COMMISSIONER OF SALES TAX Vs. SOUBHAGMAL GHASIRAM

JUDGEMENT

(1.) THIS is a reference under Section 44 (1) of the M. P. General Sales Tax Act, 1958, hereinafter called the Act, made at the instance of the Commissioner of Sales Tax, M. P. The question of law referred to this Court is as follows: Whether, in the facts and circumstances of the case, the assessment could be lawfully reopened under Section 19 (1) of the M. P. General Sales Tax Act, 1958 ?

(2.) THE material facts giving rise to this reference briefly are as follows: On 9th February, 1966, an assessment order was passed by the Sales Tax Officer determining the gross turnover at Rs. 4,18,429 though according to the return it was Rs. 5,09,027. According to the return, the taxable turnover was Rs. 5,60,600, but the Sales Tax Officer determined the taxable turnover at Rs. 2,51,398. Thus, the assessing authority determined the gross and taxable turnovers substantially less than the figures shown in the return filed by the assessee. Later on, the Sales Tax Officer issued a notice under Section 19 (1) of the Act for reassessment. The explanation offered by the assessee was not accepted and the Sales Tax Officer reassessed the tax payable by the assessee. On appeal, the order passed by the Sales Tax Officer was set aside and the case was remanded by the Appellate Assistant Commissioner, Sales Tax, Ujjain, to the Sales Tax Officer, for reassessing the petitioner in the light of the observations made in his order dated 27th June, 1970. Aggrieved by that order, the assessee preferred an appeal before the Tribunal. It was urged before the Tribunal on behalf of the assessee that the assessing authority had no jurisdiction under Section 19 (1) of the Act to reassess the petitioner. This contention was upheld and the Tribunal held that the ground contemplated by Section 19 (1) of the Act for reassessment did not include perversity of the assessing authority. The Tribunal further held that as there was no bona fide mistake, the case was not covered by the provisions of Section 19 (1) of the Act. In this view of the matter, the Tribunal allowed the appeal and quashed the proceedings under Section 19 (1) of the Act. On an application made by the Commissioner, the Tribunal has referred the aforesaid question of law to this Court for its opinion.

(3.) THE answer to the question referred to this Court turns on the true construction of Section 19 (1) of the Act. That section reads as under: Section 19. Assessment of turnover escaping assessment.-- (1) Where an assessment has been made under this Act or any Act repealed by Section 52 and if for any reason any sale or purchase of goods chargeable to tax under this Act or any Act repealed by Section 52 during any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within five calendar years from the date of order of assessment after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed, in such manner as may be prescribed, to reassess the tax payable by such dealer and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount: Provided that in the case of an assessment made under any Act repealed by Section 52, the period for reassessment on the ground of under-assessment, escapement or wrong deduction shall be as provided in such Act notwithstanding the repeal thereof. The short question for consideration is whether the provisions of Section 19 (1) of the Act are attracted only when a bona fide mistake has crept in the original order or does Section 19 (1) of the Act enable the Sales Tax Officer to initiate proceedings under that provision, within the time prescribed by that provision, if, in good faith, he considers that he has good ground for believing that, for any reason, any sale or purchase of goods chargeable to tax under the Act has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom. It is well-settled that when the words of a statute are clear, plain or unambiguous, the courts are bound to give effect to that meaning irrespective of consequences. When the Act expressly uses the expression "if for any reason" it would not be permissible either for the Tribunal or for this Court to curtail the scope of that expression and hold that the reason contemplated by Section 19 (1) of the Act must be a bona fide mistake on the part of the Sales Tax Officer. The only limitation on the part of the Sales Tax Officer while initiating proceedings under Section 19 (1) of the Act is that he must act in good faith as held by the Privy Council in Commissioner of Income-tax, Bengal v. Mahaliram Ramjidas [1940] 8 I. T. R. 442 (P. C.) while considering a similar provision under the Indian Income-tax Act, 1922. In that case, the Privy Council held that to enable the Income-tax Officer to initiate proceedings under Section 34 of the Indian Income-tax Act, 1922, it was enough that the Income-tax Officer on the information which he had before him and in good faith considered that he had good ground for believing that the assessee's profits had for some reason escaped assessment or had been assessed at too low a rate. The Tribunal, therefore, erred, in our opinion, in holding that the provisions of Section 19 (1) could be invoked only if in the original order there could be shown some bona fide mistake. The scope of the expression "escaped" occurring in Section 19 (1) of the Act came up for consideration before us in Commissioner of Sales Tax, M. P. v. Jeewa Khan [1978] 42 S. T. C. 95. After referring to the decision of the Supreme Court reported in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, Bihar and Orissa [1959] 35 I. T. R. 1 (S. C.), wherein the Supreme Court construed the scope of the expression "escaped" occurring in Section 34 (1) (b) of the Indian Income-tax Act, 1922, we relied on the following observations made by the Supreme Court: We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been submitted, if the Income-tax Officer erroneously fails to tax a part of the assessable income, it is a case where the said part of the income has escaped assessment. The appellant's attempt to put a very narrow and artificial limitation on the meaning of the word 'escape' in Section 34 (1) (b) cannot, therefore, succeed. The Learned Counsel for the assessee contended that, in the instant case, the Sales Tax Officer had, after consideration of the material on record, passed the original order of assessment and, therefore, he had no jurisdiction under Section 19 (1) of the Act to initiate proceedings for reassessment. But, in view of the aforesaid observations of the Supreme Court, it must be held that if the Sales Tax Officer had erroneously failed to assess any sale or purchase of goods chargeable to tax under the Act, it is a case of "escaped assessment". The Tribunal has not found that the action of the Sales Tax Officer in initiating proceedings under Section 19 (1) of the Act was not bona fide. In these circumstances, the view of the Tribunal that the assessing authority had no jurisdiction to initiate proceedings for reassessment under the provisions of Section 19 (1) of the Act cannot be upheld.