DEPUTY COMMISSIONER Vs. C P RAJARATHINAM
LAWS(KER)-2003-1-101
HIGH COURT OF KERALA
Decided on January 14,2003

DEPUTY COMMISSIONER Appellant
VERSUS
C P Rajarathinam Respondents

JUDGEMENT

G.SIVARAJAN, J. - (1.) THE matter arises under the Kerala General Sales Tax Act, 1963 (for short "the Act"). The issue relates to the application of the provisions of section 17(4) of the Act, brought into force with effect from April 1, 1992. The assessment year concerned is 1989 -90. The respondent/assessee is a jeweller. The assessment of the respondent was completed under section 17(3) of the Act as per order dated October 30, 1995 (annexure A). Aggrieved by the said order, the assessee filed an appeal before the Assistant Commissioner, Agricultural Income -tax and Sales Tax, Palakkad, where he had raised a contention that the assessing authority erred in completing the assessment under section 17(3) of the Act in view of the provisions of the Act in section 17(4). Though the first appellate authority adverted to that contention, he did not deal with the same. He confirmed the assessment order. Hence, the assessee filed second appeal before the Sales Tax Appellate Tribunal, Additional Bench, Palakkad. The Tribunal, on a consideration of the provisions of section 17(4) of the Act and rule 18A(1A), 18(A)(1B) and 18A(2) of the Kerala General Sales Tax Rules, 1963, (for short "the Rules") and the factual situations, set aside the assessment order and directed the assessing authority to consider the claim of the assessee under section 17(4) of the Act. It is against this order of the Tribunal, the Deputy Commissioner has filed this revision.
(2.) LEARNED Government Pleader appearing for the revision - petitioner submits that in order to apply the provisions of section 17(4) of the Act, the assessee had to file a statement as contemplated under the provisions of rule 18A(1A) of the Rules, and in the absence of filing of such a statement, the assessee is not entitled to the benefit of section 17(4) of the Act. He submitted that rule 18(2) of the Rules has no application to a case where the assessee had not complied with the requirements of rule 18A(1A) of the Rules. Government Pleader, accordingly, submitted that the Tribunal erred in setting aside the assessment order which was confirmed in the first appeal, and in remitting the matter to the assessing authority for fresh consideration of the matter under the provisions of section 17(4) of the Act and rule 18A of the Rules. We have also heard the learned counsel appearing for the respondent. Counsel brought to our notice that an identical question came up for consideration before this court in B. Venugopal Reddiar, Associated Automobile Agencies, Alappuzha v. Additional Sales Tax Officer - 1, Second Circle, Alappuzha [1998] 6 KTR 399, where it was held that the provisions of section 17(4) of the Act should be made applicable even in respect of assessment years prior to April 1, 1992 which are pending completion of assessments and that if the provisions of section 17(4) of the Act are satisfied the assessing authority is bound to complete the assessment accordingly. In order to appreciate the rival contentions, we have to consider the relevant provisions of the Act. Section 17(4) of the Act, as substituted by Finance Act, 1992 with effect from April 1, 1992 and further substituted by the Finance Act, 1993, published in the Kerala Gazette No. 767 dated July 29, 1993, reads as follows : "(4) Notwithstanding anything to the contrary contained in sub -sections (3) and (4A) the assessing authority shall accept the return for any year the assessment relating to which has not been completed along with the statements prescribed, which are in accordance with the provisions of the Act and rules made thereunder, submitted by any dealer, whose total turnover specified in the return submitted by him for the year for which the assessment relates does not exceed rupees five lakhs or by a dealer having dealings only in goods which are completely exempted from tax or by a dealer having dealings only in non -taxable points of goods coming in the First, Second or Fifth Schedules or by a dealer the tax payable by him does not exceed rupees five thousand for the year irrespective of any limit in turnover and assess the dealer on the basis of such return : Provided that the Deputy Commissioner may select five per cent of such cases for detailed scrutiny of the accounts and other records and if any sales or purchases are found unaccounted or otherwise attempted to evade payment of taxes, the previous five years assessments of the dealer may be reopened and escaped turnover shall be assessed or levy of tax be made after following the procedure prescribed in sub -section (3) of section 17 and the limitation prescribed under any of the provisions shall not apply to such cases." It is also necessary to refer to the provisions of sub -rules (1A) and (2) of rule 18A of the Rules, which read as follows : "(1A) Every dealer who is entitled to the assessment under sub -section (4) of section 17 shall furnish the annual return in form 9 along with statement in form 21C on or before the first day of May of the year succeeding to which it relates with proof of payment of the full amount of tax due or the tax collected by him whichever is higher, along with the documents specified under this rule for the claim of exemption. The tax due or collected, whichever is higher, during any quarter of the year shall be paid by such dealer on or before 15th of the succeeding month to the first three quarters, and for the fourth quarter, before the end of the quarter ... (2) Where the assessing authority is satisfied that the method of assessment specified in sub -section (4) of section 17 is not applicable to any case, the assessing authority shall after affording an opportunity to the dealer of being heard, pass an order to that effect and serve it on the dealer and shall proceed to assess him under sub -rule (5) of rule 18." From the provisions of section 17(4) it is clear that in a case where the total turnover furnished by the dealer in the return submitted by him for the year for which the assessment relates does not exceed, rupees five lakhs, the assessing authority shall accept the return for any year, the assessment relating to which has not been completed, along with the statement prescribed, which are in accordance with the provisions of the Act and the rules made thereunder, submitted by the dealer. The statement contemplated in the section is provided in rule 18A(1A) of the Rules, which is in form 21CC. It must be noted that sub -rule (1A) of rule 18A was inserted by S.R.O. No. 728 of 1990 published in the Kerala Gazette No. 541 dated May 28, 1990. As per sub -rule (1A) as substituted by Notification S.R.O. No. 377 of 1992, G.O.(P) No. 80/92/TD dated March 31, 1992, every dealer, who is entitled to the assessment under sub -section (4) of section 17, shall furnish the annual return in form 9, along with statement in form 21C, on or before the first day of May of the year succeeding to which it relates, with proof of payment of the full amount of tax due, or the tax collected by him, whichever is higher, along with the documents specified under this rule, for the claim of exemption. It also provides that the tax due or collected, whichever is higher, during any quarter of the year shall be paid by such dealer on or before 15th of the succeeding month to the first three quarters, and for the fourth quarter, before the end of the quarter. Sub -rule (2) of rule 18A provides that where the assessing authority is satisfied that the method of assessment specified in sub -section (4) of section 17 is not applicable to any case, the assessing authority shall after affording an opportunity to the dealer of being heard, pass an order to that effect and serve it on the dealer and shall proceed to assess him under sub -rule (5) of rule 18.
(3.) THOUGH rule 18A(1A) of the Rules provides for filing the statement in form 21CC along with the return, in view of the provisions of section 17(4) of the Act which is applicable to pending assessments also in respect of assessment for the years prior to 1990 -91 the assessees may not have filed the statement in form 21CC contemplated under rule 18A(1A) for the reason that the said rule was introduced only with effect from May 28, 1990 by S.R.O. 728 of 1990. Having regard to the requirement of the statement in form 21CC which are factual details with regard to the payment of tax as per the return, etc., the said statement can be filed at any time prior to the completion of the assessment. This can be done by the assessee on receipt of a notice under rule 18A(2) of the Rules which would satisfy the requirement of filing the statement mentioned in section 17(4). In the present case, the turnover disclosed by the assessee in the return filed for the assessment year is only Rs. 57,127.50, which is far below the limit of Rs. 5 lakhs specified in section 17(4) of the Act. The only other requirement is the filing of the statement under sub -rule (1A) of rule 18A of the Rules. On a reading of the said rule it is manifest that the statement contemplated therein must be filed along with the return in the first week of May of the succeeding assessment year. As already noted, sub -rule (1A) of rule 18A has come in the statute book only with effect from May 28, 1990, which is subsequent to the date fixed for filing the return. As already noted, section 17(4) casts an obligation on the assessing authority to accept the return filed by the assessee, which is pending at the commencement of the provision of section 17(4), provided the conditions stipulated therein are satisfied. Under rule 18A(2) of the Rules, if the assessing authority is satisfied that the method of assessment specified in sub -section (4) of section 17 is not applicable to any case, he has a duty to pass an order to that effect, after affording an opportunity to the dealer of being heard, and serve it on the dealer and then only he can proceed to assess him under sub -rule (5) of rule 18. It is also to be noted that form No. 21CC is provided under rule 18A(1A) of the Rules. The requirements of the said form are (1) that the tax admitted in form No. 8 submitted along with the statement has been paid; and also that the assessee has fully paid the tax due or tax collected by him, along with the return in form No. 8. There is a further requirement of a declaration that the dealer has not taken out registration under the Act with any other assessing authority and has no business in any place other than the premises declared.;


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