S K MANEKIA Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THE applicants in this reference under section 34 (1) of the Bombay Sales Tax Act, 1953, are a partnership firm carrying on business in crockery, glassware, chinaware, glazedware, earthenware and cutlery. THE applicant-firm was registered as a dealer under the Bombay Sales Tax Act, 1946, and the Bombay Sales Tax Act, 1953. For the assessment period 1st April, 1952, to 31st October, 1952, the applicants were assessed by the Sales Tax Officer, B Ward, Bombay, on 31st July, 1953. On 13th January, 1956, the applicants' office was raided by the Sales Tax Officer (VI), Enforcement Branch, Bombay, and certain books of account were seized. THEreafter, on 8th March, 1956, a notice under section 15 of the Bombay Sales Tax Act, 1953 (hereinafter for the sake of convenience referred to as "the 1953 Act"), was issued to the applicants by the said Sales Tax Officer, and in pursuance of the said notice the said Sales Tax Officer reopened the assessment of the applicants for the said period 1st April, 1952, to 31st October, 1952, and reassessed them on the ground that they had suppressed certain sales effected by them. Against this order of reassessment the applicants filed an appeal to the Assistant Commissioner of Sales Tax (Appeals III), Bombay, and by his order dated 12th August, 1957, the said Assistant Commissioner set aside the said order of reassessment on the ground that the said notice under section 15 served on the applicants was of a period shorter than the one required under the said section. THEreupon on 11th October, 1957, the applicants were served with a fresh notice under the said section 15 by the said Sales Tax Officer. This notice was served upon one N. A. Merchant, the manager of the applicant-firm. THE applicants appeared before the said Sales Tax Officer through their Advocate, and on 6th January, 1958, the Sales Tax Officer passed an order reassessing the applicants. In the appeal filed by the applicants against the said order the Assistant Commissioner of Sales Tax (Appeals IV), Bombay, by his order dated 9th February, 1962, reduced the quantum of suppressed sales arrived at by the said Sales Tax Officer and confirmed the rest of the order appealed against. Against this appellate order the applicants filed a revisional application to the Deputy Commissioner of Sales Tax, and by his order dated 31st October, 1963, the Deputy Commissioner of Sales Tax, Bombay City Division (Appeals III), Bombay, further reduced the quantum of suppressed sales and dismissed the revisional application so far as the other matters were concerned. A second revisional application preferred by the applicants to the Tribunal was dismissed by the Tribunal on 20th December, 1966. On 7th June, 1967, the applicants made a rectification application to the Tribunal contending that certain facts, which were matters of record, and certain submissions advanced by the applicants had not been recorded in the order of the Tribunal dismissing the applicants' said revisional application. By its order dated 8th December, 1967, the Tribunal dismissed the said application stating that the facts which, according to the applicants, had not been mentioned in its said order dated 20th December, 1966, had in fact been referred to therein.

(2.) AMONGST the various contentions urged by the applicants were a contention that at the material time cups, saucers, dishes, etc. , sold by the applicants were liable to general tax at the rate of one-half of an anna in the rupee under section 6 of the Bombay Sales Tax Act, 1946, and were not chargeable to special tax at the rate of one anna under entry 17 of Schedule I to the said Act; that the said notice under section 15 of the 1953 Act having been served on the said Merchant was not a valid service in law and, therefore, the reassessment proceedings were not valid; and that since the first order of reassessment made on 29th June, 1956, had been set aside in appeal by the Assistant Commissioner of Sales Tax, the said Sales Tax Officer had no jurisdiction to initiate fresh reassessment proceedings in respect of the said period. All these contentions were negatived by the revenue authorities and the Tribunal.

(3.) BEFORE we turn to the arguments advanced at the Bar, it is necessary to refer to the relevant statutory provisions. There is no dispute before us that in respect of the assessment period 1st April, 1952, to 31st October, 1952, during which period the Bombay Sales Tax Act, 1946, was in force, any reassessment proceedings taking place after the repeal of the said Act would have to be taken under section 15 of the 1953 Act. Under the said section 15, if in consequence of any information which had come into his possession the Collector of Sales Tax was satisfied that any turnover in respect of sales or purchases of any goods chargeable to tax had escaped assessment in any year or had been under-assessed or assessed at a lower rate or any deductions had been wrongly made therefrom, the Collector had the power, within the period prescribed in that section, to assess or reassess, as the case may be, the amount due from such dealer, after serving upon the dealer a notice as mentioned in the said section. The relevant provisions with respect to notice as contained in sub-section (1) of the said section 15 are, "the Collector may,. . . . . serve on the dealer liable to pay the tax in respect of such turnover a notice containing all or any of the requirements which may be included in a notice under sub-section (3) of section 14 and may proceed to assess or reassess the amount of the tax due from such dealer". Sub-section (3) of section 14, referred to in the said section 15 (1), related to the issue of a notice in regular assessment proceedings requiring the presence of a dealer who has furnished his returns or requiring such dealer to produce his evidence. Section 45 (1) of the 1953 Act conferred upon the State Government the power to make rules for carrying out the purposes of the said Act. Sub-section (2) of that section set out certain particular matters which the rules might provide for. Clause (z) of the said sub-section (2) was as follows : " the manner in which, and the time within which, the applications shall be made, information furnished and notices served, under this Act. " In pursuance of the power conferred by the said section 45 (1) the State Government inter alia made the Bombay Sales Tax (Procedure) Rules, 1954. Rule 2 of the said Rules is the interpretation clause and defines certain terms used in the said Rules. The relevant portion of the said rule 2 was as follows : "2.Definitions.- In these rules, unless there is anything repugnant in the subject or context - (i) 'agent' means a person authorised in writing under clause (a) or (c) of section 43 to appear on behalf of a dealer or other person before any sales tax authority". Rule 46 of the said Rules provided that an authorisation given to an agent was to continue to be valid for the purpose of appearance in an appeal against, or application for revision of, any order passed in the proceeding in respect of which such authorisation was given. The proviso to that rule required a separate authorisation for appearance in proceedings relating to each separate period for which an order of assessment was to be made or had been made under section 14 of the 1953 Act. Chapter XI of the said Rules deals with service of notices. That chapter contained only one rule, namely, rule 47. The material provisions of rule 47 were as follows : "47. Notices.- (1) Notices under the Act or any rules made thereunder may be served by any of the following methods :- (i) by delivery to the addressee or his agent, by hand of a copy of the notice; (ii) by post : Provided that if upon an attempt having been made to serve any such notice by any of the abovementioned methods, the sales tax authority concerned is satisfied that the addressee is evading the service of notice or that for any other reason, the notice cannot be served by any of the abovementioned methods, the said authority shall cause such notice to be served by affixing a copy thereof - (a) if the addressee is a dealer on some conspicuous part of the dealer's office or the building in which the dealer's office is located, on upon some conspicuous part of any place of the dealer's business last notified by the dealer, and (b) if the addressee is not a dealer, on some conspicuous part of his residence or office or the building in which his residence or office is located, and such service shall be as effectual as if it had been made on the addressee personally. " Sub-rule (2) of the said rule 47 dealt with the formalities to be observed by the serving officer, sub-rule (3) with the mode of service by post and sub-rule (4) with the return of service to the officer who directed such service and the course to be adopted by that officer thereupon. Relying upon the aforesaid provisions, Mr. Patel, the learned counsel for the applicants, submitted that under section 15 of the 1953 Act the notice could only be served upon the dealer personally and that assuming it could be served upon an agent, by reason of the provisions of the said rule 47 (1) that agent could only be an agent as defined by the said rule 2 (i ). Mr. Patel further submitted that, in the present case, the notice was not served upon the applicants, which would be either by sending the notice to them by registered post with acknowledgment due as required by the said rule 47 or by service personally upon a partner of the applicant-firm, but was served upon the manager of the applicants who was not authorised in writing as required by the said rule 2 (i), and the service was, therefore, invalid and contrary to law. Mr. Patel's contention was that the proper service of a valid notice under the said section 15 was the foundation of the jurisdiction of the Sales Tax Officer who acted under delegated authority in making the reassessment order to initiate reassessment proceedings and make an order of reassessment and that, in the present case, the service being contrary to law the Sales Tax Officer acquired no jurisdiction to initiate the said reassessment proceedings under section 15 or to reassess the applicants and that the said reassessment proceedings were invalid.