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1994 Supreme(MP) 662
A.R. Tiwari, J.
LADURAM RAMNIWAS
Versus
STATE OF M. P. AND OTHERS.
Misc. Petition No. 797 of 1984
Decided On: Decided On : 16-08-1994
Notices under section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 cannot be issued on the basis of a subsequent decision in another case.
Headnote:
SALES TAX - REASSESSMENT - NOTICES ISSUED UNDER SECTION 19(1) OF THE MADHYA PRADESH GENERAL SALES TAX ACT, 1958 - VALIDITY - WHETHER NOTICES CAN BE ISSUED ON THE BASIS OF A SUBSEQUENT DECISION IN ANOTHER CASE - HELD, NO - NOTICES QUASHED.
Fact of the Case:
The petitioners, who are registered under the Madhya Pradesh General Sales Tax Act and the Central Sales Tax Act, 1956, were issued notices for reassessment of sales tax under section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 (the Act) on the ground that the levy of sales tax on the sale of mawa at the rate of 2 per cent, instead of 8 per cent, was erroneous in terms of a Full Bench decision of the Madhya Pradesh High Court in Gyanmal Kesharichand's case. The petitioners challenged the notices, contending that the Full Bench decision was inapplicable and that it gave no power to reopen and reassess when the appeal was pending in the Supreme Court and when the factual matrix did not justify the step.
Finding of the Court:
The court held that the notices issued under section 19(1) of the Act were not permissible on the strength of the Full Bench decision in Gyanmal Kesharichand's case. The court observed that section 19(1) of the Act permits reassessment only when there is an under-assessment, escaped assessment, assessment at a lower rate, or wrong deduction. In the instant case, there was no foundation of "escaped assessment" at a lower rate but an attempt to "review and revise" under section 19(1) on account of a court decision in another case. The court further held that recourse to section 19(1) was not shown to be valid, as section 19-A of the Act specifically provides for reassessment in cases where an order passed in respect of a dealer is rendered erroneous and prejudicial to the interests of revenue consequent to or in the light of any judgment or order of any court or Tribunal which has become final.
Issues: 1. Whether notices under section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 can be issued on the basis of a subsequent decision in another case?
Ratio Decidendi: 1. Section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 permits reassessment only when there is an under-assessment, escaped assessment, assessment at a lower rate, or wrong deduction. 2. Recourse to section 19(1) is not valid when the reassessment is sought to be made on the basis of a subsequent decision in another case, as section 19-A of the Act specifically provides for reassessment in such cases.
Final Decision: The court allowed the petitions and quashed the notices issued under section 19(1) of the Act. The court also held that if occasion arises, recourse to section 19-A of the Act may be considered if justified on facts and permissible under the law.
A. R. TIWARI, J. - This order shall also govern the disposal of connected Misc. petitioners, M.P. No. 924 of 1984 Sunil Kumar v. State; M.P. No. 932 of 1984 Mohta v. State; M.P. No. 959 of 1984 Pannalal v. State; M.P. No. 960 of 1984 Manoharlal v. State; M.P. No. 961 of 1984 Abhay Kumar v. State; M.P. No. 962 of 1984 Rajmal v. State; M.P. No. 963 of 1984 Anil Kumar v. State and M.P. No. 964 of 1984 Kanhaiyalal v. State entailing common question of law and fact and heard analogously.
2. Facts lie in a narrow compass.
3. This petitioner and petitioners of aforesaid petitions have received notices for reassessment of sales tax under section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 (for short, "the Act") on the linchpin that levy of sales tax on sale of mawa at the rate of 2 per cent, instead of 8 per cent, turns out to be erroneous in terms of Full Bench decision rendered by this Court in [1984] 55 STC 140; (1982) 15 VKN 132 (Commissioner of Sales Tax, M.P. v. Gyanmal Kesharichand). The petitioners are registered under the Madhya Pradesh General Sales Tax Act and the Central Sales Tax Act, 1956. The rate of sales tax on cooked food was 2 per cent from the enforcement of Act till September 30, 1978, as per Schedule II, Part I of entry No. 8 of the Act. From October 1, 1978, cooked food is defined in section 2(cc) of the Act. For the first time from October 1, 1978, mawa was excluded from definition of "cooked food". Section 2(cc) contains as under :
"(cc) 'cooked food' includes sweets and sweetmeats, mishri, batasha, chironji, shrikhand, rabadi, doodhpak but excludes ice-cream, kulfi, ice-candy, non-alcoholic drinks containing ice-cream, cakes, pastries, biscuits, chocolates, toffees, lozenges, peppermint drops and mawa."
4. The petitioners were charged at the rate of 2 per cent sales tax on mawa on the basis of decision given by Board of Revenue in the case of Regal Dairy, Mhow in Second Appeal No. 142/72 on September 13, 1972 [(1973) 4 VKN 314]. The Division Bench of this Court answered the reference under section 44 of the Act in favour of the assessee in M.C.C. No. 70 of 1977 [1981] 47 STC 374; (1981) 14 VKN 7 (Commissioner of Sales Tax v. Regal Dairy). This decision is under challenge in the Supreme Court.
5. The respondents issued notices, impugned in these petitions on the basis of Gyanmal's case [1984] 55 STC 140 (MP) [FB]; (1982) 15 VKN 132 (FB). Sales tax on mawa is payable at the rate of 8 per cent in State case and 10 per cent in Central case.
6. These notices for reassessment are under challenge. Quashment is sought on the ground that the Full Bench decision is inapplicable and it gave no power to reopen and reassess when the appeal was pending in the Supreme Court and when factual matrix does not justify the step.
7. The respondents have filed returns in support of the notices.
8. I have heard both sides.
9. The question is simple, so should be the answer. The crucial question is whether notices under section 19(1) of the Act are permissible on the strength of Gyanmal's case [1984] 55 STC 140 (MP) [FB]; (1982) 15 VKN 132 (MP) [FB] ?
10. It is proper to reproduce the relevant part of section 19(1) of the Act -
"(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 within a period of two calendar years from the commencement of such proceedings, the tax payable by such dealer and the Commissioner may, where the omission leading to su
