09 [in W.P.(T) No. 4073 of 2022] and 2009-10 (in W.P.(T) No. 4071 of 2022] and in respect of both the Assessment Years, original assessment orders were passed by the Assessing Officer, wherein the claim of the assessee-company towards concessional purchase was duly accepted and no dispute was raised by the Assessing Officer. 5. However, after completion of the assessment proceedings, an audit objection was raised by the office of the Accountant General, Jharkhand vide Audit Objection bearing No. IR 60/2014-15 and it was alleged that assessee-company has mis-utilized Form 'C' for purchase of goods at concessional rate as the assessee was carrying out manufacturing activity on job work basis and the goods manufactured by it was not sold by it but was sold by Tata Motors Limited. Thus, it was suggested that penalty under Section 10 A of the CST Act should be imposed upon the Petitioner-company on purchase of goods at concessional rate. 6. It is spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed vide order dated 12.04.2019, wherein imposition of penalty under Section 10A of the CST Act was upheld, which resulted into filing of Revision applications before Commercial Taxes Tribunal, Jharkhand being Revision Application No. JR 35 of 2019 (for 2009-10) and JR 36 of 2019 (for 2008-09). Before the Commercial Taxes Tribunal, the Assessee primarily raised following grounds:- (i) No re-assessment proceedings were ever initiated, as only Notice u/s 70(1) of the JVAT Act was issued and no Notice of re-assessment u/s 40(1) and/or 42(3) of the JVAT Act was issued. (ii) Even if, allegedly, re-assessment proceedings were initiated, then also, re-assessment proceedings were barred by limitation under Section 40(4) of the JVAT Act. (iii) Assessing Officer as well as first Revisional Authority have travelled beyond the Show Cause Notice, as Show Cause Notice was issued in terms of Section 10(d) of the CST Act, whereas order was passed for alleged violation of provisions of Section 10(b) of the Act. (iv) The assesse further contended that levy of penalty u/s 10-A of the CST Act could not have been imposed upon the assessee, as the assesse did not make any false and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial Taxes Tribunal, Jharkhand in Revision Application bearing no. JR 36 of 2019 pertaining to the period 2008-09, wherein Revision Application has been dismissed and imposition of penalty under Section 10A of the Central Sales Tax Act, 1956 has been upheld. (ii) For issuance of further appropriate writ/order/direction including Writ of Declaration, declaring that Petitioner is not liable for imposition of penalty under Section 10A of the Central Sales Tax Act, 1956, especially because the Petitioner had no wrongful or mala fide intention and has not deliberately and knowingly purchased goods allegedly not mentioned in its registration certificate by utilizing Form-C warranting imposition of penalty upon the Petitioner. W.P.(T) No. 4073 pertaining to the period 2009-10: (i) For issuance of appropriate writ/order/direction including Writ of Certiorari for quashing/setting aside the order dated 08.03.2022 (Annexure-12) passed by the Commercial Taxes Tribunal, Jharkhand in Revision Application bearing no. JR 35 of 2019 pertaining to the period 2009-10 to the extent the imposition of penalty under Section 10A of the Central Sales Tax Act, 1956 for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any Court or Tribunal which has become final, the prescribed authority is of the opinion that earlier order passed by it in respect of any dealer is erroneous or prejudicial to the interest of revenue being not in accordance with the ratio of a judgment delivered by any Court or Tribunal in a subsequent proceeding. It was submitted that Section 42(1) provided for an additional ground for initiation of re-assessment proceeding over and above the grounds on which re-assessment proceedings could have been initiated under Section 40(1) of JVAT Act and specifically provided, inter alia, that the period of limitation as contained under the Act i.e., under Section 40(4) would stand extended for passing of the re-assessment order up to a period of three years from the date of Judgment or Order. Reliance was further placed upon provisions of Section 42(2) and it was contended that Section 42(2) also contains non-obstante clause extending the period of limitation by two years for passing of assessment/ re-assessment order which was required to be passed by the prescribed authority for giving effect to an order passed by a Court or Tribunal in appeal/revision in respect of the Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon ble Supreme Court in the case of Maharashtra University vs. Prakash Mandal, reported in (2010) 3 SCC 786 [paras 27 28] in support of the aforesaid proposition. 17. Learned counsel for the petitioner further invited our attention to Article 265 of the Constitution of India and submitted that the constitutional embargo enshrined under Article 265 of the Constitution of India is both on levy and collection of tax without authority of law and the State is not permitted to exact any tax without following procedure laid down by law. It was submitted that JVAT Act contains a complete mechanism and lays down detailed procedure under which re-assessment proceeding can be initiated against an assessee including the period of limitation. It was submitted that not only levy of tax but its collection should be in accordance with law and Section 42(3) of the JVAT Act is to be read with Section 40 of the said Act which is the only enabling provision for initiation of re-assessment proceeding and, thus, the period of limitation of five years from the end of tax period, as prescribed under Section 40(4) of the JVAT Act, would be applicable even in respect of re-assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of Certificate of Registration i.e. 05.04.2000 and no objection was ever raised by the Revenue on the eligibility of the assessee to purchase goods at concessional rate. It was further submitted that it was only due to amendment carried out in the Registration Certificate on 06.10.2009 the dispute cropped up and even the Assessing Officer, while passing the penalty order, only stated that prior to 06.10.2009 the assessee-company was not entitled to purchase tools, spares and consumables at concessional rate and never questioned the eligibility of the assessee to purchase goods at concessional rate for manufacturing activity. Accordingly, by placing reliance in the case of 'Sanjeev Fabrics' (supra) it was submitted that the ratio of the said Judgment of Hon'ble Apex Court is squarely applicable in the case of the Petitioner as there was no intentional and/or false representation by the Petitioner-assessee, who was under the bona fide believe that it was entitled to purchase goods at concessional rate. 19. Per contra, Mr. Rajiv Ranjan learned Advocate General, appearing for the State of Jharkhand, assisted by Mr. Ashok Kumar Yadav, Sr. S.C.-1, submitted that on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirement of recording the satisfaction of reason to believe . At the cost of repetition, it was submitted that it is in the aforesaid background, no limitation was prescribed under Section 42(3). 20. Learned Advocate General further submitted that under Section 42(3) of JVAT Act, re-assessment proceeding can be initiated in respect of a dealer whose assessment or re-assessment or scrutiny assessment has already been completed. Thus, it was contended that said Section even provides for re-assessment to be undertaken of an order of re-assessment already passed in respect of an assessee and, thus, Section 40(4) cannot be applied interpolating the period of limitation prescribed under the said Section. While referring to Section 42(1) and 42(2), it was submitted that said Section also provides for initiation of re-assessment proceeding where, pursuant to an order passed by a Court or Tribunal, an earlier order passed in respect of a dealer is found to be erroneous or prejudicial to the interest of revenue or where an order is required to be passed for giving effect to an order in appeal or revision passed by any Court or Tribunal. He contended that it is true that under the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessment proceeding is to be guided by substantive provision of re-assessment contained under Section 40 of the JVAT Act ? (ii) Whether if Section 42(3) is held as not prescribing any period of limitation for carrying out re-assessment proceedings, said re-assessment proceeding is required to be carried out within the reasonable time and what should be the reasonable time under the scheme of the JVAT Act ? (iii) Whether imposition of penalty under Section 10A of the CST Act against the Petitioner-assessee for alleged violation of provisions of Section 10(b) of the CST Act is sustainable in the eye of law ? 24. So far as Issue No. (i) and (ii) is concerned; the broad issue to be adjudicated in these writ applications is Whether Section 42(3) is in itself the substantive provision provided under the JVAT Act for initiation of re-assessment proceeding or it merely enumerates additional circumstances/grounds under which re-assessment proceeding can be initiated under the substantive provision of re-assessment contained under Section 40 of the JVAT Act. 25. Article 265 of the Constitution of India provides, inter alia, that there shall be no levy and collection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied). 26. The Hon ble Supreme Court, in the said Judgment, has clearly laid down that the phrase levy and collection indicates that all the steps in making a man liable to pay a tax and exaction of tax from him must be in accordance with law. All steps must be taken according to statutory provisions and no one can be subjected to levy and collection of tax without authority of law. It is a settled law that completion of assessment of an assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act. 27. It is in the aforesaid backdrop of enunciation of law, we have examined various provisions of JVAT Act, 2005 and like any other taxing statute, JVAT Act also contains provisions for computation and demand of tax. Section 33 of the Act provides for Scrutiny of Returns , which enables the Assessing Authority to verify the correctness of calculation etc. in respect of the return filed by the assessee. Section 35 contains therein provisions for Assessment and Self-assessment ; and Section 35(8) of the said provisions provides, inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein for carrying out re-assessment proceeding. 33. Section 40(1) read with Section 42 of JVAT Act would reveal that Section 42 prescribes additional grounds/circumstances in which re-assessment proceeding can be initiated by the prescribed authority. 34. Section 42(1) specifically provides that the prescribed authority may initiate re-assessment proceeding if in the light of any Judgment or order passed by any Court or Tribunal, which has become final, the authority is of opinion that the assessment order passed in respect of a dealer for any period is erroneous or prejudicial to the interest of revenue. This enabling provision, which has been inserted under Section 42(1), contains a non-obstante clause which extends the period of limitation up to three years from the date of Judgment and order of any Court or Tribunal. Analysis of the said provision would clearly reveal the intention of the Legislature wherein the Legislature enabled the prescribed authority to correct an erroneous or prejudicial assessment order passed by it in the light of any Judgment or order of any Court or Tribunal rendered subsequently. Since this specific enabling provision was inserted as an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that where an objection or observation relating either in facts or in law is raised by the Comptroller and Auditor General of India, the prescribed authority shall proceed to re-assess the dealer. In order to appreciate the contours of Section 42(3), reference may be made to Section 40(1) which contained provisions for initiation of re-assessment proceeding by the prescribed authority upon receiving information or otherwise after recording reasons to believe . 37. The Hon ble Supreme Court, in its Judgment rendered in the case of Larsen and Toubro Limited, reported in (2017) 12 SCC 780, while interpreting similar provisions under Section 19 of the Bihar Finance Act, 1981, has held as under:- 31. The contention whether finding the information from the very facts that were already available on record amounts to information for the purpose of Section 19 of the State Act, it would be sufficient to refer to a judgment of this Court in Anandji Haridas Co. (P) Ltd. v. S.P. Kasture wherein it was held that a fact which was already there in records does not by its mere availability that a fact which was already there in records does not by its mere availability become an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles 148 and 149 of the Constitution of India, submitted that since the Comptroller and Auditor General of India is a constitutional authority and is entitled to audit the accounts of State Government, an objection/ observation made by the said authority has to be given due weightage and, it is for the said reason that by law it has been made mandatory by the Legislature to proceed for re-assessment and it is in the said background, the Legislature, in its wisdom, inserted Section 42(3). 41. We have carefully examined the submissions of learned Advocate General and we have also examined the provision of the Comptroller and Auditor General of India (Duties, Powers and Conditions of Services) Act, 1971. We are not in agreement with the proposition of law advanced by learned Advocate General, as the Comptroller and Auditor General of India, under the Act of 1971, essentially performs administrative or executive functions and it cannot be attributed with power of judicial supervision over the quasi-judicial authority. The Hon ble Apex Court, in the case of Indian Eastern Newspaper Society, New Dehi Vs. Commissioner, reported in (1979) 4 SCC 248 , has held as under:- 11. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been consumed, so it does not come under the purview of taxation. In other words, the assessing officer was not satisfied on the basis of information given by the audit party that any of the turnover of the appellant Company had escaped assessment so as to invoke Section 19 of the State Act. From the above, it also appears that the assessing officer had to issue notice on the ground of direction issued by the audit party and not on his personal satisfaction which is not permissible under law. 35. In view of the above discussion, we are of the considered view that the order dated 27.02.2006 passed by the Deputy Commissioner, Commercial Taxes, Urban Circle, Jamshedpur is without jurisdiction and the High Court was not right in dismissing the petition filed by the appellant Company. (Emphasis supplied). 43. The law is no more res integra that a quasi-judicial authority cannot abdicate its jurisdiction on the dictate of an external authority and proceed to pass order on such external dictate. In the present case, it has been argued by learned Advocate General, Section 42(3) mandates the assessing authority to initiate re-assessment proceeding on the dictate of the Audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion pursuant to audit objection under Section 42(3). This, in our opinion, has been deliberately omitted by the Legislature as it was conscious that re-assessment proceeding would have been otherwise initiated under Section 40(1) on information being received by the Audit Party , but the only further requirement was to record reasons to believe . What has been dispensed with in Section 42(3) is the requirement of recording reasons to believe only. It is under the said circumstances, non-obstante clause was not inserted in Section 42(3) extending the period of limitation from the date of receipt of audit objection, and, thus, the period of limitation would be governed by Section 40(1) read with 40(4) of the JVAT Act. At the cost of repetition, if two different terminologies are used in same Section, it intends to convey different meaning and, thus, in absence of non-obstante clause contained under Section 42(3) of JVAT Act, the period of limitation for completion of re-assessment proceeding would be governed by Section 40(4) of the JVAT Act. 47. We are further not consciously deliberating on the issue of Section 42(3), which mandates the assessing authority to initiate re-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that although said Section prescribed no period of limitation but the same would not mean that suo-motu power can be exercised at any time. The Hon ble, in the said Judgment, held that if no period of limitation is prescribed, statutory authority must exercise jurisdiction within reasonable time and the reasonable period would depend upon the nature of the statute, liabilities and other relevant factors. In the said Judgment, Hon ble Supreme Court, while examining the scheme of Punjab General Sales Tax Act, held that revisional power should ordinarily be exercised within a period of three years and, in any event, the same should not exceed the period of five years. Said finding was given by the Hon ble Apex Court by considering various provisions of the Punjab Act which contains provision of limitation varying from three years to five years from the end of the tax period. Similarly, under the scheme of JVAT Act also, provisions of limitation for carrying out assessment, audit assessment, scrutiny assessment, re-assessment proceedings, etc. have been prescribed to be three years to five years. It is for the said reason also, in our opinion, while incorporating provision of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a half times the tax which would have been levied under sub-section (2) of section 8 in respect of the sale to him of the goods, if the sale had been a sale falling within that sub-section: Provided that no prosecution for an offence under section 10 shall be instituted in respect of the same facts on which a penalty has been imposed under this section. (2) The penalty imposed upon any dealer under sub-section (1) shall be collected by the Government of India in the manner provided in sub-section (2) of section 9 (a) in the case of an offence falling under clause (b) or clause (d) of section 10, in the State in which the person purchasing the goods obtained the form prescribed for the purposes of sub-section (4) of section 8 in connection with the purchase of such goods; (b) in the case of an offence falling under clause (c) of section 10, in the State in which the person purchasing the goods should have registered himself if the offence had not been committed. 51. The provisions of Section 10 and 10-A of the CST Act were subject matter of interpretation by Hon ble Apex Court in the case of Sanjeev Fabrics (supra). The Hon ble Court in the said case wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissions in the use of Form C will be embraced in the expression false representation . In our opinion, therefore, a finding of mens rea is a condition precedent for levying penalty under Section 10(b) read with Section 10-A of the Act. 52. In the backdrop of aforesaid enunciation of law, we are required to examine the case of the Petitioner and to determine as to whether requirement of Section 10(b) has been satisfied while passing the impugned order of penalty against the Petitioner. The case of the Petitioner is that the Petitioner is a manufacturing dealer which undertakes the activity of manufacturing and processing of goods for Tata Motors Limited and it, accordingly, applied for registration and was granted CST Registration with effect from 05.04.2000. Said Registration Certificate, all along, was treated by the Petitioner as well as Respondent-Department to permit the Petitioner to purchase the goods mentioned therein at concessional rate for manufacturing and processing activity and no dispute whatsoever was raised. The further case of the Petitioner is that it got its Certificate of Registration amended with effect from 06.10.2009 by way of abundant caution and ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection, was issued for alleged violation of Section 10(d) of the Act, but orders were passed for alleged violation of Section 10(b) of the Act. The first Revisional Authority i.e. Additional Commissioner of Commercial Taxes also held that the audit objection is not valid in view of the Judgment of East India Mfg. Company Ltd. (supra), but still upheld the order of the Assessing Authority imposing penalty, which compelled the Petitioner to move before the second Revisional Authority i.e. Commercial Taxes Tribunal. 55. The Commercial Taxes Tribunal, interestingly, upheld levy of penalty on a completely new ground by recording, inter alia, that in the original Registration Certificate of the Petitioner, although Petitioner was entitled to purchase goods at concessional rate for re-sale, but the word Wahi / Do was missing in the Registration Certificate and Petitioner was not entitled to purchase goods for manufacturing and processing of the goods for sale. This finding rendered by Commercial Taxes Tribunal is clearly travelling beyond the impugned orders and has been raised for the first time before the Tribunal. 56. At the cost of repetition, the Respondent-Department, all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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