1. In this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, Vikram Forging Allied and Industries Limited, a company within the meaning of the Companies Act, 1956 (hereafter referred to as "the company") has challenged the reopening of deemed assessments for four financial years, each of four quarters ending on March 31, 1989, March 31, 1990, March 31, 1991 and March 31, 1992 under Section 11E of the Bengal Finance (Sales Tax) Act, 1941 (in short, "the 1941 Act").
2. The company is a registered dealer and carries on business of manufacturing tea processing machine and spare parts at a factory situated in Howrah. It regularly submitted returns, and did so in respect of the annual periods, each of four quarters ending March 31, 1989, March 31, 1990, March 31, 1991 and March 31, 1992. The returns were treated as correct and complete in terms of the provisions of the Section 11E(1) of the 1941 Act and the assessments for those periods were deemed to have been made accordingly. The company did not receive any notice of hearing under Section 11E(2) of the 1941 Act, but received an order dated June 18, 1997 informing it that its deemed assessments for the four periods mentioned above have been reopened by respondent No. 2 in terms of that section. According to this order, the reopening was done on the ground that due taxes were not paid on sales of REP licences during the said period. Against the said order the applicant filed a revision petition before respondent No. 3 who disposed of the same by his order dated February 23, 1999. In this order respondent No. 3 admitted that the petitioner was not given due opportunity of hearing as required under the law, and set the order of respondent No. 2 aside, but himself declared the deemed assessments reopened for fresh assessment because, according to him, sales of REP licences are liable to tax and therefore the deemed assessments should be reopened. Being aggrieved by the order, the applicant approached the West Bengal Taxation Tribunal in case No. RN-84 of 1999. When the case came up for hearing before the Tribunal on June 15, 1999, the learned advocate appearing for the respondents submitted that the respondents would not contest the matter and conceded that the prayers made in the application might be allowed. On the basis of this submission the Tribunal quashed the orders and the notices. On the same day, i.e., on June 15, 1999, the respondent No. 1 issued four fresh notices directing the applicant to show cause on June 25, 1999 as to why the deemed assessments for the same four periods will not be reopened on the ground that the returns filed by the applicant contained incorrect statements of turnover/incorrect particulars of sales in respect of REP licences. The applicant has again approached to this Tribunal with the present application.
3. Mr. Bajoria, learned senior counsel appearing for the applicant has mentioned a number of reasons why he considers the notice to be invalid. He has pointed out that the notices were issued on June 15, 1999, this shows the respondents had made up their mind and were ready with those notices on that date, but on that very date when the Tribunal was hearing the matter, they did not inform the Tribunal of their decision. He then contended that in terms of Rule 54AA of the Bengal Sales Tax Rules of 1941, the date of hearing should be fixed ordinarily after 15 days from the date of service of the notice, but in the present case the notice period amounted to less than 15 days. He submitted that use of the word "ordinarily" in the rule does not mean "you need not". There must be special unforeseen circumstance to justify a notice period of lesser duration. The possibility of reopening being time barred is not such a special circumstance. The third point mentioned by him is more technical in nature. Mr. Bajoria has submitted that when the company had previously approached the Tribunal in RN-84 of 1999, the Tribunal has been pleased to set aside the order reopening the deemed assessments, but did not quash the new assessment orders passed in pursuance of those reopening orders.
Therefore those fresh assessments orders stand even now. In that situation, the respondents cannot take action under Section 11E(2), because orders under Section 11(1) are in existence, according to Mr.
Bajoria. The fourth argument placed by Mr. Bajoria is to the effect that though the sales of REP licences were not mentioned in the returns, that does not amount to concealment within the meaning of Section 11E(2), because at the time the returns were submitted it was not known that REP licences are "goods" and that sales of these licences are to be mentioned in the returns. Concealment, or furnishing incorrect particulars, should be interpreted with reference to the date on which such returns were furnished, and the returns in question were furnished before the date on which the Supreme Court declared that REP licences are "goods" within the meaning of sales tax laws. Mr. Bajoria says that he is aware that this Tribunal, in the case of Shivdham Wood Products Private Limited v. Commercial Tax Officer reported in [1999] 112 STC 87, has held that the legal position as clarified by the Supreme Court, will be deemed to be operative from the date the legal provision of the statute came into force. He is also aware that the Karnataka High Court had taken a similar view in the case of Mysore Cements Limited v. Deputy Commissioner of Commercial Taxes (Assessment-V), City Division, Bangalore reported in [1994] 93 STC 464.
But he wants to rely on the judgment of a division Bench of the Calcutta High Court in Jiyajeerao Cotton Mills Ltd. case . It has been held in this judgment that the law laid down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate, doubt or conflict of judicial opinion is resolved and settled by the Supreme Court, it does not obliterate the existence of such debate, doubt, or conflict prior to such decision. If this view is accepted, then in the present case it cannot be said that the dealer furnished incorrect statement of his turnover in the returns submitted by him. Mr. Bajoria wants all these notices to be quashed.
4. Mr. J.K. Goswami, learned State Representative appearing for the respondents contradicted the arguments put forward by Mr. Bajoria.
According to him the West Bengal Taxation Tribunal takes up motions for hearing at the early working hours of each day. The order passed in RN-84 of 1999 on June 15, 1999 in the open court, was duly communicated instantly to the authorities in charge of those matters. It is not surprising, therefore, that the authorities could take on the same day the action they thought needed to be taken subsequent to the decision of the honourable Tribunal. He accepts that 15 days time was not given, but he submits that the respondent had to allow smaller notice period, because otherwise the matter was likely to be barred by limitation. He has submitted that the law does not require that fifteen days time must invariably be given in each and every case, and that in the present case the deviation from the ordinary time-limit ought to be ignored, because even the applicant has not submitted that he was prejudiced by being given nine days time in place of the fifteen days ordinarily given. In support of his contention, he refers to the decision of the Supreme Court in the case of Ganesh Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh 5. Mr. Goswami then submits that it is not true, as alleged by Mr.
Bajoria, that the assessment orders under Section 11(1), passed after the deemed assessments were reopened, are still valid. In this connection he draws attention to the operative part of the order of this Tribunal dated June 15, 1999 which, among other things, directs that "the orders of assessment under Section 11(1) of the Bengal Finance (Sales Tax) Act, 1941, and all other consequential actions if already made or taken, are also hereby quashed".
6. Mr. Goswami then places his arguments as to why, in the circumstance of the present case, it was proper to evoke Sub-section (2) of Section 11E of the 1941 Act. That sub-section can be evoked when a registered dealer in his returns has either concealed any sales or particulars thereof, or has furnished incorrect statement of his turnover or incorrect particulars of his sales. It has been held repeatedly by competent judicial forums including the West Bengal Taxation Tribunal that when the Supreme Court declared that REP licences are "goods" the Supreme Court did not make a new law but merely declared the legal position as it existed regarding REP licences, and therefore as a result the sales of REP licences were subject to sales tax in West Bengal from the date the 1941 Act came into force. The liability to pay tax on such sales, even if those sales were made before the Supreme Court made the declaration, has been recognised in all such judgments.
It has of course been held that the liability to pay interest can be considered to start on the day the judgment of the Supreme Court was delivered. But liability to pay tax has already been accepted, subject to the operation of the period of limitation. Sub-section (2) of Section 11E is one of the provisions enacted to ensure that sales in certain circumstances, if they have escaped assessments, are brought within the taxation net. The intention of the dealer furnishing the return, or even his knowledge, is not relevant in determining whether this sub-section is attracted in a particular case. It is adequate that there has resulted a reduction in the amount of tax payable by the dealer because of furnishing of incorrect statement of his turnover.
That has been the case here and therefore the authorities were within their jurisdiction when they decided to evoke this sub-section in the present case. Mr. Goswami submitted that there is no ground on which the notice under Section 11E can be called defective. He therefore requested that the application be dismissed.
7. We have considered the submissions of both sides. We do not see any reason to disbelieve Mr. Goswami when he says that, in issuing fresh show cause notices on June 15, 1999 the authorities were acting with speed to avoid action under Section 11E being barred by limitation. To avoid this bar it was necessary that the orders reopening the assessment, if warranted, are issued by June 30, 1999. Respondent No. 2 fixed the hearing on June 25, 1999, leaving only five days after the hearing for passing and issuing the order. This means that he allowed as much time as was possible before the hearing. Rule 54AA stipulates that the dealer shall be called upon by a notice "to show cause, if any, on a date fixed ordinarily after fifteen days". The use of the expression "ordinarily" indicates that in exceptional circumstances fifteen days time may not be given. The available time in the present case was squeezed between the bar of limitation on one side and the order of this Tribunal in RN-84 of 1999 on the other. These were exceptional circumstances. We hold that in the circumstances of the present case the notice under Section 11E(2) did not become invalid for allowing nine days time instead of the fifteen days to be ordinarily allowed, more so because no prejudice appears to have been caused to the applicant thereby. The last but one paragraph of the order passed by this Tribunal on June 15, 1999 in case No. RN-84 of 1999 clearly quashed, among other things, the orders of assessments under Section 11(1) of the 1941 Act, and hence the contention of Mr. Bajoria about the continued existence of the orders till the present time is not tenable. Lastly, regarding his efforts to apply the judgment of Calcutta High Court in Jiyajeerao Cotton Mills Ltd. case , we have not been able to agree with him. We do not dispute the existence of doubt prior to the declaration by the Supreme Court about the REP licences being liable to sales tax. In Jiyajeerao Cotton Mills Ltd. case , the Calcutta High Court decided that, in view of such doubt existing in that case before the Supreme Court had clarified the matter, it cannot be said that the action taken by the Income-tax officer could be considered an apparent mistake. In that case a notice had been received by the appellant, and the notice was issued on the ground that there was a mistake apparent from the record within the meaning of Section 154 of the Income-tax Act (reference para 5 of the judgment in that case). What is doubtful cannot be apparent. When an issue is in doubt, any decision about that issue taken at a time when that doubt persists can be seen to be a mistake when that doubt is clarified, but that mistake can never be an apparent mistake made at the time of making the decision. The decision taken was a mistake, but not an apparent mistake. Since Section 154 of the Income-tax Act, enables rectification of only those mistakes which are apparent from the records, the Calcutta High Court did not uphold the rectification. In the case before us it is not necessary that there shall an apparent mistake in the return. If apparentness of any mistake in the records or returns or anywhere elsewhere the basis on which actions under Section 11E(2) of the 1941 Act were to be taken, then it could be said that this decision of the Calcutta High Court has ratio in this case. Since that is not the case, the present case is distinguishable, and there is no reason to deviate from the stand so long taken in such cases regarding the retrospective applicability of the Supreme Court decision in respect of REP licences.
8. In the result, the application, which relates to reopening of assessments deemed to have been made under the Bengal Finance (Sales Tax) Act, 1941, fails and is dismissed. There shall be no order as to costs.
9. After the judgment has been delivered Mr. S.K. Chakraborty, learned advocate for the applicant prays for staying the operation of this order. Heard also Mr. J.K. Goswami, learned State Representative. We find no ground for staying the operation of the instant judgment.
Hence, the prayer is rejected.