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Gujarat High Court
Judgename :B.C.PATEL, K.M.MEHTA
CROMPTON GREAVES LIMITED - Appellant
Versus
STATE - Respondent
S.C.A. 7071 of 1996
Decided On : 11/18/1999
That two distinct conditions are required to be fulfilled before the Asseessing Officer can exercise jurisdiction; (i) he must have reason to believe that turnover has escaped, and, (ii). he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment for the relevant year.
There is no justification in the instant case for issuance of notice for reassessment. There is nothing on the record to show that the Assessing Officer had reason to believe that the turnover escaped and further that he had reason to believe that such an escapement was by reason of the omission or failure on the part of the assessee to make a return or to disclose fully and timely all material facts necessary for the assessment.
[Para 26]
In Courts opinion condition precedent for issuing show cause notices for reopening the assessment did not exist and, therefore, it must be held to be illegal. Even grounds for the longer period of limitation which has been invoked, such as the ground that there was concealment of sales or material particulars or furnishing of incorrect declarations or returns is ill-founded, and hence, the notices for reopening the assessment are bad and illegal.
[Para 27]
In the result, Rule made absolute in all the petitions with cost. Notice for reassessment issued by the respondent No. 3, at Annexure `M in SCAs No. 7072/96 and 7073/96, and at Annexure `E in SCA No. 7074/96, stand quashed in all the matters.
[Para 28]
( 1 ) BOTH these petitions are disposed of by this common judgment as question involved in both the petitions is same.
( 2 ) SO far as the facts are concerned, we have taken the facts from Special Civil Application no. 7070/96.
( 3 ) IN the present petition, the petitioner- M/s Crompton Greaves Ltd and another are challenging the notice of re-assessment issued under Section 44 of Gujarat Sales Act (hereinafter referred to as "the Act") dated 20/07/1996 issued by the Sales Tax Officer (II), Ahmedabad for assessment year 1991-92 (and 1992-93) on the ground that deductions with regard to sales made against certificate in Form 17a prescribed under Rule 24 (2-A) of the Gujarat Sales Tax Rules, 1970 (hereinafter referred to as "the Rules") read with section 12 (1) were erroneously allowed in the assessment made under section 41. In fact, grievance is made by the petitioners that they have neither made any sale on the strength of certificate in Form 17a nor claimed any deduction during the assessment year 1991-92. Even the assessing officer had no occasion to allow such deductions. BACKGROUND OF FACTS:
( 4 ) THE petitioner No. 1 is a company incorporated under the provisions of the Companies Act, 1956 and holds valid registration certificate under the provisions of Gujarat Sales Tax Act, 1969 as well as Central Sales Tax Act, 1956. The petitioner No. 2 is the branch Accountant of the petitioner No. 1-company.
( 5 ) THE petitioenrs, interalia, carry on the business of manufacture and sale of electrical goods falling under Item 26 of Schedule II attached to the Act. From the record it appears that on 9. 2. 1993 officers from the office of the Assistant Commissioner of Sales Tax, Enforcement Branch, visited the business premises of the petitioners, and passed an order under section 59 (4) (5) of the Act. The books of accounts were seized, statement of Shri Vinayak B. Shenolikar, Branch Manager of the petitioner No. 1-company was recorded. The Sales Tax Officer (IV), unit I issued a show cause notice on 26. 2. 1993 for obtaining clarification on certain points which has been produced at annexure "e1" at page 56. The petitioner through his advocate filed reply/explanation on 26. 3. 93 in response to the show cause notice. Petitioners have produced the said reply at annexure "f" at page 64 to the petition. The Sales Tax Officer (IV), Unit-1 passed the order dated 25. 2. 1994 after going through the entire evidence on record including the show cause notice and the reply therein. Reading the order it appears that the Sales Tax Officer issued the show cause notice dated 26. 2. 1993 seeking explanation for some queries and and later on restricted to four points to which the dealer explained in writing. The Sales Tax Offocer found the same in accordance with law and hence accepted and finalised the assessment order on 25. 2. 1994 under Section 41 (3) of the Act. The copy of the order is annexed to the petition at annexure "i". PRESENT CONTROVERSY:
( 6 ) FROM the record it appears that thereafter on 16. 2. 1996, the Sales Tax Office conducted search of the petitioners business premises and passed an order under Section 59 of the Act, seized the books of accounts and recorded the statement of the Branch Manager of the petitioner company. Thereafter on 20. 7. 96 notice for reassessment under Section 44 of the Gujarat Sales Tax Act, 1969 was issued. The petitioners have challenged the aforesaid show cause notice in the present petition on various grounds mentioned in the petition STATUTE BACKGROUND:
( 7 ) HOWEVER, before we appreciate the said contentions it will be useful to refer to certain provisions of the Act in this behalf. The Gujarat Sales Tax Act, 1969 (Act 1 of 70) is a law relating to the levy of a tax on the sale or purchase of certain goods in the State of Gujarat. Section 2 (10) provides definition of "dealer and Section 2 (28) provides definition of "sales" which means sales of goods made within the State. Under section 2 (14)
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