1. These two tax revision cases filed by the Revenue relate only to the correctness of the penalty imposed by the assessing authority at Rs. 7,029 under Section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959, in his original order of assessment and a penalty of Rs. 14,057 under Section 12(5)(iii) of the TNGST Act in his revised order of assessment. Simple as it may appear, the conduct and disposal of the appeals has consumed more time and confusion than they really deserve.
First, we will narrate the facts.
2. The respondent/assessee is a manufacturer of opthalmic instruments.
For the year 1987-88, they reported a total and taxable turnover of Rs. 48,25,098.32 and Rs. 3,04,300 respectively. For good and valid reasons, the assessing authority rejected the return and accounts as incorrect and incomplete and made a best judgment assessment on January 9, 1989.
After considering the objections of the assessee, the final assessment was as follows : 3. It will be useful to notice the reasoning of the assessing authority on Section 7-A turnover of Rs. 93,713.50, because this is the back-bone of the entire controversy. It is as follows : "Regarding the purchases made from unregistered dealers from Tvl.
Elangovan Engineering Industries and Laxmi Engineering Components, they admitted their inability and ignorance to prove that they are registered dealers under the Act. Regarding the other item, i.e., Lawbest Medical Equipment Agencies, they have proved that they are registered dealers. I, therefore, accept this aspect alone and delete a turnover of Rs. 25,936 from the taxable turnover Under Section 7-A. Since the rest of turnover, i.e., Rs. 93,713.50 relates to microscope stand parts and clamps, this is liable to tax at 5 per cent multi-point." 4. The assessing authority also held that the assessee had failed to disclose the turnover of purchase from unregistered dealers taxable under Section 7-A. Since the turnover was adopted from the accounts, penalty was levied at Section 12(5)(iii) of the Act at Rs. 7,029.
5. The assessing authority later realised that microscope stand parts and clamps are liable to be assessed at 15 per cent under item 8 of the First Schedule to the TNGST Act. He, therefore, revised the assessment specifically under Section 55 of the TNGST Act, The tax at differential rate of 10 per cent on Rs. 93,713.50 worked out to Rs. 9,371.35. A penalty of Rs. 14,057 at 150 per cent of tax under Section 12(5)(iii) was also slapped on the assessee. Only a notice was issued to the assessee calling upon him to file objections. On May 31, 1989, the assessee filed objections. It is interesting to notice that the assessee questioned the assessment under Section 7-A itself on the ground that the sellers were known and the department should go against them. They also questioned the levy of penalty of Rs. 7,029 under Section 12(5)(iii) of the Act, because the assessment was not under Section 12(4). They, however, admitted their mistake in not filing an appeal against the original assessment. Regarding the revision, they contended that parts and clamps were only rough castings and they were not used as accessories or parts and therefore, the rate of 5 per cent was the correct rate. The levy of penalty at Rs. 14,057 was again questioned because the assessment was under Section 12(2) and not under 12(4) of the Act. Rejecting the objections, the revision under Section 55 of the Act was confirmed. It may be noticed here that no further notice was given for a personal or oral hearing.
6. It is only after the revised order was passed by the assessing authority that an appeal in AP No. 585/89 was filed. Before the Appellate Assistant Commissioner, the dispute was as follows : (i) Levy of tax at 15 per cent on a turnover of Rs. 93,713.50 under Section 7-A.7. The findings of the Appellate Assistant Commissioner, in his order dated October 23, 1991, are as follows : (1) The sellers of microscope stand parts and clamps were not registered dealers. The said goods purchased by the assessee were used in the manufacture of other goods. So, Section 7-A is attracted.
(2) The revision by assessing authority was under Section 16(1)(b), though he had wrongly quoted Section 55 of the Act.
(3) Penalty under Section 12(5)(iii) can be made only if the assessment was under Section 12(4) of the Act. Since revision was made under Section 16(1) of the Act, the entire penalty of Rs. 7,029 made under the original order dated January 9, 1989 and the levy of Rs. 14,057 made under the revised order dated June 30, 1989 was cancelled.
8. The assessee filed a second appeal to the Sales Tax Appellate Tribunal in T.A. No. 420 of 1992 in respect of levy of Section 7-A tax.
The Revenue filed an enhancement petition in T.M.P. No. 248 of 1992 against the deletion of penalty under the original order as well as revised order. The Appellate Tribunal rendered the following findings : (1) Since the assessee purchased goods from unregistered dealers, the assessee was liable to pay tax under Section 7-A. They relied on the admission of the assessee.
(2) The revision of assessment was only under Section 16(1) of the TNGST Act and therefore, penalty cannot be imposed under Section 12(5)(iii) of the Act. They cancelled the penalty of Rs. 14,057 made in the revised order dated June 30, 1989.
(3) The penalty of Rs. 7,029 made under the original order dated January 9, 1989 had not been questioned by way of appeal. In the appeal against the revised order, the said levy of Rs. 7,029 cannot be questioned. They followed [1991] 83 STC 457 (Mad.) (Joint Commercial Tax Officer v. Ekambareeswarar Coffee and Tea Works). The enhancement petition to the extent of Rs. 7,029 was allowed.
9. Hence, two tax revision cases, one in T.C. (R) No. 2930 of 1997 against T.A. No. 420 of 1992 and the other in T.C. (R). No. 2931 of 1997 against T.M.P. No. 248 of 1992 have been filed by the Revenue.
Since T.A. No. 420 of 1992 filed by the assessee before the Appellate Tribunal was dismissed. T.C. (R) No. 2930 of 1997 has no legs to stand upon. It is dismissed.
10. T.C. (R) No. 2931 of 1997 against the dismissal of enhancement petition in T.M.P. No. 248 of 1992, to the extent of the penalty of Rs. 14,057 imposed under the revised order dated June 30, 1989, is alone the issue before us.
11. The tax cases came up before the second court comprising of the Vice-Chairman and the Judicial Member. Orders were reserved. On July 25, 2000, the Judicial Member wrote the leading judgment. He held as follows : (1) The disputed turnover did attract purchase tax under Section 7-A(1) of the Act.
(2) The revised order on June 30, 1989 was only under Section 55 of the Act and not under Section 16(1) of the Act. On this issue, he disagreed with the views of the Appellate Assistant Commissioner and the Appellate Tribunal.
(3) On the question whether, "a reasonable opportunity of being heard" under the proviso to Section 55(1) of the Act was given to the assessee or not, elaborate reasons were given to reconsider the Special Tribunal's earlier decision reported in [2000] 118 STC 504 (Vinayaga Spinning Mills v. Commercial Tax Officer, Bazaar Circle, Tiruppur) and to hold that personal hearing or personal evidence was not necessary, especially when the assessee in his reply dated March 15, 1989 did not ask for such a hearing. He also observed that the question of violation of the proviso, was never raised at any earlier stage, It was, therefore, held that the order dated June 30, 1989 levying further penalty of Rs. 14,057 under Section 12(5)(iii) was valid. He, therefore, proposed to allow T.C.(R). No. 2931 of 1997.
12. Learned Vice-Chairman agreed that the revision was under Section 55 of the Act, but did not find reason to differ from the earlier view expressed in [2000] 118 STC 504 (TNTST) (Vinayaga Spinning Mills v.Commercial Tax Officer), He, therefore, suggested the placing of the papers before a Pull Bench. On the Judicial Member agreeing to this course, the case was posted before the Full Bench of the Special Tribunal to consider the correctness of the decision in [2000] 118 STC 504 (TNTST) (Vinayaga Spinning Mills v. Commercial Tax Officer).
13. Already, the case has lost its original shape and is bursting at the seams. We do not, therefore, want to decide issues which really do not arise on the reference to the Full Bench. We, therefore, take it that the revision was made only under Section 55 of the TNGST Act. The one and only issue we are called upon to decide is whether [2000] 118 STC 504 (TNTST) (Vinayaga Spinning Mills v. Commercial Tax Officer) was wrongly decided and whether any Supreme Court or High Court judgment makes the said judgment bad in law, warranting a different view and whether the words in the proviso to Section 55(1) call for a personal or oral hearing to be afforded to the assessee. The proviso is as follows : "Provided that no such rectification which has the effect of enhancing an assessment or any penalty shall be made unless such authority has given notice to the dealer and has allowed him a reasonable opportunity of being heard." 14. It is not disputed that the revised order dated June 30, 1989 had the effect of enhancing the assessment and penalty.
15. Much of the arguments advanced by Mr. M. Venkateswaran, Senior Standing Counsel for the Revenue, revolves around the principles of natural justice. Mr. S.N. Kirubanandam for the respondent, relies on the decisions interpreting the very words "a reasonable opportunity of being heard" occurring in Section 21(6) of the TNGST Act.
16. The principles of natural justice are supposed to be as old as Adam and Eve. When Adam disobeyed God by eating the forbidden fruit from the tree of knowledge, God did not punish Adam without giving him an opportunity. It is said, God called him and asked him "Hast thou eaten of the tree where I commanded thee that thou should not eat ?" There are innumerable facets of natural justice. Suffice it to say the law was developed by many historical decisions like, Ridge v. Baldwin [1963] 2 All ER 66, A.K. Kraipak v. Union of India AIR 1970 SC 150, International Airport Authority of India v. K.D. Bali AIRSwadeshi Cotton Mills v. Union of India AIR 1981 SC 818, Neelima Misra's case AIR 1990 SC 1402, Mahabir Auto Stores case AIR 1990 SC 1031.
17. It is really not necessary to write an essay on natural justice except to notice the difference between cases where principles of natural justice are read into a statute and where the statute itself provide for an opportunity. It has been well truly laid down that where the statute itself provides for a particular form of opportunity, it has to be strictly followed. If this essential difference is kept in mind, much of the controversy can be dispelled from our mind. One has to see only the decision cited by the Revenue to understand this difference. Rajamannar, C.J., effectively brings to light the correct approach in the following passage : "The only ground on which this writ is sought is that the Board did not give an opportunity to the petitioner to be orally heard. There is nothing in the Act or in the Rules framed thereunder which enjoins on the Board the duty to give an oral hearing to a person who invokes their revisional jurisdiction." 18. In this case, the statute clearly provides a manner of giving opportunity. The same words have been interpreted in a particular manner by three separate Judges of the Madras High Court and a Bench of this Special Tribunal. Argues Mr. Venkateswaran that those judgments did not take note of two Supreme Court judgments. We will now refer to them.(State of Kerala v. K.T. Shaduli Yusuff), is strongly relied upon by the Revenue. The Supreme Court starts with the premise that they were not dealing with a case where the principles of "audi alteram partem" need not be read into the statutory provision.
They were dealing with Section 17(3) of the Kerala General Sales Tax Act. It ran as follows : "If no return is submitted by the dealer under Sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment : Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return." The words "of 'being heard" are used there also. Actually, it is a case of giving opportunity to the dealer before an assessment is made. But, the Supreme Court held that it will apply to any enquiry held under the words "after making such enquiry", Observed the Supreme Court : "The first part of the proviso which requires that before taking action under Sub-section (3) of Section 17, the assessee should be given a reasonable opportunity of being heard would obviously apply not only at the second stage but also at the first stage of the inquiry, because the best judgment assessment, which is the action under Section 17, Sub-section (3), follows upon the inquiry and the 'reasonable opportunity of being heard' must extend to the whole of the inquiry, including both stages." But, the Revenue relies on the following words of the Supreme Court, namely, "reasonable opportunity of being heard" before making best judgment assessment merely embodies the audi alteram partem rule and what is the content of this opportunity would depend, as pointed above, to a great extent on the facts and circumstances of each case. Even here, they ultimately held that a witness examined in the enquiry must be offered for cross-examination. Certainly, they were not considering a question of giving an oral hearing to the assessee before a best judgment is made. Certainly, they would have answered in the affirmative, because even in the enquiry by the assessing authority, they directed opportunity to the assessee to cross-examine witnesses.
So far as the direct case of making assessment dealer, it is all the more necessary to give an opportunity of oral hearing. In any event, we do not see as how this Supreme Court judgment goes against the ruling of this Special Tribunal in [2000] 118 STC 504 (Vinayaga Spinning Mills v. Commercial Tax Officer).
20. The next decision relied on by the Revenue for stating that the decision of the Special Tribunal in [2000] 118 STC 504 (Vinayaga Spinning Mills v. Commercial Tax Officer) requires reconsideration, is [1978] 42 STC 189 (AP) (Sri Venkataramana Manure Company v. Deputy Commissioner of Commercial Taxes, Guntur). In that case, Section 20 of the Andhra Pradesh General Sales Tax Act, 1957, did not say that a person to whom a show cause notice is given under Sub-section (4) should be given a personal hearing. It is in that context that a single Judge of the Andhra Pradesh High Court declared that no personal hearing was necessary, but even here, the division Bench of the Andhra Pradesh High Court held that a personal hearing should have been given to the assessee.Anandji Haridas and Co.
(P.) Ltd. v. S.P. Kushare, Sales Tax Officer, Nagpur]. In this case, the Supreme Court was dealing with the difference between Sections 11 and 11-A of C.P. and Berar Sales Tax Act, 1947, in the context of giving opportunity of being heard and in the context of the period of limitation. The Supreme Court had no occasion to go into the question whether the words "of being heard" should be interpreted as giving an oral hearing. They proceeded on the question of limitation and in fact, in that case, the assessee received notice and appeared before the assessing authority. We do not find anything in the said judgment which would render [2000] 118 STC 504 (TNTST) (Vinayaga Spinning Mills v.Commercial Tax Officer) 22. The last decision relied on by the Revenue is [1991] 83 STC 354 (Guj) (State of Gujarat v. Ajay Trading Company), which relates to the question whether Section 55 would apply to the facts of the case in making a rectification order. We have already held that Section 55 alone applies and we do not, therefore, find any necessity to go through this decision.
23. Coming to the decisions cited by Mr. S.N. Kirubanandam for the assessee, they are reported in [1990] 2 SISTC 143 (Mad.) (Azhagappa Cotton Mills v. Deputy Commercial Tax Officer) relating to Section 21(6) of the TNGST Act, which also uses the words "an opportunity of being heard". It was held that a personal hearing should have been given before the registration was cancelled. This has been followed by M.S. Janardhanam, J., in the decision reported in (1993) 4 MTCR 440 (Mad.) (P.K.S. Threads v. Commercial Tax Officer) and Shivaraj Patil, J., in the case reported in (1995) 8 MTCR 55 (Mad.) (Rajam Offset Printers v. Commercial Tax Officer). It is after the above decisions that the Special Tribunal itself took the view that the words, "of being heard" should be interpreted as giving a personal hearing to the party whether asked for or not. This is the case reported in [2000] 118 STC 504 (Vinayaga Spinnig Mills v. Commercial Tax Officer).
24. One other point raised by the learned counsel for the Revenue is that the words, "giving opportunity of being heard" only means to give opportunity of being heard and there is no question of personal audience or face to face physical appearance of the assessee. The words, "of being heard" would only denote representation either written or oral or both by the assessee. As per the Oxford Concise Dictionary, the meaning of the word, "heard" is given as "given audience".
Therefore, it is argued that there is no question of "giving personal audience". It is further argued that the word "hear" and "heard" only means hearing a person either personally or over phone or through a radio message. Even accepting the above arguments of the learned counsel for the Revenue, we have to point out that the TNGST Act, 1959, does not recognize a hearing over the phone or through a radio message.
Further, such a hearing is not known to law. "Hearing" in the legal parlance only means a "personal audience" or "oral hearing". We reject the above arguments of the learned counsel for the Revenue and uphold the decision rendered in [2000] 118 STC 504 (TNTST) (Vinayaga Spinnig Mills v. Commercial Tax Officer).
25. In fine, we do not see any ground at all for taking a contrary view than the one taken in [2000] 118 STC 504 (TNTST) (Vinayaga Spinnig Mills v. Commercial Tax Officer). We reiterate that Section 55 is certainly a provision enabling the assessing authority to revise his order and it is justifiably prescribed that where rectification has the effect of enhancing an assessment or any penalty, not only notice should be given to the dealer, but he should also be allowed to have a personal hearing before a decision is taken. The various decisions cited by us certainly make us hold that the provision of law visits the assessee with grave civil consequences, if the rectification results in the enhancing of the assessment or the penalty. Therefore, the respondent/assessee is right in his arguments that the penalty levied under Section 12(5)(iii) of the TNGST Act, 1959, cannot be enhanced in the revision made under Section 55 of the TNGST Act, 1959, without giving the assessee a personal hearing before the rectification is made.
26. In this view of the matter, we uphold the order of the Sales Tax Appellate Tribunal, even though for different reasons.
28. I beg to differ from the aforesaid views of the honourable Chairman and the Administrative Member, in view of the reasons already stated in my judgment in T.C.R. Nos. 2930 of 1997 and 2931 of 1997 dated July 25, 2000. For the reasons already stated in my judgment in paras Nos. 6 to 12, by discussing the earlier judicial pronouncements and also in the reference made, it is settled principle that on the principles of natural justice in any quasi-judicial proceedings, the right of personal hearing is not mandatory or a person is not entitled for an oral hearing unless such a right has been conferred in the statute itself. In such a situation, whether the terms of "of being heard" would confer a right of personal hearing upon the dealer, whether he asks for it or not, has to be determined. My limited, knowledge of English language for the terms "of being heard" found in the proviso of Section 55 of the TNGST Act makes me to understand that the said expression has conferred only the right of "fair hearing" by way of hearing the assessee either by way of written or oral representation or both, but it never requires personal hearing as a must or mandatory one whether he asks for it or not, in addition to the right of hearing either written or oral by way of representation through legal practitioner or authorised representative especially the terms "of being heard" had not been followed with the words "in person" or "personally". Does it mean that wherever the terms of "of being heard" enumerated in the various provisions of the TNGST Act connote personal or oral hearing as a must or mandatory. It cannot be so, because of the absence of the words "in person" or "personally" after the terms "of being heard". That was the reason why His Lordship Fazal Ali, in State of Kerala v. K.T. Shaduli Yusuff, reported in [1977] 39 STC 478 (SC) (at page 490) had held that the assessing authority is not bound to examine the witness in the presence of the assessee. Hence, I am unable to subscribe the view that personal hearing should be given to the assessee whether he asks for it or not, but at the same time if he asks for it, it should be given and should not be refused. In this case, the assessee never asked for personal hearing at any stage till the arguments put forward by their counsel in the revision before this Special Tribunal though he filed written objections only without asking for oral hearing to the notice given under Section 55 of the TNGST Act.
29. So far all the reasons stated above and the reasoning given in my judgment dated July 25, 2000, both the T.C.R. No. 2930 of 1997 and 2931 of 1997 ought to be allowed accordingly.
And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 16th day of October, 2000.