Full Judgment Text
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PETITIONER:
STATE OF U.P.
Vs.
RESPONDENT:
DYER MEAKIN BREWERIES LTD.
DATE OF JUDGMENT08/03/1973
BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
REDDY, P. JAGANMOHAN
KHANNA, HANS RAJ
CITATION:
1973 AIR 2366 1973 SCR (3) 649
1975 SCC (3) 1
ACT:
Central Sales Tax Act, 1956, Section 10-A-Assessee
registered as dealer in Gaziabad-Penalty proceedings
initiated against assessee--Subsequently, assessee’s
registration transferred to Lucknow--Sales Tax Officer had
jurisdiction to impose penalty on assessee even after
transfer of registration.
HEADNOTE:
The assessee was registered as a dealer under the Central
Sales Tax Act, 1956, at Ghaziabad. For the relevant
assessment years, be was assessed by the Tax Officer at
Ghaziabad. The Sales Tax Officer, Ghaziabad, subsequently
came to know that the assessee had misused some of the ’C’
Forms and, therefore, issued a penalty notice u/s 10-A of
the Act on January 8, 1960. During the pendency of the
penalty proceedings, the assessee transferred his
registration to Lucknow.The Sales Tax Officer, Ghaziabad
imposed the penalty on the assessee for the misuse of Form
’C’. At the instance of the assessee, the Revisional
Authority under the Statute referred three questions of law
to High Court under section 11(1) of the U.P. Sales Tax Act,
the principal question being whether the Sales Tax Officer,
Ghaziabad, had jurisdiction to impose penalty when the
registration was transferred to Lucknow. The High Court
answered the question against the State.
On appeals by special leave, allowing the appeals,
HELD,: Prima facie, the Sales Tax Officer, Ghaziabad was
competent to levy the penalty on the assessee. Section 10-A
definitely says that the authority who granted the
certificate of registration to an assessee is one of the
authorities competent to levy penalty. Undoubtedly the Sales
Tax Officer, Ghaziabad, was the authority who granted the
certificate of ’registration to the assessee and that
certificate was in force during the relevant assessment
years. Even though after 28-3-1960, the date of ,transfer of
registration, he ceased to be the authority competent to
grant certificate of registration to the assesses he still
had the competence to levy penalty on the assessee in view
of the fact, that it was he who had granted certificate of
registration to the assessee. The levy of penalty is One of
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levying tax. If the Sales-tax Officer was competent to levy
sales-tax on the assessee in respect of the relevant
assessment years, he was equally competent to levy penalty
on the assessee in respect of the offences committed during
these years. [653 D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1655 and
1656 of 1970.
Appeals by special leave from the judgment and order dated
1st January 1970 of the Allahabad High Court in Sales Tax
Reference Nos. 15 and 16 of 1968.
N. D. Karkhanis and 0. P. Rana, for the appellant.
D. P. Singh, S. C. Agarwal, V. J. Francis and R. P. Singh,
for the respondent,
650
The Judgment of the Court was delivered by
HEGDE, J. These are appeals by Special Leave. They related
to penalty proceeding. The assessee, M/s. Dyer Meakin
Breweries Ltd., is carrying on business of manufacture and
sale of wines, bear and fruit juices, etc. at Ghaziabad.
The assessee was registered as a dealer under The Central
Sales Tax Act, 1956 (hereinafter referred to as the Act) at
Ghaziabad. During the assessment years 1958-59 and 1959-60,
the assessee submitted its sales tax returns to the Sales
Tax Officer at Ghaziabad and he was assessed by that
Officer. Subsequently, the Sales Tax Officer, Ghaziabad,
came to know that the assessee had misused some of the ’C’
forms issued to it. According to his information, the
assessee, by misusing the ’C form, had purchased goods worth
Rs. 11,754.62 P. in the assessment year 1958-59 and goods
worth Rs. 2,68,242.38 P. in the assessment year 1959-60.
Hence, the Sales Tax Officer, Ghaziabad, issued to the
assessee a notice on January 8, 1960 calling upon him to
show cause why he should not impose penalty on him under
Section 10-A of the Act. The assessee did not give any
explanation. Some time thereafter, the assessee made an
application praying for condonation of his default, alleging
that the defaults were committed due to ignorance of law.
The Sales Tax Officer did not accept that explanation. The
Sales Tax Officer, Ghaziabad again issued a notice to the
assessee on October 31, 1960 requiring it to show cause why
it should not be prosecuted under Section 10(b) of the Act.
Thereupon, the assessee submitted an application offering to
compound the offence for a sum of Rs. 7,000/-. That offer
was not accepted. Subsequently, on January 23, 1961, the
Sales Tax Officer again called upon the, assessee to show
cause why penalty should not be imposed on him under Section 10-A.
After examining the representation made by the
assessee, the Sales Tax Officer imposed on the assessee a
penalty of- Rs. 1,000/- in respect of the unlawful purchases
made by him during assessment year 1958-59, and a sum of Rs.
23,000/- in respect of the unlawful purchases made by him
during the assessment year 1959-60. On appeal, the
Assistant Commissioner (Judicial) reduced the penalty in
respect of the assessment year 1958-59 to Rs. 750/- and in
respect of the assessment year 1959-60 to Rs. 17,000/-.
Thereafter, the assessee took up the matter in revision.
The Revisional Authority dismissed the assessee’s appeal in
respect of the assessment year 1958-59, but reduced the
penalty from Rs. 17,000/- to Rs., 15,000/- in respect of the
assessment year 1959-60. Thereafter, at the instance of the
assessee, the Revisional Authority submitted the following
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questions to the High Court under Section 11 (1) of the U.P.
Sales Tax Act :-
"1. Whether on the facts and circumstances of
the case the Sales Tax Officer, Ghaziabad
being not seized
651
of the matter at the time of making the
penalty order the jurisdiction having been
transferred to Lucknow circle, was right and
just in law in initiating the penalty
proceedings and imposing the fine ?
2. Whether on the facts and circumstances of
the case the additional Revising Authority,
Sale$ Tax, Meerut Range was justified in
holding that the applicants made the
representations with a guilty mind
fraudulently and falsely, with the full
knowledge that the objected goods purchased
were not covered by the registration
certificate
3.If the answer to question No. 2 is in the
negative, whether the imposition of penalty
under section 10(b) of the Central Sales Tax
Act was justified and right in law
The High Court answered the first question in favour of the
assessee. It came to the conclusion that the Sales Tax
Officer, Ghaziabad, had no jurisdiction to initiate penalty
proceedings against the assessee as by the time he made his
order, the, jurisdiction over the assessee had been
transferred to the Sales Tax Officer, Lucknow, Having
answered the first question in favour of the assessee, the
High Court thought it unnecessary to answer the remaining
two questions.
The only question that we have to decide is whether the.
High Court was justified in coming to the conclusion that
the Sales Tax Officer, Ghaziabad, had no jurisdiction to
impose penalty on the assessee. As mentioned earlier, the
assessee was registered as a dealer before the Sales Tax
Officer, Ghaziabad. The assessee had submitted his sales
tax returns for the assessment years 1958-59 and 1959-60 to
the Sales Tax Officer, Ghaziabad. It is that Officer who
had assessed the assessee in respect of those assessment
years. The validity of those assessments have not been
questioned at any stage. The registration of the assessee
was transferred from Ghaziabad to Lucknow only on 28-3-1960.
Till that date, the assessee continued to be registered as a
dealer in the office of the Sales Tax Officer, Ghaziabad.
The penalty proceedings had been initiated on January 8,
1960, i.e. long before the assessees registration was
transferred from the Sales- Tax Officer, Ghaziabad to the,
Sales Tax Officer, Lucknow. The High Court came to the
conclusion that when the penalty was actually imposed on the
assessee, the Sales Tax Officer, Ghaziabad, had no
jurisdiction over the assessee and hence the levy made was
invalid. We shall presently examine the correctness of
that conclusion. But before doing so, it would be
convenient to dispose off a new contention advanced by Mr.
Singh, the learned counsel for the assessee. Mr. Singh
contended that the registration of the assessee as a dealer
652
before the Sales Tax Officer, Ghaziabad was an invalid
registration as the U.P. Sales Tax Act as well as the
Central Sales Tax Act did not permit double registration of
the same assessee. According to him the assessee’s head
office was at all time at Lucknow. This is an entirely new
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contention. No such contention appears to have been taken
either before the authorities under the Act or before the
High Court. On the basis of the material on record it is
not possible to come to, a firm conclusion that the same
assessee had been registered at two places. Further there
is no material before us to show that during the relevant
assessment years the assessees head office was at Lucknow.
These are essentially questions of fact. We cannot go into
those questions at this stage. Hence, we do not propose to
go into the contention that the assessee’s registration at
Ghaziabad was invalid. We have to proceed on the basis that
the assessee was properly registered as a dealer at
Ghaziabad. If that was not so, the assessee would not have
applied to the Sales Tax Officer, Ghaziabad, for
registration; nor would it have submitted its sales tax
returns to that officer. As mentioned earlier, the sales
tax assessments for the years 1958-59 and 1959-60 were not
challenged as being unauthorised.
This takes us to the question whether under Section 10-A of
the Act, the Sales Tax Officer, Ghazibad, had competence to
levy penalty on the assessee. We shall first read Section
10 of the Act to the extent it is material for our present
purpose. That section says :-
"10. If any person-
(a)..................
(b) being a registered dealer, falsely represents when
purchasing any class of goods that goods of such class are
covered by his certificate of registration; or
(c)......................
(d)......................
(e)......................
(f)......................
he shall be punishable with simple imprisonment which may
extend to six months, or with fine, or with both; and when
the offence is a continuing offence, with a daily fine which
may extend to fifty rupees for every day during which the
offence continues".
653
Section 10-A(1) says:-
"If any person purchasing goods is guilty of
an offence under clause (b) or clause (c) or
clause (d) of section 10, the authority who
granted to him or, as the case may be is
competent to grant to him a certificate of
registration under this Act may, after giving
him a reasonable opportunity of being heard,
by order in writing, impose upon him by way of
penalty a sum not exceeding one and a half
times the tax which would have been levied
under this Act in respect of the sale to him
of the goods if the offence had not been
committed :
Provided that no prosecution for an offence
under section 10 shall be instituted in
respect of the same facts on which a penalty
has been imposed under this section.
"(emphasis supplied).
There is no dispute that the authority who granted the certi
ficate of registration was the Sales Tax Officer, Ghaziabad.
Therefore, prima facie, he was competent to levy penalty on
the assessee. But it was contended on behalf of the assessee
that on 28.3.1960,the registration before the Sales Tax
Officer, Ghaziabad, stood cancelled and thereafter the
assessee was registered before the Sales Tax Officer,
Lucknow, that being so, the Sales Tax Officer,Ghaziabad, had
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no jurisdiction to levy penalty on the assessee.This
contention overlooks the language of Section 10-A. That
section definitely says that the authority who granted the
certificate of registration to an assessee is one of the,
authorities competent to levy penalty. Undoubtedly, the
Sales Tax Officer,Ghaziabad, was the authority who granted
the certificate of registration to the assessee and that
certificate was in force during the assessment years 1958-59
and 1959-60. Even though after 28.3.1960 he ceased to be the
authority competent to grant certificate of registration to
the assessee he still had the competence to levy penalty on
the assessee in view of the fact that it was he who had
granted certificate of registration to the assessee. In this
case, we are dealing with the penalty relating to offences
committed during the assessment years 1958-58 and 1959-60.In
fact the levy of penalty is one form of levying tax. If the
Sales Tax Officer was competent to levy sales tax on the
assessee in respect of those assessment years, he was
equally competent to levy penalty on the assessee in respect
of the offences committed during those years. In our
opinion, the High Court did not properly appreciate the
legal position in this case. The High Court was wrong in
thinking that the proceedings initiated on January 9, 1960
stood terminated as a result of the subsequents notices
issued by the Sales Tax Officer. The notices issued by
654
him are not statutory notices. Under Section 10-A of the
Act the Sales Tax Officer was only required to give
reasonable opportunity to the assessee to show cause why
penalty should not be imposed on him.
In the, result, we allow these appeals, set aside the order
of the High Court and remand the case to the High Court for
answering the remaining questions. Costs of these appeals
will be costs in the cause.
S.B.W. Appeals allowed.
655