MADRAS FLOUR MILLS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) IN all these three writ petitions, Mr. D. Trilokchand chopda, learned counsel for the petitioners, contended that the procedure followed so far as the assessment years 1987-68, 1968-69 and 1969-70 are concerned should be in accordance with the various Government orders, policy abstracts, such as G. O. No. 973, Revenue Department, dated 27th May, 1967, which have not been followed by the authorities concerned, and what is more, during the relevant period 10th April, 1970 and 19th January, 1976 which is the time between the decisions pronounced in Pyarelal Malhotra v. Joint Commercial Tax officer at 1970 (26) STC 416 (Mad.) and State of Tamil Nadu v. Pyare Lal malhotra 1976 AIR (SC) 800, 1976 (2) SCR 168, 1983 (13) ELT 1582, 1976 (37) STC 319, 1976 (1) SCC 834, 1976 (3) SCR 168, 1976 UPTC 282, 1976 (5) CTR 278, 1976 taxlr 1519, 1976 CTR (SC) 278, 1976 SCC (Tax) 102 (SC) proper approach has not been made by the authorities concerned, and there is an element of discrimination so far as the writ petitioners herein are concerned. While arguing the instant writ petitions, the learned counsel for the petitioners brought to the notice of this Court, item 4-A of the Second Schedule to the Tamil Nadu general Sales Tax Act, sections 4, 14 and 15 of the Central Sales Tax Act, and also the single point suffrage of tax. IN these three writ petitions, it is the iron and steel that is involved for the assessment of tax, and not any hardware material prepared out of iron and steel material. Article 286 (3) of the constitution of INdia was also brought to the notice of this Court. IN this regard, the decision rendered in Kovilpatti Steel Rolling INdustries P. Ltd. v. Commercial Tax Officer, Kovilpatti, in Writ Appeals Nos. 230 and 231 of 1981 dated 17th November, 1987 was also brought to the notice of this Court. What we are concerned in the instant writ petitions is whether there has been any denial of liberty to the petitioners herein, because at the stage of assessment they have come forward with the present writ petitions. It is not available before this Court, the appeals against the assessment in question on the file of the revisional authorities. It is submitted by the learned counsel for the petitioners that the appeal proceedings before the revisional authorities are pending before the said authorities. When the appeals were pending before the appellate Assistant Commissioner, the writ petitioners have come forward with these writ petitions, inter alia, contending that there had been improper application of the Government orders and various orders giving "waiver". IN this regard, apart from G. O. No. 973, Revenue department, dated 27th May, 1967, copy of G. O. Ms. No. 4, Commercial Taxes and religious Endowments Department, dated 3rd January, 1977, extract from Board of revenue (CT), Madras in Ref. No. A1/11982/77 dated 1st April, 1971; letter No. 92/xvi-1/78-12, Government of Tamil Nadu, Commercial Taxes and Religious endowments Department, dated 20th July, 1979; G. O. Ms. No. D-103, Commercial taxes and Religious Endowments Department, dated 24th January, 1981; and G. O. P. S. No. 311, Commercial Taxes and Religious Endowments Department, dated 13th march, 1982 were also brought to the notice of the court. Notification II of g. O. P. S. No. 311, Commercial Taxes and Religious Endowments Department, dated 13th March, 1982 was also stressed by the learned counsel for the petitioners. M. S. round which has been valued at Rs. 16, 84. 055. 22 was manufactured out of iron scraps purchased from dealers within the State, and it forms part of the proceedings of the Joint Commercial Tax Officer, Godown Assessment Circle, dated 28th June, 1976 for the assessment year 1967-68. The following paragraphs occurring at pages 34, 35 and 36 are pointed out by the learned counsel for the petitioners, which run as follows : ". . . . . . . . . The dealers maintain that they have not collected any tax on their sales of iron and steel following the judgment of the Madras High Court, in this issue. They therefore, plead for an administrative waiver of the tax due on their turnover of iron and steel. It is also the contention of the dealers that sale of machinery by them is not assessable since they are not dealers in them. The various issues and objection to the proposed assessment raised by the dealers were examined by me carefully. The plea of sub judice by the dealers is untenable since the State has withdrawn all cases similar to that of Malhotra 1970 (26) STC 416 (Mad.) following the decision of supreme Court in that case. The present assessment of the dealers relate to the year 1967-68. The accounts of the dealers for the year were checked in 1969 itself and kept pending only to get final clarification in respect of the admissibility of their sales of iron and steel item. The Supreme Court in Pyare lal Malhotra's case 1976 AIR (SC) 800, 1976 (2) SCR 168, 1983 (13) ELT 1582, 1976 (37) STC 319, 1976 (1) SCC 834, 1976 (3) SCR 168, 1976 UPTC 282, 1976 (5)CTR 278, 1976 Taxlr 1519, 1976 CTR (SC) 278, 1976 SCC (Tax) 102 has interpreted the entry No. 4 in the Second Schedule as it understood and has clarified that each of sub-item in entry 4 is a separate commodity and single point levy should be assessed on that basis.

(2.) A notice was therefore issued to the dealers proposing to assess them on the turnover of iron and steel and objections if any, were invited from the dealers against the proposal. The dealers are therefore, at liberty to produce any evidence, connected to the issue for the consideration of the assessing authority. They have not chosen to bring out the factual and legal aspects which differentiate their case from Malhotra's case 1976 AIR (SC)800, 1976 (2) SCR 168, 1983 (13) ELT 1582, 1976 (37) STC 319, 1976 (1) SCC 834, 1976 (3) SCR 168, 1976 UPTC 282, 1976 (5) CTR 278, 1976 Taxlr 1519, 1976 ctr (SC) 278, 1976 SCC (Tax) 102 (SC ). The burden of proof is on them. In fact, they were requested to appear in person on 25th May, 1976 and present their case. They have not responded to the call. The silence of the dealers for about 3 months since the receipt of the notice of assessment clearly indicates that they have no case against the proposed assessment. The dealers buy scraps and convert them into M. S. rounds. In the process of manufacture they obtain scraps also. Hence, the decision of the Malhotra case 1976 AIR (SC) 800, 1976 (2) SCR 168, 1983 (13) ELT 1582, 1976 (37) STC 319, 1976 (1) SCC 834, 1976 (3) SCR 168, 1976 UPTC 282, 1976 (5) CTR 278, 1976 Taxlr 1519, 1976 CTR (SC) 278, 1976 scc (Tax) 102 (SC) will squarely apply to the issue now under consideration. The proposal to assess the dealers on their sale of iron and steel does not arise as a result of any new impost. It is already there in the statute book. Its application and consequent assessment has been postponed due to varying interpretation of the statute. Once the deadlock is resolved the levy will become applicable ab initio. This cannot be termed as retrospective taxation. The non-collection of sales tax by the dealers on their sales cannot be a plea to forbear from collecting the taxes due from the assessee. The department has never conceded that the sale of iron and steel by the assessee is not liable to tax. The matter is under dispute from the beginning and hence, the dealers should have made necessary provisions towards future liability in the event of the issue being decided against them. Anyhow, the question of waiver should be addressed to the concerned authorities. The sale of machinery by the dealers is assessable as per the decision of the Madras High Court in Palani Andavar Mills'case. The dealers have failed to substantiate their objections to the proposed assessment and hence, they are rejected. I therefore finally determine the total and taxable turnover of the dealers for the year 1967-68 at Rs. 19, 53, 100. 15. . . . . . . . . . . . " * Referring to the above, the contention that is raised on behalf of the petitioners by their learned counsel is that the sum and substance of the above Government orders relating to "waiver" has not been followed. It is common ground that assessment order dated 28th June, 1976 is involved in these writ petitions, and the subject-matter of these proceedings are iron and steel, pending disposal before the Appellate Assistant commissioner. Under these circumstances, when a contention is raised that proper appreciation has not been (made) with respect to the period in between 10th April, 1970 - judgment rendered by the Madras High Court, and the reversal of the said judgment by the Supreme Court on 19th January, 1976 by the authorities concerned, this Court is of the view, after taking into consideration the several contentions raised by the learned counsel for the petitioners, that the said contention now put forward by the petitioners herein cannot be sustained. This Court has considered all the facts and circumstances in this case and this Court is of the opinion that the rights of the petitioners are not infringed by the orders and notifications referred to above relating to item No. 4-A, Second Schedule to the Tamil Nadu General Sales Tax act. On a careful and anxious consideration of the contentions raised by either side, this Court is of the opinion that the contentions put forth by the learned counsel for the petitioners cannot be upheld in view of the fact that all the proceedings mentioned in the Government orders are only proceedings in between the time of assessment and which are to be availed of by the petitioners. Therefore, no prejudice is caused even if it is to be admitted that the strict spirit and tenor of the Government orders have not been followed by the authorities concerned. Further, the right of revision is also available to the petitioners since they themselves admit that appeals are pending disposal before the Appellate Assistant Commissioner. Therefore, this court at this stage does not want to express any opinion with regard to the various contentions put forth by the learned counsel for the petitioners and confines itself to the question whether any prejudice has been caused to them or not if there had been any non-application of the strict spirit and tenor of the government orders, and this Court is of the view that no prejudice has been caused. The writ petitions are, therefore, devoid of merits and hence they are liable to be dismissed. So far as the stay is concerned that the parties should not be allowed to collect the tax that had been fixed by the authorities, this court is of the view that it is for the petitioners to move the appropriate forum, viz. , the Appellate Assistant Commissioner, for the said remedy; and if stay is granted by this Court, certainly the said order amounts to interference of the discretion vested with the Appellate Assistant Commissioner. The contention of the petitioners regarding grant of stay by this Court, is also answered accordingly. The petitioners are at liberty to move the Appellate assistant Commissioner regarding stay. Therefore, all these three writ petitions are dismissed. Under the circumstances of the case, there is no order as to costs. The appellate Assistant Commissioner is directed to dispose of the appeals within two months from the receipt of the records from this Court.