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TMI Blog2023 (8) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... on job work basis for Tata Motors Limited. The original company, pursuant to amalgamation order passed by Hon'ble High Court of Judicature at Bombay in Company Petition No. 247 of 2001, was merged with one 'H.V. Transmission Limited' and the name of amalgamated company was changed to 'TML Drivelines Limited' vide order dated 29th July, 2004. Thereafter, again, pursuant to the scheme of amalgamation approved by National Company Law Tribunal (for short 'NCLT'), Mumbai, 'TML Drivelines merged with 'Tata Motors Limited' and, at present, the assessee-company is known as 'Tata Motors Limited'. 3. The assessee-company, at the relevant point of time, was manufacturing axles and its spare parts for Tata Motors Limited, for which, entire raw materials were supplied by Tata Motors Limited and, after manufacturing of the goods, the goods were transferred to Tata Motors Limited. The assesse, for carrying out manufacturing activity, required certain goods to be utilized for manufacturing and processing and, accordingly, it applied for grant of Registration Certificate under the provisions of the Central Sales Tax Act, 1956 (for short 'CST Act& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed upon the Petitioner-company on purchase of goods at concessional rate. 6. It is specific case of the petitioner that at the time of raising audit objection itself, the Assessing Authority did not agree with the audit objection, but despite thereof, issued a Notice to the assessee-company dated 29.04.2015 directing the assessee-company to explain the comments raised in the audit objection. Said Notice was issued under Section 70(1) of the JVAT Act which is a prequel action for initiation of re-assessment proceedings under Section 40(4) read with Section 42(3) of the JVAT Act. The assessee replied to the aforesaid Notice refuting all allegations levelled in the audit objection and, further, specifically raised the point that no re-assessment proceeding can be initiated against the assessee pursuant to audit objection, as in terms of Section 9 of the CST Act read with provisions of the JVAT Act, particularly Section 40(4) thereof, the very initiation of re-assessment proceedings is barred by limitation. It was specifically contended by the assessee that for the Assessment Year 2008-09, re-assessment proceeding could have been initiated and completed within five years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been imposed upon the assessee, as the assesse did not make any false and deliberate mis-representation with wrongful and mala fide intention of guilty mind or mens rea in purchasing goods at concessional rate. 9. The learned Tribunal, by its common impugned Judgment dated 08.03.2022, decided altogether five Revision applications, being two Revision applications pertaining to the assessee originally known as 'H.V. Axles Limited' and three Revision applications pertaining to the assessee, formally known as 'H.V. Transmission Limited'. 10. The Tribunal, in its decision, while interpreting the provisions of Section 40 read with Section 42(3) of the JVAT Act, held that no period of limitation has been prescribed under Section 42(3) of the JVAT Act for initiation of re-assessment proceedings and, hence, the period of limitation under Section 40(4) of the JVAT Act of five years would not be applicable where re-assessment proceedings have been initiated pursuant to audit objection. Further, the learned Tribunal in respect of Revision applications of H.V. Transmission Ltd., bearing Nos. JR-37, JR-38 and JR-39, formed an opinion that the assesse, prima facie, discharged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Sales Tax Act, 1956 for the period 01.04.2009 till 05.10.2009 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." 12. Mr. Sumeet Gadodia, assisted by Mr. Ranjeet Kushwaha, Advocate, primarily advanced submissions on two issues before us namely; (i) Re-assessment proceedings were barred by limitation; and (ii) No penalty could have been imposed by the Petitioner as there was no deliberate misrepresentation by it with wrongful and mala fide intention of guilty mind or mens rea. 13. Learned counsel for the Petitioner brought to our notice the scheme of the JVAT Act which includes charging section, section pertaining to assessment, audit assessment, scrutiny assessment, re-assessment, etc. including provision of limitation under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in respect of the Assessee itself. It has been further submitted that Section 42(3), which was inserted by Act 22 of 2011, lays down additional ground for initiation of reassessment proceeding where an objection or observation relating to either in fact or in law has been made by the Comptroller and Auditor General of India in respect of assessment/re-assessment order of an assessee. It was further been contended that although additional ground for initiation of reassessment proceeding against a dealer was inserted vide Section 42(3), but said Section did not contain any non-obstante clause extending the period of limitation for reassessment as prescribed under Section 40(4) of the JVAT Act. 15. Relying upon the above variance between the sub-sections of Section 42 of the Act, it has been submitted that where the Legislature, while providing for additional ground for initiation of reassessment proceeding, thought it appropriate to extend the period of limitation on availability of such ground, the same was specifically inserted by non-obstante clause, but the Legislature, in its wisdom, had not thought it fit to insert a non-obstante clause under Section 42(3) of the Act. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f re-assessment proceeding which has been initiated pursuant to audit objection. Reference in this regard was made to the decision of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. & Ors. Vs. Union of India and ors. reported in (1997) 5 SCC 536 (Para-160). 18. On the question of penalty, Mr. Gadodia placed extensive reliance on the Judgment delivered by Hon'ble Apex Court in the case of Commissioner of Sales Tax, U.P. Vs. Sanjeev Fabrics, reported in (2010) 9 SCC 630, and it was submitted that there was no mis-representation on the part of the assessee-company at the time of purchasing goods at concessional rate. It was submitted that assessee-company is a manufacturing dealer and obtained Certificate of Registration for purchase of goods at concessional rate for use in manufacturing and processing of goods for sale. However, due to typographical error in original Registration Certificate, although the goods which the asssessee was entitled to purchase at concessional rate, was inserted in the column of 'Re-sale', but the word 'Wahi'/'Do' was left out in the original Registration Certificate. It was further submitted that neither the assessee nor th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain reading of Section 42(3), it would be evident that said Section is an independent Section enabling initiation of re-assessment proceeding pursuant to an objection or observation raised by Comptroller and Auditor General of India either in facts or in law. It was fervidly submitted that said Section uses the word 'shall' which mandates the prescribed authority to proceed to re-assess the dealer pursuant to objection or observation being made by the Comptroller and Auditor General of India. While placing reliance upon Section 40(1) of JVAT Act, it was submitted that under the said provision, the prescribed authority 'upon information or otherwise' has to form 'reason to believe' for proceeding for re-assessment of a dealer, whereas, under Section 42(3), requirement of recording 'reason to believe' has been dispensed with and it is mandatory for the Assessing Authority to proceed to re-assess a dealer. It was further submitted that in view of such mandatory provision inserted by the Legislature, deliberately, no period of limitation has been prescribed under Section 42(3) which is an independent enabling provision of re-assessment inserted under the Act. It was submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, 'non-obstante clause' has been inserted extending the period of limitation for carrying out assessment or re-assessment proceeding on happening of the events prescribed under the said Section, but, merely because 'non-obstante clause' has been provided in sub-section (1) or (2) of Section 42 extending the period of limitation, would not lead to an inference that non providing of such non-obstante clause under Section 42(3) would mean that Section 42(3) is to be read with Section 40(4). It was submitted that there is no intendment in a taxing statute and if the language of the statute is plain and clear, there is no scope of intendment and the Court would not supply any casus omissus to the said provision. By placing reliance upon the decision of the Hon'ble Supreme Court in the case of State of Jharkhand vs. Shivam Coke, reported in (2011) 8 SCC 656, it was contended that where the Statute does not provide period of limitation, provisions of Limitation Act cannot be read into it and proceedings are required to be conducted in a reasonable period of time which would depend upon the facts and circumstances of each case. 21. Learned Advocate General further justified the levy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. Like, any taxing statute, the scheme of JVAT Act also contains provisions pertaining to charge of tax; secondly, provisions relating to computation of tax resulting into demand of tax; and, thirdly, provisions for recovery of tax so computed. The Hon'ble Apex Court, in the case of Mafatlal Industries (supra), vide Para 160, has held as under:- "160. The constitutional embargo is on both the levy and collection of tax without authority of law. It has been repeatedly asserted by the Courts that every taxing law has three parts. First is charge, the second is computation which results in a demand of tax and the third is recovery of the tax so computed. The Constitution has enjoined that there must be a valid levy. The word 'levy' has also been understood in a broad sense in various cases to include not only the imposition of the charge but also the whole process upto raising of the demand. The Constitution guarantees that not only the levy should be lawful but also collection of tax must also be done with the authority of law. The State is not permitted to exact any tax from a citizen without the authority of law and without following the procedure laid down by law. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of three years from the end of tax period for which tax is assessable. Section 37 deals with 'Audit Assessment' and Section 38 deals with 'Assessment of Dealer who fails to get himself Registered'. Section 39 provides, inter alia, that 'No Assessment after five years' shall be made under Sections 37 and 38 of the Act. Section 40 of JVAT Act, deals with the provision of 'Turnover escaping assessment' and, admittedly, Section 40(4) provides, inter alia, that no assessment or re-assessment shall be made after expiry of five years of the tax period for which tax is assessable. Section 41 of the Act provides for 'Exclusion of period for Assessment' where assessment or re-assessment proceedings have been stayed under the orders of competent court. Section 42 gives power of 're-assessment in certain cases'. 29. Thus, under the scheme of the Act, there is specific provision for assessment, self-assessment, audit assessment, assessment of dealers not registered, and, specific provisions have also been incorporated for carrying out re-assessment proceedings under Section 40(1) of the JVAT Act. 30. Section 40(1) of JVAT Act, which contains provision for re-assessment, lays down foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts wisdom, inserted a non-obstante clause in Section 42(1) of the Act extending the period of limitation of five years prescribed under Section 40(4) for re-assessment by a further period of three years from the date of Judgment or order. Thus, even if in a case where the period of limitation has already expired for initiation of re-assessment proceeding under Section 40(4) of the Act and thereafter Judgment is delivered by any Court or Tribunal, which pronounces any law; and if the prescribed authority is of the opinion that it has made any assessment earlier which is contrary to the said law declared by the Judgment and order by any Court or Tribunal, the prescribed authority, de hors the period of limitation prescribed, can initiate re-assessment proceeding under Section 40(1) read with Section 42(1) of the Act within three years from the date of Judgment or order. 35. Similarly, Section 42(2) of the Act also contains a non-obstante clause which extends the period of limitation up to two years from the date of the order passed by a Court or Tribunal in an appeal or revision when a remand assessment or re-assessment proceeding is required to be undertaken to give effect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t objections were well within the parameters of being construed as "information" for the purpose of Section 19 of the State Act. 32. The expression "information" means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or after bearing on the assessment. We are of the clear view that on the basis of information received and if the assessing officer is satisfied that reasonable ground exists to believe, then in that case the power of the assessing authority extends to reopening of assessment, if for any reason, the whole or any part of the turnover of the business of the dealer has escaped assessment or has been under-assessed and the assessment in such a case would be valid even if the materials, on the basis of which the earlier assessing authority passed the order and the successor assessing authority proceeded, were same. The question still is as to whether in the present case, the assessing authority was satisfied or not." 38. Thus, even earlier, prior to insertion of Section 42(3), the Assessing Authority, could have treated audit objection as an information and could have initiated re-assessment proceeding. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey perform essentially administrative or executive functions and cannot be attributed the powers of judicial supervision over the quasi-judicial acts of income tax authorities. Nor does section 16 of the Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971 envisage such a power for the attainment of the objectives incorporated therein." (Emphasis supplied). "12. But although an audit party does not possess the power to so pronounce on the law, it nevertheless may draw the attention of the Income Tax officer to it. Law is one thing, and its communication another. If the distinction between the source of the law and the communicator of the law is carefully maintained, the confusion which often results in applying section 147(b) may be avoided. While the law may be enacted or laid down only by a person or body with authority in that behalf, the knowledge or awareness of the law may be communicated by anyone. No authority is required for the purpose." 42. Further, in the Judgment rendered by Hon'ble Apex Court, in the case of Larsen and Toubro (supra), Hon'ble Apex Court, after examining almost all earlier Judgments, although held that an aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body to external dictates, which would be contrary to the ratio laid down by the Judgment of Hon'ble Apex Court in the case of Indian Eastern Newspaper Society, New Dehi (supra) and in the case of Larsen and Toubro (supra). 44. It is in the aforesaid backdrop; we are required to examine as to whether Section 42(3) is an independent provision conferring power of re-assessment or is merely as additional ground conferred under the Act upon the assessing authority for carrying out re-assessment proceedings. 45. It is trite law that a statutory term is recognized by its associated word and its colour and content are to be derived from their context. The Hon'ble Supreme Court in the case of Maharashtra University (supra), vide Para 27 and 28, has held as under:- "27. The Latin expression "ejusdem generis" which means "of the same kind or nature" is a principle of construction, meaning thereby when general words in a statutory text are flanked by restricted words, the meaning of the general words are taken to be restricted by implication with the meaning of the restricted words. This is a principle which arises "from the linguistic implication by which words having literally a wide m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Section 42(3) is not under challenge before us. 48. At this stage, we may further record the arguments advanced by learned Advocate General by referring to Section 42(3) of the Act wherein it was argued that Section 42(3) enables initiation of re-assessment proceeding not only of completed assessment proceeding, but also of completed re-assessment proceeding. It has been argued that Section 42(3) even enables the assessing authority to initiate fresh re-assessment proceeding pursuant to audit objection in case of an assessee against which earlier re-assessment order has already been passed. In our opinion, said argument of learned Advocate General is again in the teeth of the scheme of JVAT Act, as, under the JVAT Act, there is no provision for initiation of re-assessment proceeding against a re-assessment order and only remedy, thereafter, is to prefer appeal or revision. If the assessing authority is allowed to initiate repeated re-assessment proceeding against an assessee merely on the dictate of Audit Party, there would be no finality of assessment and the assessee would be having domical sword hanging over in it in perpetuity, which is not the scheme of the Act. 49. Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we deem it appropriate to quote provisions of Section 10 and 10A of the CST Act, 1956, which is quoted as under:- "10. Penalties.-If any person- (a) furnishes a declaration under sub-section (2) of section 6 or sub-section (1) of Section 6-A or sub-section (4) or sub-section (8) of section 8, which he knows, or has reason to believe, to be false; or (aa) fails to get himself registered as required by section 7 or fails to comply with an order under sub-section (3-A) or with the requirements of sub-section (3-C) or sub-section (3-E) of that section; (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate or registration; or (c) not being a registered dealer, falsely represents when purchasing goods in the court of inter-State trade or commerce that he is a registered dealer; or (d) after purchasing any goods for any of the purposes specified in clause (b) or clause (c) or clause (d) of sub-section (3) or sub-section (6) of section 8 fails, without reasonable excuse, to make use of the goods for any such purposes; (e) has in his possession any form prescribed for the purposes of sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it noted that Section 10 enunciates seven types of violation of provisions of the Act which constitute an offence and is punishable by prosecution with simple imprisonment which may extend to six months, or with fine or with both; and in case of continuing offence, said Section provides for daily fine. The Hon'ble Apex Court, while noting Section 10-A, noticed that said Section provides for penalty in lieu of prosecution and it is in that background, Hon'ble Apex Court interpreted the term 'falsely represents' as contained under Section 10(b). The Hon'ble Court, after considering various Judgments noted that object of Section 10(b) of the Act was to prevent any misuse of Registration Certificate, but still the Legislature, in the said Section, has used the expression "falsely represents" in contravention to "wrongly represent" and, thus, noted that what was required to be construed is whether the words "falsely represents" would cover mere incorrect representation or would embrace only such representations which are knowingly, willfully and intentionally false. In the backdrop of the aforesaid, Hon'ble Supreme Court, in the case of 'Sanjeev Fabrics' has held as under:- "36. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase goods at concessional rate. In fact, this amendment triggered the dispute in question and an audit objection was raised by the office of the Accountant General, Jharkhand. The Accountant General raised the audit objection not under Section 10(b) of the CST Act, but under Section 10(d) of the Act. Thus, even as per the Accountant General, the goods, which were purchased by the Petitioner at concessional rate, were mentioned in its Registration Certificate for being utilized for manufacturing and processing of goods for sale, but the Auditor raised objection stating, inter alia, that Petitioner has violated Section 10(d) of the Act as it is purchasing goods at concessional rate and utilizing the said goods for manufacturing and processing of goods at job work for Tata Motors Limited and, hence, it is not entitled for the benefit of concessional purchase. 53. The Assessing Officer did not agree with the said audit objection and, in our opinion, rightly so in view of the Judgment of the Hon'ble Apex Court in the case of 'Assessing Authority-cum-Excise and Taxation Officer, Gurgaon vs. East India Cotton Manufacturing Company Ltd., Faridabad, reported in (1981) 3 SCC 53. 54. Alth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing and processing of goods for sale and nobody noticed the inadvertent typographical error which occurred in the original Registration Certificate where the word 'Wahi'/'Do' was missing. In fact, the Auditor also never raised the said objection and the Assessing Authority as well as the first Revisional Authority also never raised such objection. This fact itself is demonstrative of the conduct of the assesse and it cannot be said that the assesse has falsely represented in deliberate defiance of law with mens rea being guilty of contumacious or dishonest conduct in purchase of goods at concessional rate for manufacturing and processing of goods for sale. 57. Accordingly, by following the ratio laid down by Hon'ble Apex Court in 'Sanjeev Fabrics' (supra), we declare that imposition of penalty against the Petitioner under Section 10A of the Act is not sustainable in the eye of law, and, the assesse was under the bona fide belief that its Registration Certificate entitled it to purchase goods at concessional rate for manufacturing and processing of goods for sale and the said bona fide belief of the assesse is fortified by the stand taken by the Revenue itse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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