State Of Gujarat: State Of Maharashtra: Sales Tax Officer: State Of Gujarat vs Patel Ramjibhai Danabhai: M. S. Padvi: R. G. Ajmerj And Company: Billmoregardevi Mining Syndicate Private LTD.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1979 Supreme(SC) 278

SUPREME COURT OF INDIA
Y.V. CHANDRACHUD CJI., R.S. SARKARIA, N.L. UNTWALIA, P.S. KAILASAM AND E.S. VENKATARAMIAH, JJ.
The State of Gujarat and another etc., Appellants
Versus
Patel Ramjibhai Danabhai and others etc., Respondents.
Civil Appeals Nos. 287-290; 2450-2451; 2529 of 1972 and 303 of 1974, D/- 1-5-1979.
WITH
State of Maharashtra, Appellant
Versus
M. S. Padvi, Respondent.
WITH
Sales Tax Officer and others, Appellants
Versus
M/s. R. G. Ajmeri and Co. and another, Respondents.
AND
State of Gujarat, Appellant
Versus
M/s. Billmore Gandevi Mining Syndicate (P) Ltd., Respondent.
Advocates appeared
Mr. R. M. Mehta, Sr. Advocate (287-90, 2529 and 303), Mr. M. C. Bhandare Sr. Advocate (2450-51), Mr. V. S. Desai Sr. Advocate (2450-2451), (Mr. M. N. Shroff, Advocate with them), for the Appellants in all the matters, Mr. I. N. Shroff, Advocate (in C. A. Nos. 287-90/72), Mr. R. P. Bhatt, Sr. Advocate (Mr. B. R. Agarwala, Advocate with him) (in C. A. Nos. 2450-51/72) and Mr. J. Ramamurthi and Miss R. Vaigai, Advocates, (for No. 1) in C. A. No. 2529/72, for Respondents; Mr. M. N. Shroff, Advocate, for the Intervener in C. A. Nos. 2450-51/72.

Advocates:
B.R.AGRAWAL, I.M.SHROFF, J.RAMAMURTHY, M.C.BHANDARE, M.N.SHROFF, R.M.MEHTA, R.P.BHATT, R.VAIGAI, V.S.DESAI

Headnote:
Bombay Sales Tax Act, 1953 – Sections 11, 14, 15, 33, 36, 35 – Constitution of India, 1950 – Articles 226, 14 – Sale Tax – Facts in Writ Petition from which C.A. has arisen, are that writ petitioners 1, 4, and 6 were running business in partnership under the name of The Laxmi Vijay Saw Mill from November 2, 1955 to October 31, 1959 – From November 1, 1959, writ petitioners 1 to 7 together with one Patel Muljibhai Bemjibhai, formed another partnership and executed a deed to that effect on Feb. 1, 1960 – This partnership was dissolved on November 10, 1964 – On November 13, 1964, the Sales Tax Officer, Anand, was informed about this dissolution. – Held, It cannot be said that the procedure provided in S. 33 (6) is more onerous than the one specified in S. 35. – The requirement as to issue of a notice to the defaulter and giving of an opportunity of 1104 being heard, is a common feature of both the sections. – It is true that under Section 33 (6), the assessment is made on best-judgment basis. – Nevertheless, it cannot be made arbitrarily or capriciously. – It has to be made after taking into account all relevant material gathered by the Taxation Officer or produced before him by the assessee in response to the notice. – If an assessment under Section 33 (6) is made upon inadequate materials, but on honest and fair guess-work, then it will be but due to the deliberate default of the assessee in supplying the necessary information. – The differential mode of assessment under Section 33 (6) is thus founded upon rational criteria. – Court was dealing with the case of a registered dealer under the C. P. and Berar Sales Tax Act, 1947. – It was in that context that this Court, by a majority of 3 to 2, held that Sec. 11 (4) (a) of that Act was violative of Art. 14 of the Constitution. – Here court is concerned with the cases of unregistered dealers under the Bombay Act. – Upon a proper construction of two provisions, in juxta-position to each other, such unregistered dealers can be proceeded against under S. 33 (6) of the Bombay Act of 1959 or Sec. 14 (6) of the Bombay Act of 1953, as the case may be, and not under Sec.35/Sec. 15 of the said Acts. – There is no overlapping between these two, because Sec. 35 cannot be applied to the case of an unregistered dealer falling within the purview of the special provision in Section 33 (6). – This was clear from sub-section (2) of S. 35, as it stood at the time material to these cases. – Court is of opinion that Sec. 33 (6) of the 1959 Act and Sec. 14 (6) of the 1953 Act do not violate Art. 14 of the Constitution, and are valid – Appeals Allowed

Judgment

SARKARIA, J.:- This judgment will dispose of two batches of appeals. The first batch includes Civil Appeals 287 to 290 and 2529 of 1972 and Civil Appeal 303 of 1974 preferred by the State of Gujarat/Sales Tax Officer on the basis of a certificate granted by the High Court. Of this batch, Civil Appeals 287 to 290 of 1972 are directed against a common judgment, dated July 8, 1970, of the High Court of Gujarat; while Civil Appeal 303 of 1974 is preferred against a judgment, dated July 4, 1973, of the Gujarat High Court, which follows its earlier decision in Patel Ranjibhai Dhanbhai v. A. S. Tambe, Sales Tax Officer, Anand.

2. The Second batch comprises of Civil Appeals 2450 and 2451 of 1972 and Civil Appeals 1260 and 1213 of 1975. They have been preferred by the state of Maharashtra after obtaining special leave under Art. 136 of the Constitution. Of these, the first two are directed against an Order, dated April 19, 1972, of the Maharashtra Sales Tax Tribunal which, in turn, is based on a judgment, dated October 11/12, 1971, of the Bombay High Court in S. C. A. No. 444 of 1968 (B. M. Jain v. State of Maharashtra); and the other two are directed against a judgment, dated October 11/12, 1971, of the High Court of Bombay.

3. The common question posed for our decision in all these appeals is, whether any of the provisions in Ss. 33 (6) and 35 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 1959 Act) which are in pari materia with Sections 14 (6) and 15, respectively, of the Bombay Sales Tax Act, 1953 (thereinafter called the 1953 Act), offend Art. 14 of the Constitution and, as such, are void. The High Courts/Tribunal in the concerned appeals have answered this question in affirmative, so far as S. 33 (6) of 1959 Act/14 (6) of 1953 Act is concerned.

FIRST BATCH

Facts in C. A. 287/72.

4. The facts in the Writ Petition (S. C.A. No. 191 of 1968) from which C.A. 287/72 has arisen, are that writ petitioners 1, 4, and 6 (respondents herein) were running business in partnership under the name of The Laxmi Vijay Saw Mill from November 2, 1955 to October 31, 1959. From November 1, 1959, writ petitioners 1 to 7 together with one Patel Muljibhai Bemjibhai, formed another partnership and executed a deed to that effect on Feb. 1, 1960. This partnership was dissolved on November 10, 1964. On November 13, 1964, the Sales Tax Officer, Anand, was informed about this dissolution.

5. On November 11, 1965, the Sales Tax Officer issued notices in Form No. 13 under Section 14 of the 1953 Act, requiring the erstwhile partners to show cause why they should not be assessed under sub-sec. (6) of S. 14 of the said Act. and why a penalty on account of their failure to get their firm registered, when they were liable to pay tax, be not imposed. These notices covered the period from April 1, 1955 to December 31, 1959. In reply to the notices, the respondents contended that since the old partnership formed in 1955 and the new partnership formed on Nov. 1, 1959, had both been dissolved, the proposed action was illegal, there being no machinery under the 1953 Act to assess a dissolved firm. A further objection was raised that the assessment proposed was time-barred.

6. At this stage, the respondents moved the High Court by a petition (S. C. A. 191/68) under Art. 226 of the Constitution, alleging that the turnover of the business during the relevant period, never exceeded the limit of Rupees 900/- in the past and, therefore, the question of their incurring liability to get the firm registered as a dealer and to file sales-tax returns under the 1959 Act, did not arise.

7. During the pendency of this writ petition, on Sept. 9, 1968, the Sales Tax Officer 1100 assessed the writ petitioners under S. 33 (6) of the 1959 Act on best judgment basis, and an amount of Rupees 9,771,45 was determined as tax arrears and a further amount of Rupees 10,000/- was imposed as penalty. A notice making demand of both these amounts was also issued on Sept. 12, 1959.

Facts of