Superintendent of Taxes, Tezpur &
Ors Vs. M/S. Bormahajan Tea Co. Ltd. [1978] INSC 8 (17 January 1978)
KAILASAM, P.S.
KAILASAM, P.S.
UNTWALIA, N.L.
CITATION: 1978 AIR 533 1978 SCR (2) 573 1978
SCC (1) 513
ACT:
Constitution of India Art. 136-The discretion
of the Court at the final hearing to decide whether the court would interfere
taking the totality of the facts into consideration.
Assam Taxation (On Goods Carried by Road or
on Inland Waterways) Act. 1961. Section 7, 9, 11, 20-The return filed beyond
the period prescribed whether non est.-Return filed without payment of the tax
due whether non est.--Whether Revenue can treat the return as invalid and
thereafter contend before this Court that the return was valid.
HEADNOTE:
The respondent is an assessee under the Assam
Taxation (On Goods Carried by Road or on Inland Waterways) Act, 1961.
The respondent in C. A. 602 of 1974 submitted
the return under section 7(1) of the Act for the period ending September 30,
1960, without paying the tax on the return as required under section 20(2) of
the Act. The respondent in C. A. No. 603 of 1974 submitted his return under
section 7(1) for the quarter ending 31st December 1960. The return was filed
beyond the period of 30 days as required by section 7(3). No tax was paid along
with the submission of the return in this case also. The assessing authorities
treated the returns filed as invalid and therefore, proceeded with the best
judgment assessment. The assessing authorities passed assessment orders in both
the cases under section 9(4) of the Act. No notices either under section 7(2)
or section 11 of the Act were served on the respondents.
The respondent filed a Writ Petition in the
High Court and challenged the assessment orders on the grounds 1.Since the
return was filed without depositing the tax in both cases and filed beyond time
in one case the returns are not returns within the meaning of section 7(1) and
no assessment proceedings can be made on that.
2.Since no notice as contemplated by section
7(2) and section 11 of the Act directing the assessee to show cause why
assessment proceedings should not be initiated within two years from the date
of the expiry of the return period ,:as issued no proceedings could be validly
initiated ,is it had become time-barred under section 7(2) of the Act.
The appellant contended that the demand by
the Taxing Officer under section 9(3) of the Act is in pursuance of the return
filed voluntarily by the assessee though without payment of the tax and that it
can be taken as a return and assessment made under section 9 of the Act.
The High Court held that under section 7(1)
the return must be submitted within a period of 30 days after the completion of
the return quarter and that the return submitted after the statutory period must
be held to be non est for the purpose of initiating assessment proceedings. The
High Court also held that the return submitted without the payment of due on
the return which is a mandatory requirement makes the return non est and,
therefore, no further proceedings could be taken on such a defective return.
In appeal by Special Leave the appellant
contended 574
1. The High Court was in error in holding
that the return submitted by the respondent is non est.
2. The return is complete and valid when it is
submitted in such form to such authorities as prescribed by the rule and the
fact that there was any defect in the return such as nonpayment of tax required
under section 20(2) or delay in filing the return within the time prescribed
under section 7(3) does not make the return non est.
The respondent contended that this Court
should not allow the plea put forward on behalf of the appellant that the
return was a valid one as it was admitted that the assessment did not proceed
on the return submitted. That the appellant treated both the returns as invalid
ones; that the Tax Authorities cannot be allowed to change their front and
submit that they proceeded on the ?oasis of the returns furnished by the
respondent.
Dismissing the appeal, the Court
HELD : 1. On a reading of section 7(1) and
section 20(2) of the Act it cannot be said that the submission of the learned
Counsel for the appellant that it is not necessary that the tax should be paid
before valid return is submitted is without substance. This Court in the
decision of Superintendent of Taxes v. Onkarmal Nathman has held that before
proceedings could be taken under section 9(4) it is mandatory that notice under
section 7(2) will have to be issued.
Therefore, the only approach which is
available to the appellant and which has been taken by it before this Court is
that the assessment proceedings are valid as the return is not non est. This
Court should not allow the appellant to take this plea-. It was admitted before
the High Court that the assessment was not based on the returns filed.
This Court under Article 136 of the
Constitution cannot permit the State to contend that it can proceed on the
basis that the returns were valid especially when the plea before the High
Court was that the returns were invalid. [579 A, D, F-G] Superintendent of
Taxes, Dhubri and Ors. v. Onkarmal Nathmal Trust etc. 1975 Supp. S.C.R. 365 at
p. 375 referred to.
2.The exercise of powers under Article 136 is
discretionary. Even though there may be substance in the argument put forward
on behalf of the appellant the Court taking the totality of the circumstances
may decline to interfere in an appeal by special leave. [579 G-H, 580 A]
Trivedi v. Nagrashra, [1961] 1 SCR 113 at 117 and State of Gujarat and Ors. v.
Gujarat Revenue Tribunal and Ors., [1976] 3 SCR 565 at 578, followed.
The Court found that on the facts of the case
the court is not called upon to decide this question. [579 A]
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 602 and 603 of 1974.
Appeals by Special Leave, from the Judgment
and Order dated the 3rd July, 1973 of the, Assam & Nagaland High Court in
Civil Rule Nos. 1000 and 1001 of 1969.
L. N. Sinha and S. N. Chowdhary for the
Appellant.
A. K. Sen, J. P. Bhattacharjee, P. H. Parekh
and Miss Manju Jetley for Respondent.
The Judgment of the Court was delivered by
KAILASAM, J. These appeals are preferred by the Superintendent of Taxes,
Tezpur, by special leave against the judgment and order passed 575 by the High
Court of Assam and Nagaland at Gauhati inCivil Rule Nos. 1000 and 1001 of 1969.
The respondent is M/s. Bormahajan Tea Co,.
Ltd., who is assessee under the Assam Taxation (On Goods Carried by Road or on
Inland Water-ways) Act, 1961. The Assam Taxation (On Goods Carried by Road or
on Inland Water-ways) Act was passed in 19 5 4. The validity of the Act was
challenged by various parties before the Assam High Court and this Court.
This Court on September 26, 1960 held
that-the Act was ultra vires of the Constitution as the previous sanction of
the President was not taken as required under Art. 304 of the Constitution. The
present Act, The Assam Taxation (On Goods Carried by Road or Inland Water-ways)
Act, 1961 (hereinafter called as "the Act"), was passed by the Assam
Legislature with the sanction of the President for the purpose of validating
the tax that had been imposed under the 1954 Act The Act received the assent of
the President.., on April 6, 1961 and was published in the Assam Gazette on
April, 15, 1961 and was to be in force only up to March. 31, 1962. The Validity
of this Act was also challenged and the High Court of Assam by its order dated
August 1, 1963 held that this Act was also ultra vires. The State Government
appealed to this Court against this judgment. While the appeal was pending before
this Court two writ petitions filed by different assessees under Art. 32 of the
Constitution before this Court were disposed of on December 13, 1963 holding
that the Act was valid. On an application made by the Government of Assam
pending the appeal against the order dated August 1, 1963 of the Assam High
Court this Court granted stay of the operation of the judgment of the High
Court and on January 29, 1965 made the stay absolute subject to the condition
that the assessment proceedings, could continue but no levy should be made. On
April 1, 1968 this Court reversed the judgment dated August 1, 1963 of the
Assam High Court and held the present Act to be valid.
Though the present Act was passed in 1961 as
the matter was pending before the Courts the assessment proceedings could not
be taken up till January 29, 1965 when this Court allowed the assessment
proceedings to be continued.
The two appeals before us relate to the
assessment quarter ending September 30, 1960 and December 31, 1960. In Civil
Rule No. 1000 of 1969, Assam High Court, out of which Civil Appeal No. 602 of
1974 before this Court arises, the respondent company submitted the return on
October 27, 1960 under section 7(1) of the Act for the period ending September
30, 1960. The respondent submitted the return without paying tax on the return
as required under section 20 (2) of the Act. In Civil Rule No. 1001 of 1969 in
the Assam High Court, out of which Civil Appeal No. 603 of 1974 arises in this
Court, the respondent submitted a return on February 14, 1961 for the quarter
ending December 31, 1960 under, section 7(1) of the Act. The return under
section 7(1) has to be, submitted under section 7(3) within 30 days of the
completion of the quarter in respect of which the returns are to be filed. In
this return also no tax as required was paid prior to the submission of the
return. It may be noted that 576 while in Civil Appeal, No. 602 of 1974 the
return was filed within time but without payment of tax, in Civil Appeal No.
603 of 1974 the return was filed out of time
and without payment of the tax.
Orders of assessments were passed in both the
cases on June 19, 1969 in pursuance of the provisions of section 9(4) of the
Act. It is the common case that no notice either under section 7(2) or Section
1 1 of the Act was served on the respondent for the submission of the return
for the periods in question. In the High Court the respondent-submitted that
order of assessment made by the Revenue on June 19, 1969 is not valid in law on
two grounds. Firstly, it was contended that as the return in Civil Rule No.
1000 of 1969 was filed without the necessary deposit of the tax the return is
not a return within the meaning of section 7(1) and no assessment proceedings
can be taken on that, It was further submitted that as no notice as
contemplated under section 7(2) and section 11 of the Act directing the
assessee to show cause why assessment proceedings should not be initiated
within 2 years from the date of the expiry of the return period was issued, no
assessment proceedings could be validly initiated as. it became time-barred
under section 7(2) of the Act. The plea on behalf of the Government was that
the demand by the taxing officer under section 9(3) of the Act is in pursuance
of the return filed voluntarily by the assessee though without payment of the
tax and out of time and that it can be taken as a return and assessment made
under section 9 of the Act. In this view the submission was that it is not
necessary for the tax authorities to issue any notice under section 7(2) within
2 years from the date, on which the return ought to have been submitted. The
High Court held that as under section 7(1) the return must be submitted within
a period of 30 days after the completion of the return quarter, the return submitted
after the statutory period must be held to be nonest for the purpose of
initiating assessment proceedings based thereon and as no action had been
taken, either under section 7 (2) or section 11 of the Act, in the present
case, the assessment order dated June 19, 1969 is beyond the competence of the
authorities. With regard to Civil Rule No. 1000 of 1969 the High Court came to
the same conclusion on the ground that though the return was admittedly
submitted within the prescribed time, the tax due on that return was not paid
and as payment of tax before, furnishing a return under section 7_(1) of the
Act is mandatory such failure would result in making the return non-est and
therefore no further proceedings can be taken or such a defective return. In
the result the High Court held that the return submitted in Civil Rule No. 1000
of 1969 although within the, prescribed period is not a return within the
meaning of section 7(1) and that the return in Civil Rule No. 1001 of 1969 as
it was beyond the prescribed period and Without payment of tax cannot be
treated as a return under section 7(1) of the Act and as admittedly no
proceedings were taken under section 7(2) of the Act the tax authorities were
not competent to proceed with the assessment.
In the appeals before us Mr. Lal Narain
Sinha, the learned counsel for the appellant, submitted that the High Court was
in error in holding that the return submitted by the respondent is non est.
The learned counsel referred to section 7(1)
which requires that the return shall be furnished in such form and to such
authorities as may be prescribed The form is prescribed by Assam Taxation (On
Goods Carried by Road or on Inland Water-ways) Rules, 1961. Rule 6 prescribes
that the return shall be furnished in Form No. 1 and Rule 7 requires ,that
return shall be signed and verified by the dealer or producer or his agent.
Form No. 1 under the Rules requires in Column E that ,the amount paid with the
Challan No. and date should be noted. Section 20 prescribes the manner in which
the tax shall be paid. Section 20(2) provides that before any producer or
dealer furnishes'the return required by sub-section (1) of section 7, he shall
in the prescribed manner pay into the Government Treasury the full amount of
tax due from him under this Act on the basis of such return and shall furnish
along with the returns a receipt from such Treasury in token of payment of such
tax. Section 13 provides penalty for failure to pay tax. It was submitted by
Mr. Lal Narain Sinha that a return is complete and valid when it is submitted
in such form and to such authority as prescribed by the Rules and the fact that
there was any defect in the return such as non-payment of tax as required under
section 20(2) or delay in filing the return within the time prescribed under
section 7(3) the return will not become non est. The consequence of filing a
defective return is not to make the return non est but to make the assessee
liable to penalty under section 13 of two other proceedings. So long as there
is a return the learned counsel submitted that it was not necessary for the tax
authorities to proceed under section 7(2) which is applicable to cases where no
return has been submitted. In support of his contention that any defect in the
return would not make the return non est, the learned counsel referred us to
three decisions. A.I.R. 1931 Cal. 476, A.I.R. 1932 P. C. 165 and 48 I.T.R. 1.
In Chandra Nath Bagchi vs. Nabadwip Chandra Dutt and Others(l) the judgment
debtor pleaded want of notice under Order 21, Rule 22 of the Civil Procedure,
Code, which requires that an opportunity should be given to the
judgment-debtors against whom execution is taken out more than a year after the
decree to show cause why execution should not proceed. It was admitted, that no
such notice was in fact given but as the judgment-debtor in that case was
actively litigating objecting to the execution being taken against him, he
cannot be permitted to plead failure of notice under 0.21 Rule 22. Chief
Justice Rankin while accepting the requirement that a notice under 0.21, Rule
22, is necessary found that in the case before him the parties have been
litigating actively with each other upon the question whether the execution
should proceed and how it should proceed. In the circumstances the learned C.
J. observed :
"It appears to me to be merely piling
unreason upon technicality to hold upon the circumstances of this case that it
is open to the judgment-debtors on these grounds to object to the jurisdiction
of the Court because they have not got a formal notice to do something, namely
to dispute the execution of the decree when in point of fact they were busy
disputing about it in all the courts for the best part of the last two
years." Relying on the above observation the learned counsel submitted
that the respondent who challenged the A.T.R. 1931 Cal. 476.
578 validity of the assessment for several
years and who have the return (cannot now contend that the assessment is not
valid having been filed beyond time or without payment of the tax.
In Nagendra Nath Dey and Anr. vs. Suresh
Chandra Dey and Others,(1) the Judicial Committee held that any,application by
a party to an appellate Court, asking it to set aside or revise a decision of a
Subordinate Court, is an appeal within the ordinary acceptation of the term,
and that it is no less an appeal because it is irregular or incompetent.
Relying on this decision it was submitted
that the return is no less a return though it was defective in that tax was not
paid and was presented out of time.
In Gursahari Saigal vs. Commissioner of
Income-tax, Punjab (2) the Supreme Court was construing section 18A(6) and (8)
of the Indian Income-tax Act, 1922. Sub-section (6) provided thatwhen the tax
paid on the basis of his own estimate is less than 80% of the tax determined on
the basis of the regular assessment simple interest at the rate of 6% per annum
from the first day of January in the financial year in which the tax was paid
up to the date of the said regular assessment shall be payable by the assessee
upon the amount by which the tax so paid falls short of the said eighty per
cent. According to the sub-section interest has to be calculated from first
January in the financial year in which the tax mentioned was paid and such
calculation has to be made on the short-fall between the amount paid and 80 per
cent of the tax which was found payable on the regular assessment. According to
sub-section (8) where on making the regular assessment Income-tax Officer finds
that no payment of tax has been made in accordance with the provisions of this
section, interest calculated in the manner laid down in sub-section (6) 'shall
be, added to the tax as determined on the basis of regular assessment. The
assessee's contention was that since he had not paid any tax at all it is not
possible to calculate interest in the manner laid down in sub-section (6). The
plea was that in a case in which no tax had been paid at all, sub-section (6)
will have no application as there is no short-fall between 80 per cent of the tax
payable, on regular assessment and the amount actually paid. The Court rejected
the plea and held that sub-section (6) should be read according to the
provisions of which interest has to be calculated as provided in sub-section
(8), in farmer which makes it workable and thereby prevent the clear intention
of sub-section (8) being defeated. The Court further held that the intention
was that interest should becharged from first January of the financial year in
which the tax oughtto have been paid and those who paid the tax but a smaller
amount and those who did not pay tax at all would then be put in the same
position substantially. On the strength of the decision it was submitted that
the respondent who had not paid the tax cannot take advantage of his omission
and say that the assessment proceedings cannot be proceeded with on the return
submitted.
(1) [1932] P.C. 165.
(2) 48 I.T.R. 1.
579 On a reading of section 7(1) and section
20(2) of the Act it cannot be said that the submission of the learned counsel
for the appellant that it is not necessary that the tax should be paid before
valid return is submitted is without substance. On the facts of the case we
feel we are not called upon to decide this question. Certain enactments, as
pointed out by the High Court, provide that the return submitted will not be
valid unless it is accompanied by Treasury Receipt showing payment of tax (vide
sub-section (6) of section 19 of the Assam Agricultural Income-tax Act, 1939).
Section 16 of the Assam Sales-tax Act, 1947 providesthat no return submitted
under this section shall be valid unless it isaccompanied by a Treasury Receipt
showing payment of the tax due. Section 7( l) of the Act merely requires that
the return should be furnished in such form and to such authority as may be
prescribed. The returns were admittedly submitted to the authorities.
Though the form requires mentioning of the
particulars of the Treasury challan for the payment of the tax, it was
submitted that the return furnished without payment of the tax cannot be said
to be return at all. It was further pleaded that the failure to pay the tax as
required under section 20(2) will not make the return non-est. We, refrain from
deciding this question.
Mr. A. K. Sen, the learned counsel for the,
respondent, submitted that this Court should not allow the plea put forward on
behalf of the appellant that the return was a valid ode as it was admitted that
the assessment did not proceed on the return submitted. He referred to the
judgment of the High Court wherein it is stated :"It is also the admitted
position in both these cases, the Superintendent of Taxes treated the returns
filed as invalid ones." It was submitted that the tax authorities cannot
now be allowed to change their front and submit that they proceeded to assess
on the basis of the returns furnished by the respondent. It is common ground
that no notice under section 7(2) of the Act within 2 years of the expiry of
the return period was issued to the respondent. This Court, by a majority in
Supdt. of Taxes, Dhubri and Others vs.
Onkarmal Nathmal Trust etc.,(1) has held that
before proceedings could be taken under section 9(4) it is mandatory that
notice under section 7(2) will have to be issued.
Therefore, the only approach that is
available to the State and which has been taken by the learned counsel, is that
the assessment proceedings are valid as the return is not nonest. The question
that arises for consideration is whether we should allow this plea to be taken
by the State when it admitted before the High Court that the assessment was not
based on the return. It has to be seen that the ground that was urged by the
respondent was that the returns were nonest which was accepted by the High
Court. We do not think we will be justified in these appeals under Art. 136of
the Constitution to permit the State to contend that it can proceed onthe basis
that the returns were valid, especially when the plea before the High Court was
that the returns were invalid. this Court has repeatedly held that the exercise
of power under Art. 1.36 is discretionary.
(vide Trivedi vs. Nagrashra (2) In State of
Gujarat & Ors vs. Gujarat Revenue Tribunal & Ors. (3) this Court
(1)[1975] Supp. S.C.R. 365 at p. 375, (2) [1961] S.C.R. 113, 117.
(3) [1976] 3 S.C.R. 565, 578.
580 held that ever though there may be
substance in the argument Pat forward on behalf of the appellant the Court
taking the totality of the circumstances may decline to interfere in an appeal
filed by special leave of the Court under Art. 136 of the Constitution.
In the result the appeals are dismissed. No
order as to costs, P.H.P. Appeals dismissed.
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