Supreme
Paper Mills Ltd. Vs. Asst. Commnr. Commercial taxes Calcutta & Ors [2010] INSC
222 (25 March 2010)
Judgment
IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1410 OF
2003 Supreme Paper Mills Ltd. ... Appellant Versus Asst. Commnr. Commercial
Taxes Calcutta & Ors ... Respondents
Dr.
Mukundakam Sharma, J.
1.
The issue that falls for consideration in the present appeal is
whether the show cause notice issued by the respondent is illegal and defective
as the same did not provide for a time period of 15 days as prescribed in the
statute and also because it did not disclose materials leading to the
satisfaction of the concerned authorities justifying the issuance of such a
show cause notice.
2.
The appellant Company was carrying on the business of
manufacturing various types of papers at its paper mill situated at Village
Raninagar Chakdah, District Nadia, Kolkata. In the course of its carrying on
business it filed necessary returns as required under the Bengal Finance (Sales
Tax) Act, 1941 (for short the "1941 Act") and also paid the taxes on
the basis of the said return. The Revenue also completed the assessment
proceeding which was deemed to have been made under Section 11 E (1) of the
1941 Act by operation of law. Subsequently, however, the appellant received a
show cause notice from the Deputy Commissioner, Commercial Taxes, Corporate Division
whereby the appellant was directed to show cause why deemed assessment case for
the period mentioned in the said impugned notices would not be re-opened. Since
the validity of the aforesaid notices has been challenged by the appellant
herein, we would extract the relevant contents of one of the notices which
reads as follows:- "Whereas I am satisfied that the returns filed by you
which formed the basis of the above mentioned deemed assessment case exhibit
incorrect statement of your turnover/incorrect particulars of sales whereas it
appears to me that the assessment is required to be re- opened, you are hereby
directed to show cause on 29.6.99 at 11.00 a.m. why the assessment will not be
re-opened."
3.
The other notices which are also impugned herein have similar
contents. In terms of the aforesaid notices, the appellants were directed to
submit their reply to the show cause notice on 29.6.1999.
4.
Being aggrieved by the issuance of the aforesaid notices, the
appellant filed an application under Section 8 of the West Bengal Taxation
Tribunal Act, 1987 challenging the validity of the aforesaid notices issued by
the respondent proposing to re-open the deemed assessment for the four periods.
The West
Bengal Taxation Tribunal heard all the four cases analogously and by judgment
dated 27.7.2001, dismissed the same.
5.
Being aggrieved and dissatisfied by the aforesaid judgment and
order passed by the Tribunal, the appellant preferred a Writ Petition in the
High Court of Calcutta which was entertained. However, the High Court of
Calcutta dismissed the writ petition by the impugned judgment and order dated
19.7.2002 which is under challenge in this appeal.
6.
Counsel appearing for the appellant submitted before us that the
aforesaid show cause notice is illegal and without jurisdiction as a time
period of 15 days which is required to be given was not extended to the
appellant to submit its reply to the show cause notice. It was also submitted
that the said notices were invalid due to non-mentioning of materials leading
to the satisfaction of the authority for issuance of such a notice.
7.
In support of the aforesaid contentions, counsel appearing for the
appellant relied upon the provisions of section 11E (2) of the Act as also on
Commissioner (Commercial Taxes) and Others reported in 2001 38 Sales General
(Investigation and Registration) and Anr. reported in (2001) 2 SCC 474.
8.
Counsel appearing for the respondent, however, refuted the
aforesaid submission contending inter alia that what is challenged in the
present case is only a show cause notice and that no final order is yet passed.
It was also submitted that the pre-condition as mentioned in the statutory
provision is the satisfaction of the concerned Authority that the assessee had
furnished incorrect statements of his turnover or incorrect particulars of the
sale submitted under Section 10 or otherwise, and that such a satisfaction can
be derived on the basis of the information received by that Authority or
otherwise.
9.
It was submitted that on fulfilling all the pre-conditions
mentioned in the statute itself and if the Commissioner is satisfied of the
aforesaid situation, it is possible for him to issue such a show cause notice.
He also submitted that the aforesaid show cause notice cannot be said to be
invalid 4 because of paucity of time granted to the appellant. We have
considered the aforesaid submissions of the counsel appearing for the parties
in the light of the records placed before us.
10.
Section 11 E (2) in terms of which the aforesaid show cause notice
is issued reads as follows:- "Sec. 11E (2) - Where the Commissioner is
satisfied on information or otherwise that a registered dealer - (a) has
concealed any sales or particulars thereof, or (b) has furnished incorrect
statement of his turnover or incorrect particulars of his sales in the return
submitted under section 10 or otherwise.
relating
to an assessment made under sub-section (1) which has resulted in reduction of
the amount of tax payable by him under this Act in respect of any of the
periods, the Commissioner shall, subject to such conditions as may be
prescribed, within six years from the date of such assessment, reopen in the
prescribed manner the assessment for such period and, after giving such dealer
a reasonable opportunity of being heard, make fresh assessment under
sub-section (1) of section 11 for such period to the best of his
judgement."
11.
The aforesaid provision makes it crystal clear that if on
information received by the Commissioner or even otherwise, if he is satisfied
that the assessee namely the registered dealer has furnished incorrect
statement of his turnover or incorrect particulars of his sales in the return
submitted or even otherwise, he may issue a show cause notice to show cause as
to why 5 the assessment made should not be re-opened. It is crystal clear that
the show cause notice is issued with the purpose of giving the dealer a
reasonable opportunity of being heard before an order is passed for re- opening
of the assessment for the reason that he has furnished incorrect statement of
his turnover or incorrect particulars of his sales in his return.
[(1973) 3
SCC 171], a similar issue as sought to be raised herein was urged before the
Supreme Court. In the said case, a similar notice was issued by the Sales Tax
Officer to the dealer contending inter alia that he had a reason to believe
that his turnover for the quarter ending 1963-64 on which sales tax was payable
under the Orissa Sales Tax Act, 1947 had escaped assessment/had been
under-assessed. In that view of the matter, the dealer was called upon to
submit his reply. The aforesaid notice was challenged by filing a writ petition
in the High Court of Orissa whereas the High Court allowed the writ petition on
the ground that the Sales Tax officer did not indicate any reason for issuing
notice under Section 12(8) of the Act. On appeal being filed, this Court in
that context considered sub-sections (5) and sub-sections (8) of Section
12.
After considering the aforesaid provisions, the Supreme Court in paragraph
8 held as follows:- 6 "8. Although the opening words used in Section 12(8)
are "if for any reason" and not "if the sales tax authority has
reason to believe", the difference in phraseology, in our opinion, should
not make such material difference. A reason cannot exist in vacuum. Somebody
must form the belief that reason exists and looking to the context in which the
words are used, we are of the view that it should be the sales tax authority
issuing the notice who should have reason to believe that the turnover of a
dealer has escaped assessment or has been under-assessed. The approach in this
matter has to be practical and not pedantic. Any view which would make the
opening words of Section 12(8) unworkable has to be avoided. It may be noted in
this context that in Form VI appended to the rules, which has been prepared in
pursuance of Rule 23, the words used are "whereas I have reason to believe
that your turnover . . . . . . . . . . . . has escaped assessment . . . .
. . . . .
. . ."
13.
Then again in paragraph 14, this Court further held in the
following manner:- "14. There is nothing in the language of Section 12(8)
of the Act which either expressly or by necessary implication postulates the
recording of reasons in the notice which is issued to the dealer under the
above provision of law. To hold that reasons which led to the issue of the said
notice should be incorporated in the notice and that failure to do so would
invalidate the notice, would be tantamount to reading something in the statute
which, in fact, is not there. We are consequently unable to accede to the
contention that the notice under the above provision of law should be quashed
if the reasons which led to the issue of the notice are not mentioned in the
notice. At the same time, we would like to make it clear that if the Sales Tax
Officer is in possession of material which he proposes to use against the
dealer in proceedings for reassessment, the said officer must before using that
material bring it to the notice of the dealer and give him adequate opportunity
to explain and answer the case on the basis of that material."
14.
In our considered opinion, the ratio of the aforesaid decision of
this Court is squarely applicable to the facts of the present case. The
expression used in Section 11 E of the Act is that the Commissioner must be
satisfied on information or otherwise that the registered dealer has furnished
incorrect statement of his turnover or furnished incorrect particulars of his
sale in the return. A show cause notice is issued to the dealer with the
purpose of informing him that the department proposes to re-open the assessment
because the Commissioner himself is satisfied that the dealer has furnished
incorrect statement of his turnover or incorrect particulars of his sales in
the return submitted, so as to enable the dealer to reply to the show cause
notice as to why the said power vested on the Commissioner should not be
exercised.
15.
A notice was issued in order to provide an opportunity of natural
justice to the dealer. There is nothing in the language of the aforesaid
provision which either expressly or impliedly mandates the recording of any
reasons. The provision of the Act nowhere postulates that the reasons which led
to the issue of the said notice should be incorporated in the notice itself,
and that in case of failure to do so, the same would invalidate the notice.
16.
The aforesaid provision is clear and explicit and there is no
ambiguity in it. If the legislature had intended to give any other meaning as
suggested by the counsel appearing for the appellant it would have made
specific provision laying down such conditions explicitly and in clear words.
It is a well-settled principle in law that the court cannot add anything into a
statutory provision, which is plain and unambiguous. Language employed in a
statute itself determines and indicates the legislative intent. If the language
is clear and unambiguous it would not be proper for the court to add any words
thereto and evolve some legislative intent not found in the statute.
17.
Here is a case where the section provides that if the Commissioner
is satisfied that the assessee namely the registered dealer has furnished
incorrect statement of his turnover or incorrect particulars of his sales in
the return submitted or even otherwise and in that event a notice would be
issued as envisaged therein to the dealer to show cause as to why the
assessment made should not be re-opened. Therefore, notice issued in the
present case giving the dealer an opportunity to show cause within a stipulated
period does not in any manner prejudice the right of the appellant to file an effective
reply. It was always possible for the appellant to seek for further time, if
according to him the time given by the authority for filing the 9 reply was
required to be extended in order to enable him to collect some record. It
cannot therefore be said that if detailed reasons for issuance of notice being
absent in the show cause notice, the same was invalid and void.
18.
The aforesaid Section 11 E (2) nowhere specifically mentions that
factual basis of the ground of Deputy Commissioner's satisfaction on either or
both the points mentioned in sub-Section 2(a) or 2(b) of Section 11 of the Act
are required to be incorporated in the notice for re-opening of the deemed
assessment and supplied to the dealer.
19.
The appellant at this stage is simply called upon to file his
objection or show cause as to why the re-opening of the assessment should not
be done. Once he submits his reply to the show cause, he would also be heard
and would also be allowed to produce his records namely books of accounts, only
after which a decision would be taken whether the assessment already done
should be re-opened or not. Even after that, the appellant would definitely get
an opportunity of hearing in the fresh assessment proceeding.
In that
view of the matter, we are of the considered opinion that the appellant would
not in any manner be prejudiced due to issuance of the aforesaid show cause
notice. We therefore, dismiss the appeal filed by the appellant, 10 maintain
the judgment and order passed by the Tribunal and upheld by the High Court.
20.
The appeal has no merit and is dismissed.
.......................................J. [D.K. Jain]
.......................................J. [Dr. Mukundakam Sharma]
.......................................J. [R.M. Lodha]
New Delhi.
March 25, 2010
Back