Hotel Rajdoot Pvt. Ltd. vs Sales Tax Officer And Ors.
2004 Latest Caselaw 523 Del

JUDGMENT

B.C. Patel, C.J.

1. These writ petitions raising common question are disposed of by a common judgment and the facts are taken from W.P. (C) No. 1819 of 2003. The facts of W.P. (C) No. 7975 of 2002 are identical to W.P. (C) No. 1819 of 2003.

2. The petitioner is a registered dealer under the Delhi Sales Tax Act, 1975 (hereinafter referred to as "the Act"). The dealers who are registered are required to file returns at such intervals as may be prescribed. Incidence and levy of tax are found in Chapter II of the Act. Chapter II of the Delhi Sales Tax Rules, 1975 (hereinafter referred to as "the Rules") refers to incidence and, levy of tax. The period of turnover is prescribed in Rule 6. Sub-rule (1) of Rule 6 refers to the taxable turnover under Sub-section (2) of Section 4 of the Act and return period in relation to a dealer referred in Sub-section (2) of Section 21 of the Act. For the said purpose one will have to refer to Chapter V of the Rules wherein Rule 21 refers to the return period.

3. The assessment procedure is prescribed in Section 23 of the Act. Section 41 of the Act refers to production and inspection of accounts and documents and search of premises.

4. In the instant case, the petitioner is a registered dealer carrying on business and was required to file a quarterly return, as per the provisions contained in the Act for the quarter April 1, 2002 to June 30, 2002 within the period of 45 days, i.e. to say on or before August 14, 2002. However, the officers of the sales tax department visited the premises of several dealers including that of the petitioner and on considering the report submitted by the reporting team the assessing officer issued a notice dated July 18, 2002, the copy of which is produced at page 41, requiring the dealer to attend his office and to show cause as to why the dealer should not be assessed as to the best of judgment and why penalty should not be imposed under Section 56 of the Act.

5. In response to the said notice, the dealer appeared and pointed out the fact that the dealer cannot be assessed on a single day's transaction. The assessing officer considering the material placed before him arrived at a conclusion that there was suppression of sales and, therefore, he proceeded with the assessment proceedings and framed assessment on September 25, 2002, a copy of which is produced at page 44 (annexure D). It is this assessment order which is the subject-matter of this writ petition. The question, which is required to be determined by the court is whether the assessing officer can assess the dealer without calling upon him to file a return ?

6. Section 23 of the Act refers, to assessment. We think it proper to reproduce Sub-sections (1) to (5) with proviso, which read as under:

"(1) The amount of tax due from a registered dealer shall be assessed separately for each year during which he is liable to pay the tax:

Provided that when such dealer fails to furnish a return relating to any period of a year by the prescribed date, the Commissioner may, if he thinks fit, assess the tax due from such dealer separately for that period or any other period of such year:

Provided further that the Commissioner may, subject to such conditions as may be prescribed and for reasons to be recorded in writing, assess the tax due from any dealer for a part of a year.

(2) If the Commissioner is satisfied that the returns furnished in respect of any period are correct and complete, he Shall assess the amount of tax due from the dealer on the basis of such returns.

(3)(a) If the Commissioner is not satisfied that the returns furnished in respect of any period are correct and complete and he thinks it necessary to require the presence of the dealer or the production of further evidence, he shall serve on such dealer in the prescribed manner a notice requiring him on a date and at a place specified therein either to attend and produce or cause to be produced all evidence on which such dealer relies in support of his returns, or to produce such evidence as is specified in the notice.

(b) On the date specified in the notice, or as soon as may be thereafter, the Commissioner shall, after considering all the evidence which may be produced, assess the amount of tax due from the dealer.

(4) If a dealer fails to comply with the terms of any notice issued under Sub-section (3), the Commissioner shall assess to the best of his judgment the amount of tax due from him.

(5) If a dealer fails to furnish returns in respect of any period by the prescribed date, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment the amount of tax, if any, due from him."

7. According to the scheme, it appears that Sub-section (1) refers to a period. Sub-section (1) specifically points out that the dealer shall be assessed separately for each year during which he is liable to pay the tax. However, the period of a return may not be of twelve months, but the period may be either monthly or quarterly. First proviso to Sub-section (1) of Section 23, empowers to assess the tax due for "any period" or "any other period of such year". The words "any period" mean the period which is already specified, i.e., quarterly or monthly. Latter part of the proviso refers to "or any other period of such year". The words "any other period" is for a period other than the one which is not specified. When a person who is a registered dealer and is required to file the returns either monthly or quarterly, he would ordinarily be required to file a return for such a period before the prescribed date. If a registered dealer fails to file the return as required for that quarter/month of a year, such a dealer may be assessed for such quarter/month of a year, after giving the dealer a reasonable opportunity of being heard. In a given case, a dealer is carrying on sale for a specified period only and/or temporarily and who is not required to file a return either monthly or quarterly would be covered by latter part, i.e., "any other period of such year". When sale takes place in an exhibition or such special sales, or a dealer is registered in the latter part of a year, the latter part of second proviso may be invoked. Thus Sub-section (1) of Section 23 refers to the period for which tax is to be assessed. It cannot be said that in view of the proviso to Sub-section (1) it is open to assess for any period despite the fact that the period is specified, i.e., quarterly and before the date prescribed for filing a return, or for such period of a year without calling upon the dealer to file a return. In view of Sub-rule (2) of Rule 21, assessing authority, for the reasons to be recorded in writing may fix a monthly period for a registered dealer notwithstanding the fact that period prescribed is for a quarter. Such is not the case here.

8. Rule 21 of the Delhi Sales Tax Rules, 1975 (hereinafter referred to as "the Rules") is required to be considered for this purpose and we reproduce Rule 21 with its three sub-clauses as under :

"21. Return period.--(1) Every registered dealer shall furnish returns in form ST-11 quarterly, within thirty days from the expiry of each year :

Provided that the registered dealer, whose admitted tax liability in the quarter exceeds one thousand rupees, can furnish the returns within forty-five days from the expiry of the quarter :

Provided further that the registered dealer, whose gross turnover under local sales tax and Central sales tax in the quarter is nil, shall furnish the return within fifteen days from the expiry of the quarter.

(2) Notwithstanding the provisions of Sub-rule (1), the appropriate assessing authority may, for reasons to be recorded in writing, fix a monthly 'return period' for a registered dealer. The monthly return shall be furnished to it by the fifteenth day of the next month.

(3) An order passed under Sub-rule (2) shall remain in force for not less than one year and shall continue until the appropriate assessing authority may, by order direct on the application of the dealer that he shall furnish returns quarterly in accordance with the provisions of these rules from the commencement of such quarter as may be specified therein."

9. Reading the rule, it is very clear that returns are required to be furnished within 30 days from the expiry of each quarter. However, the first proviso permits a registered dealer whose admitted liability exceeds one thousand rupees to file a return within a period of 45 days from the expiry of the quarter. The period can be reduced in view of further proviso. Sub-rule (2) provides for a monthly return.

10. So far as proviso to Sub-section (1) of Section 23 of the Act is concerned, it empowers the Commissioner to assess the tax due from the dealer separately for a specified period of a year or any other period of such year. The further proviso to Section 23 indicates that for the reasons to be recorded in writing the dealer can be assessed and taxed. However, it is subject to such conditions as may be prescribed and for the reasons to be recorded in writing. So far as the conditions are concerned, they having not been prescribed, at least reasons are required to be recorded in writing to assess the dealer, for which he is assessed separately for a quarter/month on his failure to furnish a return before the prescribed date or for any other period of such year.

11. Sub-section (2) of Section 23 of the Act refers to the satisfaction of the Commissioner about the details furnished and to assess the amount of tax due from the dealer on the basis of such returns. Sub-section (3)(a) also refers to the returns furnished by the dealer but it indicates as to how the assessing officer shall proceed if he is not satisfied with the returns. Sub-section (5) of Section 23 refers to the failure of the dealer to furnish returns in respect of any period by the prescribed date. Thus, for a period if the return is not filed on or before the date prescribed, it will be open for the assessing officer to assess to the best of his judgment. However, a reasonable opportunity of being heard is required to be given. Sub-section (5) of Section 23 can be invoked where the dealer has failed to file a return in respect of any period by the prescribed date and reasonable opportunity of being heard is given to a dealer and not otherwise. In the instant case notice was given by the assessing officer to assess to the best of his judgment without there being failure on the part of the dealer in submitting the returns.

12. One has to consider Section 21 of the Act which refers to periodical payment of tax and filing of returns. Sub-section (2) empowers the Commissioner to call upon the dealer either registered or not to submit returns of turnover on or before a specified date or dates and to such authority as he may prescribe. This provision will apply to a registered dealer as well as to every other dealer meaning thereby who is not a registered dealer. Looking to the scheme, it is very clear that every dealer is required to submit his returns. However, in a given situation Sub-section (2) authorises the Commissioner to call upon a registered dealer or other dealer to file his return. It is also required to be noted that if a dealer is called upon to file return under Sub-section (2), failure of the same contemplates a penalty, as indicated in Section 55 of the Act. Ordinarily if the return is not filed when one is required to file, then in view Sub-section (5) of Section 23, it would be open for the assessing officer to assess to the best of his judgment, the amount of tax, if any, due from the dealer after giving a reasonable opportunity of being heard.

13. On behalf of the Revenue, it was submitted that in view of the verification carried out by a team of officers, the report was laid before the assessing officer, who recorded his reasons to proceed ahead in the matter and issued a notice. Not only that after showing reasons and giving an opportunity of hearing, the assessing officer made an order of assessment and, therefore, in ordinary course it is for the petitioner to approach the appellate officer to make his grievances. On the other hand, it was submitted by the petitioner that procedure adopted for assessment in this case is unknown. Under the Act, mere visit or even inspection of books of account would not authorise the assessing officer to assess the dealer. It was also submitted that it was not his own conclusion. We are not required to examine this aspect, as we are of the opinion that looking to the Scheme of the Act, it is very clear that the assessing officer is required to call upon the dealer to file a return and thereafter to assess as per the procedure contemplated in Section 23 of the Act.

14. It would be also necessary to refer, at this juncture, to Rules 25 and 26 of the Rules. Rule 25 refers to notice for assessment of tax or imposition of penalty. The said rule contemplates that notice for both the purposes or any one of the purpose shall be issued in the prescribed form, as indicated in Rule 25. After issuance of notice, how the assessing officer shall proceed is also indicated in Rule 26. Proviso to Sub-rule (1) of Rule 26 will apply to a dealer belonging to such categories as may be specified by the Commissioner by a notification in the official gazette. The proviso clearly indicates that returns are required to be filed and on the basis of those returns the assessing officer has to proceed further.

15. Section 41 of the Act refers to the search. However, on the basis of the search if the dealer is to be assessed, then what is the procedure to be followed is the question ? In the instant case, as indicated earlier, for the quarter April 1, 2002 to June 30, 2002 the dealer was required to file his return on or before August 14, 2002. On June 16, 2002 the team visited the dealer and on July 18, 2002 notice was issued. This notice again is not in accordance with the forms prescribed. If we look at the prescribed forms, there is a departure. Rule 25 which prescribes notice, i.e., in form ST-13, if notice is issued under Sub-section (3) or Sub-section (5) of Section 23 or in form ST-14, if issued under Sub-section (6) of Section 23 or in form ST-15, if issued under Section 24. So far as second proviso to Sub-section (1) of Section 23 is concerned, learned counsel for the Revenue could not point out any form prescribed. We are just referring to this form as it refers to filing of return. In the instant case, notice, which is issued, refers to form ST-13. However, the word "return" is omitted from the notice, which is in the prescribed form.

16. Learned counsel for the Revenue canvassed before us that the second proviso to Section 23 does not refer to any notice or any return and, therefore, it was open for the assessing officer to issue notice and to proceed with the assessment proceedings. We have indicated the provision which refers to filing of a return or calling upon the dealer to file a return. Sub-section (1) of Section 23 including provisos refers to a dealer only and it has nothing to do with issuance of a notice or making an assessment outside the period indicated therein. Sub-section (2) of Section 23 refers to the satisfaction qua returns filed by the assessed and to complete the assessment on the basis of such returns. Sub-section (3) refers to filing of return but non-satisfaction of the Commissioner. The procedure is prescribed in Sub-section (3) and failure of compliance to any terms of the notice issued under Sub-section (3) indicates the procedure to be followed by the Commissioner in Sub-section (4) of Section 23. However, if the return is not filed by the assessed before the prescribed date, then the procedure to be followed is indicated in Sub-section (5) of Section 23. It is also required to be noted that under Sub-section (2) of Section 21, dealer either registered or not can be called upon to furnish the return. Reading the Scheme of the Act, it is very clear that the dealer is required to submit a return. If he does not submit, then he can be called upon to submit a return and thereafter procedure is to followed, namely, best judgment assessment. The best judgment assessment is contemplated under Sub-section (4) of Section 23 and Sub-section (5) of Section 23. The period is prescribed in Sub-section (1) of Section 23 read with Rule 21 and it is for the dealer to submit his return within the time prescribed in view of Sub-section (1) of Section 23 read with Rule 21 and if a dealer fails to furnish the return then what procedure is to be followed is indicated in Sub-section (5) of Section 23. In the present case, the dealer has not failed in furnishing the return, as the specified period was not over before issuance of notice and by the notice the dealer was not called upon to file a return.

17. It is in view of this, we are of the opinion that the dealer could not have been assessed without calling upon him to file a return. Reading the provision it is very clear that there is no question of making best judgment assessment without calling upon the dealer to file return or having failed to furnish a return though required to file under law. Consequently, the order of assessment (annexure D) dated September, 25, 2002 is hereby quashed. Similarly, the assessment order dated August 31, 2002 in W.P. (C) No. 7975 of 2002 is also quashed. It will be open for the assessing officer to proceed with the returns which the dealers have filed and to frame the assessment in accordance with law. It may not be understood that we have expressed any opinion about the merits of the case and it will be for the assessing officer to proceed in accordance with law.

18. As a result of this finding, we have to dispose of other writ petitions in the following manner:

(i) So far as W.P. (C) Nos. 1826 of 2003 and 6235 of 2003 are concerned, they are filed against the notice issued by the assessing officer and, therefore, it would be open for the assessing officer to proceed in accordance with law and in view of this judgment complete the assessment.

(ii) So far as W.P. (C) No. 1830 of 2003 is concerned, appeal has already been filed, which is pending before the appellate authority and the appellate authority shall disposal the appeal in accordance with law.

(iii) So far as W.P.(C) Nos. 8274-75 of 2004 are concerned, the dealer has hot preferred an appeal and has approached this Court. We direct the dealer to prefer appeal or revision within a period of four weeks from today and the appeal or revision shall be disposed of in accordance with law. Accordingly, all the writ petitions are disposed of. No order as to costs.