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M/S CHAUDHARY TRACTOR COMPANY, TOHANA, D versus STATE OF HARYANA

High Court of Punjab and Haryana, Chandigarh

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M/S CHAUDHARY TRACTOR COMPANY, TOHANA, D v. STATE OF HARYANA - STC-20-1992 [2006] RD-P&H 3358 (23 May 2006)

S.T.C. NO. 20 OF 1992 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

S.T.C. NO. 20 OF 1992

DATE OF DECISION: 29.05.2006

M/S CHAUDHARY TRACTOR COMPANY, TOHANA, DISTT. SIRSA ....PETITIONER

VERSUS

STATE OF HARYANA

....RESPONDENT

CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL

PRESENT: MR. AVNEESH JHINGAN, ADVOCATE

FOR THE PETITIONER

JUDGMENT

This is a petition under Section 42 (2) of the Haryana General Sales Tax Act, 1973 (for short 'the Act') seeking a direction to the Sales Tax Tribunal, Chandigarh ( now known as Haryana Tax Tribunal) to refer the following questions of law to this Court for opinion: "i) Whether on the facts and circumstances of the case, Revisional Authority can or cannot revise the assessment or it was a case of escapement of turnover ?

ii) Whether on the facts and circumstances of the case, sales tax can or cannot be levied on the material supplied free of cost during warranty period ?

iii) Whether on the facts and circumstances of the case, additional sales tax can or cannot be levied on spares supplied used during warranty on account of difference or rate of tax on tractor and its spares ?

iv) Whether on the facts and circumstances of the case interest under section 25 (5) can or cannot be charged ?

v) Whether on the facts and circumstances of the case, tax can or cannot be levied on sales against S.T.C. NO. 20 OF 1992 [2]

a valid and genuine ST-15 declaration where the purchaser is not even a dealer for the same ? vi) Whether on the facts and circumstances of the case, the Revisional authority can or cannot initiate the penalty proceedings afresh ?

vii) Whether on the facts and circumstances of the case penalty proceedings can be initiated within 8 years (the time limit under Section 40 ) or it can only be initiated within 5 years (the period prescribed in the act for the best judgement assessment) ?

viii) Whether on the facts and circumstances of the case penalty can or cannot be imposed in the absence of mensrea ?

ix) Whether on the facts and circumstances of the case, penalty can or cannot be imposed for the alleged fault under bonafide belief of the dealer ? However, at the time of hearing, the counsel for the petitioner pressed only question at serial No. (vi), as the other questions do not arise out of the order of the Tribunal.

Brief, facts of the case are that the assessment of the petitioner for the year 1984-85 was framed by the assessing authority vide order dated 17.7.1987 which order was revised under Section 40 of the Act by the revisional authority vide order dated 23.1.1989 levied tax on mobile oil of the value of Rs. 56,968/- used by the dealer in the servicing of the tractors while rejecting the plea of the assessee that the same was supplied free of cost since it was part of the free service to be provided by the petitioner as a condition of sale of tractors.

After passing the order, as referred to above, the revisional authority issued a show cause notice to the petitioner for levy of penalty under Section 48 of the Act on 31.1.1989. Thereafter, penalty of Rs.

22,500/- was levied on the petitioner vide order dated 21.3.1989 for the first time under Section 48 of the Act. The petitioner failed in appeal before the Tribunal against the penalty order. Even an application for reference of question of law to this Court was also rejected by the Tribunal. Admitted facts on record are that the penalty proceedings under Section 48 of the S.T.C. NO. 20 OF 1992 [3]

Act were initiated by the revisional authority for the first time. A direct judgment of this Court in State of Haryana v. Dasaunda Singh Waryam Singh [1996] 103 STC 128, throws light on the issue, wherein it was held as under:

"Section 40, sub-section (1) of the Haryana Act, reads as under:

"40. Revision.- (1) the Commissioner may on his own motion call for the record of any case pending before, or disposed of by, any assessing authority or appellate authority, other than the Tribunal, for the purposes of satisfying himself as to the legality or to propriety of any proceedings or of any order made therein and may pass such order in relation thereto as he may think fit: Provided that no order, shall be so revised after the expiry of a period of eight years from the date of the order:

Provided further that the aforesaid limitation of period shall not apply where the order in a similar case is revised as a result of the decision of the Tribunal or any court of law:

Provided further that the assessee or any other person shall have no right to invoke the revisional powers under this sub-section."

A close scrutiny of section 40 (1) would show that the revisional authority can call for the record of any case pending or disposed of for the purposes of satisfying himself as to the legality or to the propriety of any proceedings or of any order made therein and may thereafter proceed to pass such order in relation thereto as he deems fit. The case of the assessee is that the assessment proceedings and the penalty proceedings are two independent and distinct proceedings and S.T.C. NO. 20 OF 1992 [4]

since the Assessing Authority did not initiate the proceedings for imposing the penalty, the revisional authority could not proceed either to levy the penalty for the first time or remand the case to the Assessing Authority for imposition of penalty.

At the time of making the assessment, the Assessing Authority did not invoke its jurisdiction under section 10(7) of the Punjab Act for levying the penalty for filing a false and incorrect return. As the Assessing Authority did not invoke its jurisdiction under section 10(7) of the Punjab Act for levying the penalty, the revisional authority had no jurisdiction to invoke the revisional powers under section 40 and remand the case to the Assessing Authority with a direction to redecide the matter. The revisional authority could interfere in exercise of its revisional powers to examine legality and propriety of the proceedings or the order passed therein only if the Assessing Authority had initiated penalty proceedings. Where no penalty proceedings have been initiated, the question of examining its legality or propriety does not arise.

The view we have expressed is strengthened by the reasoning recorded by the Madras High Court in Deputy Commissioner of Commercial Taxes, Madurai Division, Madurai v. K.M. Thomas & Co. [1973] 31 STC 529, where under somewhat similar circumstances, where the Assessing Authority did not either expressly or impliedly invoke its power for levying penalty, it was held that the revisional authority had no power to independently invoke the power under section 12 (3) of the Tamil Nadu General Sales Tax Act (1 of 1959) and seek to levy penalty. It was held as under: "Where the assessing authority making a best judgment assessment under section 12(2) of the S.T.C. NO. 20 OF 1992 [5]

Tamil Nadu General Sales Tax Act, 1959, did not pass an order levying penalty under section 12(3) and also did not propose to invoke that power even in the pre-assessment notice, the Deputy Commissioner, in exercise of his power of revision under section 32, could not independently invoke that power under section 12 (3) and seek to levy penalty."

The Gujarat High Court has also taken the same view in a case reported in Bhavnagar Chemical Works (1946) Ltd. v. Commissioner of Sales Tax, Ahmedabad [1991] 83 STC 409, and held as under:

"Penalty proceedings are independent and distinct from assessment proceedings. If the original authority has expressly or impliedly not at all exercised its penalty jurisdiction, the revisional authority cannot proceed to levy penalty for the first time. But where the Assessing Authority has omitted to impose penalty despite initiation of penalty proceedings, the order failing to impose penalty can be revised."

For the reasons stated above, the question referred to us is answered in the negative, i.e., in favour of the assessee and against the Revenue and it is held that the revisional authority had no jurisdiction to invoke suo motu powers for imposition of penalty when the Assessing Authority did not invoke its powers to impose the penalty inspite of submission of incorrect and false return."

Section 40 of the Act is an enabling provision whereby the Commissioner can call for the records of any proceedings pending or an order made under the Act to satisfy himself about the legality or the S.T.C. NO. 20 OF 1992 [6]

propriety thereof. In the present case as far as penalty under Section 48 of the Act is concerned, neither there was an order passed by any authority nor there were any proceedings pending under the Act, legality of which were to be judged by the revisional authority. The issue with regard to the jurisdiction of revisional authority under the Karnataka Sales Tax Act, 1957 came up for consideration before Hon'ble the Supreme Court of India in Shree Balaji Rice Mill vs. State of Karnataka [2005] 140 STC 267 wherein judgment of this Court in Dasaunda Singh Waryam Singh's case (supra) was referred. In Shree Balaji's case (supra) regarding the provisions of Section 40 of the Act, it was observed as under: "(ix) A close scrutiny of section 40 (1) of the Haryana General Sales Tax Act would show that the revisional authority can call for the record of any case pending or disposed of for the purposes of satisfying himself as to the legality or to the propriety of any proceedings or of any order made therein and may thereafter proceed to pass such order in relation thereto as he deems fit." If plain language of Section 40 of the Act and its interpretation by this Court is applied in the facts and circumstances of the present case, answer to the question is clearly evident that penalty proceedings could not be initiated by the revisional authority for the first time.

When on the facts found by the Tribunal answer to the question sought to be referred to this Court for opinion is available, as to whether still this Court should direct the Tribunal to refer the question of law to this Court for opinion or straightway answer the same is no more res integra. This Court while deciding STC No. 16 of 1993 titled as M/s Regular Traders, Madhopuri, Ludhiana vs. The State of Punjab and others on 25.4.2006 and STC No. 19 of 1992 titled as M/s Chaudhary Tractor Company, Tohana, Distt. Sirsa vs. State of Haryana decided today held that in such circumstances instead of directing the Tribunal to refer the question of law, this Court should proceed to answer the question straightway. Following the principles of law laid down in M/s Regular Traders, Madhopuri, Ludhiana's case (supra) and M/s Chaudhary Tractor Company, Tohana, Distt. Sirsa's case (supra), we deem it appropriate to answer the question.

S.T.C. NO. 20 OF 1992 [7]

In view of above discussions, it is held that the revisional authority cannot initiate penalty proceedings for the first time.

Consequently, the question referred to above is decided in favour of the assessee and against the Revenue.

(RAJESH BINDAL)

JUDGE

May 29, 2006 (ADARSH KUMAR GOEL)

gsv JUDGE


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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