Samagya Consultants Pvt. Ltd. vs Commissioner Of Sales Tax And Anr.
2001 Latest Caselaw 56 Del

JUDGMENT

Arijit Pasayat, C.J.

1. The main question that has been urged in support of the writ petition is that no reason was recorded before issuance of notice in terms of Section 24 of the Delhi Sales Tax Act, 1975 (in short, "the Act") and, therefore, subsequent action is illegal.

assessed-petitioner's case in nutshell is that it had produced books of accounts for the assessment year 1996-97 and assessment had been completed. Subsequently, notice dated June 12, 2000, under Section 24 of the Act was issued vide annexure P5. The basic requirement for initiating proceedings under Section 24 of the Act is the existence of reason to believe that any turnover has escaped assessment or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or that any deduction has been wrongly made from turnover.

2. Pursuant to notice, respondents have appeared and have produced the records. Counter-affidavit has also been filed. Stand of the respondents as indicated in the counter-affidavit is that petitioner's claim of having purchased goods that had suffered first point tax is false and that is the reason for which proceedings under Section 24 of the Act were initiated. Reference has also been made to the order passed on July 10, 2000 wherein this aspect has been highlighted. This, according to them, was sufficient compliance of the requirement.

3. In order to appreciate the rival submissions, it is necessary to note Section 24 of the Act, which reads as follows :

"24. Turnover escaping assessment.--(1) Where, after a dealer has been assessed under Section 23 for any year or part thereof, the Commissioner has reason to believe that the whole or any part of the turnover of a dealer in respect of any period has escaped assessment to tax or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable, or any deduction has been wrongly made there from, the Commissioner may,--

(a) within six years from the date of final order of assessment, in a case where the dealer has concealed, omitted or failed to disclose fully the particulars of such turnover ; and

(b) within four years from the date of final order of assessment, in any other case,

serve a notice on the dealer and after giving the dealer an opportunity of being heard and making such inquiry as he considers necessary, proceed to determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover, and the provisions of, this Act shall, so far as may be, apply accordingly.

Explanation.--For the purpose of this section, production before the Commissioner of account books or other evidence from which material evidence could with due diligence have been discovered by the Commissioner will not necessarily amount to disclosure within the meaning of this section.

(2) ................................."

4. Though learned counsel for respondents is correct in stating that on July 10, 2000 there was some indication as to the reason which had weighed with the assessing officer for initiating proceedings under Section 24 of the Act, that according to us is not sufficient. While directing initiation of proceedings under Section 24 of the Act, Sales Tax Officer has to indicate as to why such action was necessary. He must at least indicate what is the basis for his prima facie conclusion about the escapement of assessment or under-assessment or other stipulations in the provision. The exercise cannot be the result of any whim depending on the ipse dixit of the officer concerned. A completed assessment is intended to be reopened on the allegations of escapement of assessment or under-assessment. That being the position, it cannot certainly be legislative intention to authorise the Sales Tax Officer concerned to reopen the assessment without even indicating the basis for his action. In Sales Tax Officer v. Uttareswari Rice Mills [1972] 30 STC 567 it was observed by the apex Court that although the words used in the case under consideration before it were "if for any reason" and not "if the sales tax authority has reason to believe", the difference in phraseology should not make much material difference as a reason cannot exist in vacuum, somebody must form the belief that reason exists and looking to the context the court observed that it should be the sales tax authority issuing the notice who should have reason to believe that turnover of a dealer has escaped assessment or has been underassessed. The approach in the matter has to be practical and not pedantic. The legislative intent is also clear because of the expression used in Section 24 itself, i.e., "Commissioner has reason to believe". The powers of the assessing officer to reopen assessment, though wide, are not plenary. The words used in the statute are "reason to believe" and not "reason to suspect". The expression "reason to believe" postulates belief and existence of reasons for that belief. It postulates that the assessing officer holds the belief induced by the existence of reasons for holding such belief. It contemplates existence of reason on which the belief is founded, and not merely a belief in the existence of reasons inducing the belief. However, there is no requirement in law which postulates recording of reason in the notice to be issued in terms of Section 24 of the Act.

5. Above being the position, the notice issued in terms of Section 24 of the Act is indefensible. Various other points were also taken in the writ petition. We do not think it necessary to deal with them in view of the aforesaid conclusion. Accordingly, we nullify the notice (annexure P5) issued under Section 24 of the Act. We make it clear that we have not expressed any opinion on merits.

The petition stands disposed of accordingly.

Copy of the order be given dusty to counsel for the parties.