CREATIVE LTD Vs. COMMERCIAL TAX OFFICER
LAWS(ST)-1998-11-3
SALES TAX TRIBUNAL
Decided on November 19,1998

Creative Ltd Appellant
VERSUS
COMMERCIAL TAX OFFICER Respondents

JUDGEMENT

L.N. Ray (Chairman) - (1.) THESE three applications under Section 8 of the West Bengal Taxation Tribunal Act, 1987 are in the nature of writ applications under Article 226 of the Constitution of India. The main question raised in these applications is whether clause (a) of Sub -section (3) of Section 20 of the Bengal Finance (Sales Tax) Act, 1941 (in short, "the 1941 Act") is applicable to deemed assessments under Section 11E(1) of the 1941 Act.
(2.) THE applicant -company was initially a partnership firm under the name of "creative". It was converted to Creative Pvt. Ltd. on December 10, 1991. It was again converted to a public limited company in the present name, Creative Ltd., with effect from July 1, 1996. It was registered as a dealer under the 1941 Act with effect from March 17, 1989. Under the West Bengal Sales Tax Act, 1994 it has been deemed to be registered. The company is an exporter of leather goods/Its domestic sale is limited to sales of scrap leather and rejected materials. Domestic sales are insignificant compared to export sales. For the period of four quarters ending March 31, 1990 the company's assessment was deemed to have been made on June 30, 1993 under Section 11E(1) of the 1941 Act. This relates to RN -95 of 1997. So far as RN -96 of 1997 is concerned, such deemed assessment was made for the period of four quarters ending March 31, 1991 on June 30, 1993 under Section 11E(1). In respect of RN -97 of 1997 deemed assessment was made for the period of four quarters ending March 31, 1992 on June 30, 1993 under Section 11E(1). Respondent No. 2, Assistant Commissioner of Commercial Taxes, Calcutta South Circle issued a notice bearing Memo No. 1052 dated March 21, 1994 under Section 11E(2) of the 1941 Act asking the applicant -company to show cause why the assessments for four quarters each ending March 31, 1990, March 31, 1991 and March 31, 1992 should not be reopened and why order should not be passed under, Section 11E(2) directing fresh assessment under Section 11(1). The notice was, of course, issued for assessing to tax the sales of replenishment licences or exim scrips. Applicant -company made appearance before respondent No. 2, showed cause in writing, filed documents and made arguments objecting to assessing the sales of replenishment licences or exim scrips. Thereafter respondent No. 2 dropped the proceedings initiated under Section 11E(2) and recorded the fact in the Order Sheet dated May 6, 1994, which was communicated to the applicant (annexure "M"). But after publication of the judgment of the Supreme Court of India dated May 1, 1996 in the case of Vikas Sales Corporation [1996] 102 STC 106 holding that replenishment licences or exim scrips are goods liable to sales tax, respondent Nos. 1 and 3, namely, Commercial Tax Officer, Balligunj Charge and Deputy Commissioner, Commercial Taxes, Calcutta South Circle, respectively started demanding tax in respect of the aforesaid periods and created difficulties in issuance of permits to the applicant for not paying the demanded tax. Respondent No. 3 also allegedly started reopening assessment cases for the years 1989 -90, 1990 -91 and 1991 -92. Respondent No. 3 issued notices in form IX in respect of the aforesaid three years for imposing tax on sales of replenishment licences, although the assessments for those periods were deemed to have been made on June 30, 1993 under Section 11E(1) of the 1941 Act and the reopening proceedings were dropped by respondent No. 2 by order dated May 6, 1994. Those notices in form IX are challenged, inter alia, as without jurisdiction. It is also contended that no incorrect statement of turnover or particulars of turnover was made in the returns filed. Since the assessments were deemed assessments under Section 11E(1), it is pleaded that except under Section 11E(2), those could not be reopened. The taxing authorities had no liberty, according to the applicant, to proceed under Section 20(3). There are some other grounds in the applications on which the attempt of respondent No, 3 to reopen the deemed assessments in exercise of powers under Section 20(3)(a) of the 1941 Act is challenged. The applicants pray for quashing the notices issued by respondent No. 3 in form IX and for a prohibitory order directing respondents not to proceed with the same. Section 20(3)(a) of the 1941 Act is challenged as ultra vires Article 14 of the Constitution of India. There are several other prayers including a prayer that a declaration be made for declaring REP licences or exim scrips as securities within Section 2(4)(iia) of the amended provision of the Securities Contracts (Regulation) Act, 1956. Respondents contested the above case of the applicants by filing affidavits -in -opposition. Their case is that in terms of the judgment in the case of Vikas Sales Corporation [1996] 102 STC 106, REP licences or exim scrips are goods and hence are liable to sales tax. Allegations in the applications have been denied. Respondents' case is that dropping of the proceedings for reopening the deemed assessments by order dated May 6, 1994 passed by respondent No. 2 under Section 11E(2) of the 1941 Act was erroneous, and hence the cases warranted suo motu revision of the said order under Section 20(3)(a) of the 1941 Act. The notices issued in form IX for revision of the order dated May 6, 1994 under Section 20(3)(a) of the 1941 Act are claimed to be valid and competent. It is contended that Section 20(3)(a) permits sup motu revision of any order, and hence order passed under Section 11E(2) can also be revised under Section 20(3)(a). All the prayers of the applicants are opposed.
(3.) AFFIDAVITS -in -reply were filed by the applicants contending that Section 20(3)(a) of the 1941 Act could not be applied to the deemed assessments of the applicant -company. Subsequent to hearing of oral arguments, a written argument was filed by the learned Advocate for the applicants.;


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