Nathmal Tolaram VsSuperintendent of
Taxes, Dhubri & ANR [1960] INSC 171 (18 October 1960)
SHAH, J.C
DAS, S.K
HIDAYATULLAH, M
GUPTA, K.CDAS AYYANGAR, NRAJAGOPALA
CITATION: 1961 AIR 331 1961 SCR (2) 40
ACT:
Sales Tax--Reassessment--jurisdiction of the
Sales Tax Officer--High Court's power in References--Advisory
jurisdiction--Period of limitation for proceedings for reassessment--Assam
Sales Tax Act, 1947 (Assam 17 of 1947), SS2(12),16(2), 19, 19A, 32(8),34
HEADNOTE:
The appellants who were dealers registered
under the Assam Sales Tax Act, 1947, submitted a return of their turnover for
the account period April 1, 1948 to September 30, 1948, which included sales in
Assam of all goods other than jute
The Superintendent of Taxes, however,
summarily assessed the appellants under sub-s4 of S17 of the Act by order dated
September 30, 1950, to pay tax on sales of jute despatched by them to Calcutta
during the account periodThe order of assessment was confirmed by the Commissioner
of TaxesOn an application by the appellants the Commissioner referred certain
questions of law arising out of the assessment to the High Court, which then
gave its opinion that as the consignments in question were not sales within the
meaning of sub-s12 of s2 of the Act, they were not taxable, and that as to
whether the sales could thereafter be assessed if they fell within the purview
of the Explanation to sub-s12 of S2, it expressed no opinionOn receipt of the
opinion the Commissioner directed the Superintendent of Taxes to dispose of the
case in accordance with the judgment ofthe High CourtThe Superintendent of
Taxes then set aside the order of assessment dated September 30, 1950, and
issued a notice to the appellants on January 30, 1953, directing them to
produce the necessary evidence in order in the case came within the purview of
the Explanation to sub-s.12 of S2 of the ActThe appellant claimed that the
Superintendent had no jurisdiction to commence any further proceeding for
assessment as the notice issued to him was beyond three years from the end of
the assessment period as provided by s19 of the Act
Held, that the High Court in answering the
questions referred to it was exercising an advisory jurisdiction and could not
and did not give any direction to the sales tax authorities to proceed to
assess or not to assess the appellants to sales tax ; it merely gave its
opinion that the transactions were not sales within the meaning of S2, sub-s12
of the Act and were accordingly not taxable
41 Held, further, that the Commissioner not
having issued any notice under s19A of the Act or exercised his revisional
authority under s31, but having merely directed the case to be disposed of in
accordance with the judgment of the High Court, the Superintendent of Taxes had
no jurisdiction to initiate fresh proceedings for reassessment under s19 after
the expiry of three years from the assessment period
Commissioner of Income Tax, Bombay Presidency
and Aden and others vBombay Trust Corporation Ltd., (1936) L.R63 1
A408, distinguished
CIVIL APPELLATE, JURISDICTION: Civil Appeal
No196 of 1958
Appeal by special leave from the judgment and
order dated April 27, 1953, of the Assam High Court in Civil Rule No66 of 1953
Sukumar Mitter and Sukumar Ghose, for the
appellant
Veda Vyasa and Naunit Lal, for the
respondents
1960October 18The Judgment of the Court was
delivered by SHAH J.-The appellants are dealers registered under the Assam
Sales Tax Act XVII of 1947-hereinafter referred to as the Act For the account
period April 1, 1948 to September 30, 1948, the appellants submitted a return
of their turnover which included sales in Assam of all goods other than jute The
Superintendent of Taxes, Dhubri, summarily assessed the appellants under sub-s4
of s17 of the Act to pay tax on sales of jute despatched by them to Calcutta
during the account period Appeals against the order of assessment to the
Assistant Commissioner of Taxes and to the Commissioner of Taxes, Assam, proved
unsuccessful The appellants then applied to the Commissioner of Taxes to refer
certain questions arising out of the assessment to the High Court in Assam
under S34 of the Act The Commissioner referred the following questions and
another to the High Court of Judicature in Assam:
(1) Whether, in view of the aforesaid facts
and circumstances the turnover from 20,515 maunds of 6 42 jute mentioned under
item (i) is taxable under the Act ? (2) Whether, in view of the aforesaid facts
and circumstances the turnover from 5,500 maunds of jute mentioned under item
(ii) is taxable under the Act ? (3) Whether, in view of the aforesaid facts and
circumstances, the turnover from 25,209 maunds of jute mentioned under item
(iii) is taxable under the Act ? In respect of each of the three questions 1 to
3, the High Court recorded the following answer:
s" Not being a sale within the meaning
of sub12 of s2 of the Act, the consignments are riot taxable "
The High Court, however observed:
" As to whether these consignments can
hereafter be assessed if they fall within the purview of the Explanation to
sub-s12 of s2, we express no opinion "
As required by s32(8) of the Act, the
Commissioner of Taxes by his order dated August 1, 1952, directed the
Superintendent of Taxes to dispose of the case in accordance with the judgment
of the High CourtThe Superintendent of Taxes thereafter issued on January 30,
1953, the following notice to the appellants:
" In view of the Hon'ble High Court's order
in Sales-tax Reference No3 of 1951, the assessment order dated 30th September,
1950, for the return period 30th September, 1948, has been set aside and you
are directed to produce necessary evidence, contract papers, account books,
etc.................in order to see whether the contract of sale involved in
this case come within the purview of the Explanation to sub.s12 of s2 of the
Act "
By their letter dated March 23, 1953, the
appellants called upon the Commissioner of Taxes to direct the Superintendent
of Taxes not to proceed with the noticeThe Commissioner having failed to direct
as requested, the appellant petitioned the High Court in Assam under Art226 of
the Constitution for a writ 43 prohibiting the Superintendent of Taxes from re-opening
and proceeding with the assessment of the appellants under the Assam Sales Tax
Act and for a writ quashing the order dated August 1, 1952, passed by the
CommissionerThe High Court summarily dismissed the petitionAgainst the order
passed by the High Court, this appeal is filed with special leave under Art136
of the Constitution
The High Court, in answering the questions
submitted to it, was exercising an advisory jurisdiction and could not and did
not give any direction to the sales tax authorities to proceed to assess or not
to assess the appellants to sales tax : it merely recorded its opinion that the
transactions referred to in the questions were not sales within the meaning of
s2, sub-s12, of the Act and were accordingly not taxable Pursuant to the
opinion of the High Court, the Commissioner directed the Superintendent of
Taxes to dispose of the case " in accordance with" the judgment of
the High Court; but the Superintendent of Taxes thought that he was entitled to
re-open the assessment proceedings and to assess the appellants in the light of
the Explanation to s2, subs12In so doing, the Superintendent of Taxes, in our
judgment, acted without authority The Superintendent had made the assessment,
and that assessment was confirmed in appeal by the Assistant Commissioner On
the questions arising out of that assessment, the High Court had opined that
the transactions sought to be assessed were not liable to tax The
Superintendent of Taxes, on this opinion was right in vacating the order of
assessment But any further proceeding for assessment which he sought to
commence by issuing a notice requiring the appellants' to produce evidence,
contract papers, account books, etc so as to enable him to determine whether
the transactions were taxable under the Explanation to sub-s12 of s2 had to be
supported by some authority under the Act The Superintendent of Taxes has not
referred to the authority in exercise of which he issued this notice It is true
that tinder s19 of the Act, the " taxation Officer " if satisfied
upon information coming into his possession that any 44 dealer has been liable
to pay tax under the Act in respect of any period and has failed to apply for
registration and to make the return required of him, may at any time within
three years of the end of the aforesaid period serve on the dealer a notice
containing all or any of the requirements which may be included in a notice
under sub-s2 of s16 and may proceed to assess the dealer in respect of such
period But admittedly, the appellants were registered as dealers and had
submitted their returns: the power to reassess could not therefore be exercised
by virtue of s19 of the Act Under s19-A, the Commissioner has also power, if
satisfied upon information coming into his possession, that any turnover in
respect of sales of any goods chargeable to tax has escaped assessment during
the return period, to serve at any time within three years of the aforesaid
period, on the dealer liable to pay the tax in respect of such turnover a
notice containing all or any of the requirements which may be included in a
notice under sub-s2 of s16 and may proceed to assess or reassess the dealer in
respect of such period But the Commissioner bad not issued any such notice
under s19ANor had the Commissioner in exercise of his revisional authority
under s31 of the Act set aside the original order of assessment
The Commissioner merely directed under s32,
sub-s8, that the case be disposed of in accordance with the judgment of the
High Court, and acting under that direction, the Superintendent of Taxes had no
power to reopen the assessment and to call upon the appellants to produce
documentary evidence with a view to commence an enquiry whether the sales
involved in the case fell " within the purview of the Explanation to s2
sub-s12 "In any event, the account period as has already been observed was
April 1, 1948 to September 30, 1948, and three years from the end of that
period, expired before the date on which the notice was issued Fresh
proceedings for reassessment could not be initiated by the Superintendent of
Taxes under s19 after the expiry of three years from the assessment period
assuming that this could be regarded as a case of failure to apply for 45
registration and to make a return required of the appellants
In support of his contention that the
Superintendent of Taxes had authority to proceed to reassess the appellants in
the light of the observations made in the judgment of the High Court, counsel
for the appellants invited our attention to the judgment of the Privy Council
in Commissioner of Income Tax, Bombay Presidency and Aden and others v Bombay
Trust Corporation Ltd(1)In that case, a foreign company was assessed by the
Income Tax authorities in the name of a resident company for profits and gains
received by the latter as its agent under ss42(1) and 43 of the Indian
Income-tax Act, 1922In a reference under s66 of the Income-tax Act, the High
Court at Bombay opined that the assessment was illegal The Commissioner of
Income-tax, thereafter sent back the case with a direction to set aside the
assessment and to make a fresh assessment after making such further enquiry as
the Income-tax Officer might think fit Acting upon that order, the Income-tax
Officer required the resident company as agent of the foreign company to
produce or cause to be produced books of account for the year of assessment and
also to produce such other evidence on which it might seek to rely in respect
of its return, and the resident company having failed to produce the books of
the foreign company, he proceeded to make an assessment under s23(4) of the
Income-tax Act, 1922By its petition under s45 of the Specific Relief Act filed
in the High Court at Bombay, the resident company prayed for an order for
refund of the taxes already Paid under the original assessment, and for an
order for disposal of certain proceedings initiated by it before the Assistant
Commissioner and the Income-tax Officer The High Court made an order directing
refund of tax paid, and further directing cancellation of assessment In an
appeal preferred by the Commissioner of Income-tax against the order of the
High Court, it was observed by the Privy Council that the Commissioner was not
obliged to discontinue proceedings against the resident 46 company as agent of
the foreign company in respect of the year of assessment, and it was within the
jurisdiction of the Commissioner under s33(2) of the Income-tax Act to direct
further enquiry if he thought such an enquiry to be reasonable and to be
profitable in the public interest
The principle of this case has in our
judgment no application to the present case The High Court at Bombay in its
advisory jurisdiction had declared the assessment already made to be illegal But
the Commissioner was under s33 of the Indian Income-tax Act invested with
jurisdiction to direct further enquiry, and he purported to exercise that
jurisdiction The Privy Council rejected the challenge to the exercise of that
jurisdiction In the present case, no proceedings were started by the
Commissioner of Taxes in exercise of his revisional authority The Commissioner
of Taxes had directed the Superintendent of Taxes merely to dispose of the case
according to the judgment of the High Court, and the Superintendent had to
carry out that order If he was competent-and on that question, we express no
opinion-he could, if the conditions precedent to the exercise of his
jurisdiction existed, proceed to reassess the appellants
But the proceedings for reassessment were
clearly barred because the period prescribed for reassessment had expired
The Superintendent therefore had no power to
issue a notice calling upon the appellants to produce evidence to enable him to
start an enquiry which was barred by the expiry of the period of limitation
prescribed by the Act In the Bombay Trust, Corporation case (supra), the
Income-tax Officer acted in pursuance of the direction of the Commissioner
lawfully given in exercise of revisional authority and reopened the assessment In
the present case, no such direction has been given by an authority competent in
that behalf: and the Superintendent had no power to reassess the income under s19
assuming that the section applied to a case where the assessee though
registered had failed to include his sales in a particular commodity in his
turnover, because the period of limitation prescribed in that behalf had
expired
47 The appeal must therefore be allowed and
the order passed by the High Court set aside In the circumstances of the case,
no useful purpose will be served' by remanding the case to the High Court We
accordingly direct that a writ quashing the proceedings commenced by the
Superintendent of Taxes, Dhubri, by his notice dated January 30, 1953, be
issued
The appellants will be entitled to their
costs of the appeal
Appeal allowed.
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