| SooperKanoon Citation | sooperkanoon.com/56989 |
| Court | Sales Tax Tribunal STT West Bengal |
| Decided On | Sep-01-2000 |
| Judge | J Gupta, A Deb |
| Reported in | (2001)124STC358Tribunal |
| Appellant | Howrah Mills Co. Ltd. and anr. |
| Respondent | C.T.O., Lyons Range Charge and |
According to the company, due to the prevailing chaotic situation on the grounds of labour unrest, strikes, suspension of work and the financial constraints, the matters relating to sales tax payment, assessment, appeal and revision could not be attended with requisite diligence. But the assessment under the West Bengal Sales Tax Act, 1954 for the four quarters ending March 31, 1982 was completed ex parte. By a combined appellate order covering the said assessment and the assessment for that period under the Bengal Finance (Sales Tax) Act, 1941 and the Central Sales Tax Act, 1956, the respondent No. 3 (Assistant Commissioner of Commercial Taxes, Central Section) rejected the appeals, as were preferred by the company against the assessment.
The rejection was on the ground of non-payment of admitted tax of Rs. 1,29,975 under the 1954 Act. According to the company even the revision application could not be filed within the period of limitation for the reasons like labour unrest, dislocation of records, etc., which were beyond its (the company's) control. The company alleges that in the ex parte assessment the demand was arbitrarily raised to Rs. 17,67,572 in utter disregard of the principles of "best judgment assessment". The company's further plea is that the acute financial constraints prevented it from paying the admitted amount of tax though the same was ultimately paid on April 10, 2000 and hence the revising authority ought to have directed the appellate authority to hear the appeal on merit. The company has prayed for "mercy" to give it an opportunity by setting aside the assessment order and the appellate and the revisional orders. It also prays for some consequential reliefs.
2. The respondents have not filed any formal affidavit-in-opposition.
Mr. S.K. Saha Roy, learned State Representative, submits that the documents filed by the company along with its application and the relevant provisions of law will make it abundantly clear that the pleas set up by the company in its application have no logical moorings.
3. It is appropriate to mention at the outset that the Sick Industrial Companies (Special Provisions) Act, 1985 (in short, "the 1985 Act") does not have any provision having the effect of suspending the run of the period of limitation for an assessment or appeal or revision.
Section 22 of the Act provides that no provision (i) for winding up of an industrial company or (ii) for execution, distress or the like against any of the properties of the industrial company or (iii) for appointment of a receiver in respect thereof and (iv) no suit for recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loan or advance granted to the industrial company, shall lie or be proceeded further except with the consent of the Board, where in respect of such industrial company an inquiry under Section 16 is pending or any scheme referred under Section 17 of the Act is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending. It is, therefore, evident that if the conditions, as enumerated in the section, are fulfilled the State is debarred only from taking any measure for collection of arrear of tax from such an industry. But assessment of sales tax or proceeding of an appeal or revision in respect of such an industry may proceed according to law.
Again, there being specific period of limitation for such proceedings, the same must be completed within the prescribed periods of limitation.
Thus what the section prohibits is the initiation of a proceeding for realisation of arrear of tax in pursuance of such assessment, appeal or revisional order. In the instant case, it is evident from the order of assessing officer (vide annexure-D to the application) that the final date for examination was fixed on March 23, 1985 and in spite of being given repeated opportunities the company's representative did not produce their books of account for the assessment period, nor did he produce any order, passed in connection with the writ application pending in the High Court of Calcutta, prohibiting such assessment. The assessing officer even took care to examine the documents seized from the company by the Central Section of the Commercial Taxes Directorate, and could find that no books of account or document relating to the assessment period (i.e., 12 months ending March 31, 1982) was with the seized documents. Even before us this aspect has not been disputed by Mr. S.N. Bose, learned counsel for the company, The assessment order does not show that the company's representative during the assessment hearing set up any plea that the company was prevented from producing the books of account due to circumstances beyond its control, It is also not claimed by Mr. Bose that the company submitted any written representation to apprise the assessing authority that the books of account were not in the possession of the company. There is no dispute to the fact that the company's commercial activities continued during the period in question and presumably with due maintenance of the books of account. When the company refrained from producing the books of account and the period of limitation was running out, the assessing officer had to resort to the best judgment assessment.
4. The impugned assessment has been challenged on the ground that the basic principles of the "best judgment assessment" were not followed.
But on being asked to produce assessment figures for at least the three preceding periods to show that the assessment of turnover for the year in question was disproportionately high in the context of such earlier assessments, Mr. Bose has expressed his inability to produce any such figure. There is no explanation as to how the impugned assessment can be said to be made in violation of the principles of the best judgment assessment. Raising of an issue just for issue's sake without any logical mooring is useless.
5. Next we come to the appellate order. The disputed assessment is under the West Bengal Sales Tax Act, 1964 (in short, "the 1954 Act").
Undisputedly, the payment of admitted tax is the sine qua non for assumption of jurisdiction by the appellate authority. The proviso to Section 12(1) of the 1954 Act may be referred to in this regard. The order of the appellate authority shows that the admitted tax for the year in question was Rs. 9,58,473 and that out of the same Rs. 1,29,995 was not paid. This is not in dispute. Therefore, the appellate authority could not entertain the appeal in terms of the proviso to Section 12(1). Thus, there is nothing wrong with the appellate order.
In the latter part of our judgment we shall examine the sustainability of the company's plea of non-payment of admitted tax on the ground of its financial crunch.
6. We now advert to the revision application which was filed 512 days after the period of limitation. As for the justification for such delay it is the company's case that the connected papers and the appeal records could not be located so as to file the revision in time. But such explanation fails to evoke any confidence. When the appeal was disposed of on April 26, 1988, the company was already under the present management. Mr. Bose has not even been able to dispute the fact that for preferring a revision application the only additional ground, besides the grounds for preferring the appeal, was that the appellate order should not have rejected the appeal on the ground of non-payment of admitted tax in view of the financial distress the company was in.
For this additional ground the company at most required papers relating to reference to the Board and since such reference matter was under progress at the relevant period of time, all papers relating to the same were admittedly with the company's management. Therefore, if the company could file the appeal being equipped with necessary documentary and other materials, there is no reason why, unless there was a deliberate abstinence, the company could not file the revision application in time particularly when, as already stated, it was already under the present management for a long time. We too find no reason why the formal filing of the revision application should be delayed by 512 days. Mr. Saha Roy pointed out that it was a ploy to make as much delay as possible in the matter of payment of the State's dues. In support of his contention he pointed out that paragraph 3 of the minutes of the Board's proceeding (vide annexure A-1 to the application) divulges that the company generated a cash profit of Rs. 195 lakhs in the year ending March 31, 1989, during the major part of which the appeal remained pending. According to Mr. Saha Roy, had there been intention to pay, the company could have paid Rs. 1 lakh and odd, i.e., the balance of the admitted tax. It is true that during the pendency of the reference under 1985 Act no coercive measure could be taken to recover any tax dues. But that does not prohibit the company from discharging its tax liabilities particularly when it could afford to do so. We also find from the said minutes of the Board that during the year ending March 31, 1990 the company again made a cash profit of Rs. 194 lakhs. Yet no payment of the admitted tax was made.
7. Thus it can be boiled down to the position that Section 22 of the 1985 Act prohibits initiation of any measure by the State for recovery of the arrear of tax against an industrial company coming within the ambit of the section itself ; but the said provision neither prohibits assessment of tax by the assessing officer (without of course, making any demand for payment of the tax) nor does it prohibit such an industrial company from making payment of such tax if it can afford to pay the same and has bona fide intention to do so. It is also not disputable that the provision of this section cannot stop the running of period of limitation in regard to preferring of an appeal or revision application in the context of such application. We have found nothing illegal in the impugned appellate and revisional orders. As the last resort Mr. Bose submits that even if the company's conduct as an assessee is not found to be satisfactory, the company solicits the mercy of this Tribunal so that the Tribunal is pleased to remand the matter to the appellate authority before whom it can make its submission challenging the assessment order. According to Mr. Bose, the company will be highly prejudiced if the opportunity is not given. He points out that the company has already paid the admitted tax of Rs, 1,29,995 on April 8, 2000 (vide annexure E-1 to the application). In his opinion, this Tribunal, exercising extraordinary jurisdiction, can in an appropriate case set aside, the appellate order and remand the matter for fresh hearing on merit. He refers to the decision of the Calcutta High Court in the case of Kanknarrah Co. Ltd. v. State of West Bengal (1988) 21 STA 416. It is not understood how this decision can come to the applicant's help. In that case the applicant-company did not file return or produce books of account on the plea of lock-out closure. It did not pay even the admitted tax before the disposal of the appeal. The honourable Court, in disapproving the conduct of the applicants, has observed as follows : "Having considered all aspects of the case, I am of the view that the writ petition is without any merit and should be dismissed".
The above decision does not serve as a ratio. After considering the conduct of the appellant of that case, the High Court expressed that it was a fit case for dismissal. However, the court directed the appellant to make payment of the admitted tax and also directed the appellate authority to hear the appeal. The court in that case exercised its discretionary power in passing such order but did not lay down thereby any binding precedent to be invariably followed. The question in the case before us obviously comes whether to exercise such discretionary power in favour of the company. In a legal proceeding departure from legal provision just for bestowal of mercy on someone, the bona fides of whose activities is not at all in view, will be no more than an whimsical and arbitrary exercise of discretionary power. Mr, Saha Roy has pointed out that the company collected tax from its purchasers, yet did not keep the money apart for the payment of State's dues. We have already seen that in the financial year ending on March 31, 1989 the company made a cash profit of Rs. 195 lakhs yet it did not feel its duty to pay Rs. 1 lakh and odd as admitted tax before the hearing of the appeal. Again, it earned a cash profit of Rs. 194 lakhs in the year ending on March 31, 1990 without making any payment even before the revision application by 512 days. What crowns all is the fact that it got a loan of Rs. 257 lakhs on March 21, 1994 for the purpose of discharging its statutory tax obligations, but the company kept the money to itself and utilised the same for long six years without payment of the admitted tax of Rs. 1 lakh and odd, a meagre sum in comparison to what it got as sales tax loan. This admitted tax was paid on April 8, 2000. Thus even when it was provided with money by the Government for the specific purpose of discharging its statutory liabilities, the company had no mind to pay. The company's case is, therefore, not comparable to the appellant in the case of Kanknarrah & Company Ltd. (1988) 21 STA 416. What the applicant-company before us lacked in is the will and not the ability to pay its statutory dues to the State even when provided with funds for that specific purpose. Mr.
Bose has argued that the company did not make the payment of the admitted tax because it was waiting for the outcome of its revisional application. But the contention is wholly untenable. The revision application may have relevance as regards the raising of turnover over the admitted one by the assessing authority ; but it has absolutely nothing to do with the admitted tax. There is absolutely no ground why the company should not pay the admitted tax pending the revision application when it was already fortified with funds for payment of the same.
8. In view of the circumstances, we do not consider it to be a fit case where this Tribunal should exercise its discretionary power to frustrate the valid orders passed by the competent authorities and to extend to the company a special privilege which it does not deserve. In the result, application is dismissed. We make no order as to costs.