B.K. Patra and Agency Vs. State of Orissa - Court Judgment

S.C. Mohapatra, J.

1. This is a reference under Section 24(3) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as 'the Act'), at the instance of the dealer.

Statement of the case has been made to this Court on the following question of law :

'Whether, on the facts and in the circumstances of the case, in the absence of a definite finding of the prior approval of the Assistant Commissioner required under Rule 90-B of the Orissa Sales Tax Rules, 1947 assessment under Section 12(8) of the Orissa Sales Tax Act was in accordance with law ?'

Rule 90-B mentioned in the question is a mistake for Rule 90-A since Rule 9-B had been omitted by Notification dated June 30, 1977 and was not connected with the question involved. For the purpose of this reference it is to be read as Rule 90-A.

2. The dealer is registered under the Act to carry on business in supply of radio sets, time pieces, wrist-watches, electrical goods, dry-cell batteries and other commodities. In respect of the year 1978-79, the dealer was permitted to pay a lump sum tax being eligible under Rule 90-A(1) of the Rules made under the Act as amended with effect from April 1, 1978. Earlier, a dealer on application was getting the privilege of paying lump sum tax on compounding. Under Rule 20(2) a dealer who is permitted to pay tax under Rule 90-A is to file a return in form No. IV-A. Instead of filing return in form IV-A, the dealer filed return in form IV-C which is required to be filed by a casual dealer. Since the dealer did not file the required return, the Sales Tax Officer called upon the dealer to produce his accounts in exercise of power under Section 16. On examination of the accounts, the Sales Tax Officer found that the gross turnover of the dealer for the year was Rs. 3,53,026.02. In view of the aforesaid gross turnover of the dealer, the Sales Tax Officer approached the Assistant Commissioner to cancel the privilege granted to the dealer to pay lump sum tax under Rule 90-A(1) and for a proceeding under Section 12 of the Act. In the order of assessment, the Sales Tax Officer has observed :

'Thereafter, action was taken to get the compounding certificate cancelled as per Sub-rule (4)(i)(b) of Rule 90-A of Orissa Sales Tax Rules and assessing under Section 12 of the Act.'

Getting the approval from the Assistant Commissioner, the dealer was assessed under Section 12(8) of the Act. Against the order of assessment, the dealer preferred an appeal and being unsuccessful, preferred second appeal. Before the Tribunal, it was urged that there cannot be retrospective cancellation of the compounding certificate granted. On the materials on record, the Tribunal found that on July 5, 1979, the Sales Tax Officer issued notice under Section 16(1) for production of account and on being moved for cancellation of the certificate to pay tax under the compounding system, the Assistant Commissioner passed order on September 24, 1979 to that effect. The order of assessment was passed on October 15, 1979. A decision of this Court in S.J.C. No. 132 of 1975 (State of Orissa v. Kasinath Naik) was relied upon by the dealer which was distinguished by the Tribunal on a finding that the said decision relates to the year 1967-68 when the rule was different. On the aforesaid finding the Tribunal having confirmed the order of assessment, application for reference was made. But Tribunal refused to state a case. On an application under Section 24(2)(b) of the Act, statement of the case was called for by this Court.

3. Rule 90-A(4) provides that the Sales Tax Officer can assess a dealer under Section 12 of the Act where his gross turnover exceeds Rs. 1,25,000 with prior approval of the Assistant Commissioner. This restriction on the Sales Tax Officer is provided only to give protection to dealers. Since precondition for assessment of a dealer who was paying lump sum tax under Section 12 was prior approval of the Assistant Commissioner, there is no doubt that the Sales Tax Officer would not have jurisdiction to assess such a dealer if the precondition is not satisfied. It is always better to record clearly in the order of assessment that precondition for getting jurisdiction is satisfied and indicate the date and number of such approval by the Assistant Commissioner. However, in the absence of a definite finding to that effect the order of assessment is not vitiated. Rule 90-A(4) requires prior approval by Assistant Commissioner as a fact and there is no requirement to record the fact in the order of assessment. A bare perusal of Rule 90-A(4) would lead to this conclusion. It reads as follows :

'90-A. Lump sum payment of tax.--

(1) to (3).........................

(4) Notwithstanding anything contained in any of the provisions of this rule, the Sales Tax Officer may, with the prior approval of the Assistant Commissioner of Sales Tax in-charge of the Range, assess the tax to be paid by a dealer in accordance with the provision of Section 12 of the Act, for any year for which the dealer has been directed to pay a fixed sum in lieu of tax assessable on his taxable turnover,

(i) if he is satisfied on the basis of the materials in his possession that--

(a) the gross turnover of the dealer during the preceding year, on the basis of which he has been directed to pay a fixed sum exceeds one lakh rupees ;

(b) the gross turnover of the dealer during the year in which he has been directed to pay a fixed sum exceeds one lakh twenty-five thousand rupees ;

(c) the dealer has suppressed his gross turnover or taxable turnover or the amount of tax payable by him during the preceding year ; or

(ii) for any other good and sufficient reason.

(5) to (6)........................'.

4. It is true that the Sales Tax Officer approached the Assistant Commissioner for cancellation of certificate of compounding for enabling him to assess the dealer under Section 12 of the Act. Under the scheme of Rule 90-A as amended, there was no necessity for cancellation in view of clear language of Sub-rule (4). The Assistant Commissioner was required to be satisfied that one of the conditions for exercise of power under Rule 90-A(4) to assess the dealer under Section 12 is satisfied. It is not the case of the dealer that one of the conditions is not satisfied. In such circumstances, when the Assistant Commissioner accepted the suggestion of the Sales Tax Officer on September 24, 1979, the same shall be deemed to be prior approval to satisfy the precondition of prior approval of Rule 90-A(4) when there is no statutory procedure provided to make such prior approval.

5. In view of the aforesaid discussion, our answer to the question is in the negative against the dealer by stating that on the facts and in the circumstances of the case, in the absence of a definite finding of the prior approval of the Assistant Commissioner required under Rule 90-A of the Orissa Sales Tax Rules, assessment under Section 12(8) of the Act is in accordance with law in view of the fact that the Assistant Commissioner has permitted the Sales Tax Officer to so assess. There shall be no order as to costs.

K.C. Jagadeb Roy, J.

6. I agree.