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Balharshah Timber Depot v. Commissioner Of Commercial Tax And Another
Factual and Procedural Background
This matter is an application under Article 226 of the Constitution seeking to quash an order of assessment dated 6 February 1954 made under the Bengal Finance (Sales Tax) Act, 1941, and to restrain the respondents from giving effect to that assessment and the associated notice.
The petitioner is a registered partnership firm dealing in timber (wholesale and retail) operating since 8 August 1952 at 40 Chetla Road, P.S. Alipore, district 24-Parganas. The petitioner alleges that it applied for a registration certificate on 7 November 1952 after its taxable quantum exceeded the statutory limit, but that the Sales Tax Authorities delayed issuing the certificate until 17 February 1953.
On 2 March 1953 a notice in Form No. 6 under S.11(2) was issued directing the petitioner to appear for assessment for the period 12 September 1952 to 16 February 1953. The petitioner attended, objected to jurisdiction, and the Commercial Tax Officer overruled the objection and assessed Rs. 2,202-15-9 as sales tax for that period. Around 11 February 1954 a notice in Form No. VII directed deposit of the assessed amount into the Reserve Bank, Calcutta, by 20 March 1954.
The petitioner filed an application for review of the assessment on 24 April 1954 before the officer who made the assessment; that application was not allowed. The petition raised multiple grounds (paragraphs 9 to 14), but the Rule Nisi issued was limited to specified grounds in paragraph 13. The court ultimately discharged the Rule and dismissed the petition; there was no order as to costs.
Legal Issues Presented
- Whether the notice issued under S.11(2) of the Bengal Finance (Sales Tax) Act, 1941, and the subsequent assessment for the period 12 September 1952 to 16 February 1953 were illegal and without jurisdiction because the petitioner had applied for registration prior to the assessment and therefore had not "failed to get itself registered" within the meaning of S.11(2).
- Whether delay by the Sales Tax Authorities in granting registration (from the petitioner's application to the date of registration) rendered the assessment invalid.
- Whether the petitioner is disentitled to relief under Article 226 because it did not pursue the statutory appeal remedy under Section 20 of the Sales Tax Act and moved the High Court after the appeal remedy became time-barred.
- Whether application of S.11(2) instead of S.11(1) (if inappropriate) vitiates the assessment for want of jurisdiction or only constitutes procedural irregularity.
Arguments of the Parties
Petitioner's Arguments (as advanced by Mr. Anil Kumar Sinha)
- The notice dated 2 March 1953 in Form No. 6 and the assessment under S.11(2) were illegal and without jurisdiction because S.11(2) applies only where a dealer has "failed to get itself registered."
- The petitioner had applied for registration on 7 November 1952; therefore it cannot be said to have failed to get registered. Any delay in registration was attributable to the Sales Tax Authorities.
- Consequently, the assessment for the period when the petitioner had applied for registration (and prior to actual registration) was invalid.
Respondent's Arguments (as reported, including submissions by Mr. Majumdar)
- The petitioner did not appeal under Section 20 of the Sales Tax Act and only approached the High Court under Article 226 after the statutory appeal period had lapsed; discretionary relief under Article 226 should not be granted where the remedy by appeal was available but not pursued. Reliance was placed on Promode Lal Maitra v. Additional District Magistrate (61 Cal WN 11 : AIR 1957 Cal 164).
- The Sales Tax Authorities had jurisdiction to assess the petitioner once the petitioner's gross turnover exceeded the taxable quantum under S.4(2) of the Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Promode Lal Maitra v. Additional District Magistrate, 24-Parganas, 61 Cal WN 11 : AIR 1957 Cal 164 | Asserted principle that discretionary relief under Article 226 should not be granted where a statutory appeal remedy (Section 20) existed and was not pursued, especially where the appeal remedy has become time-barred. | The court recorded that the respondent relied on this decision, but observed that the petitioner had sought a review under S.20(4) (albeit after the 30-day period) and that the Assistant Commissioner did not reject the review application as time-barred but advised appeal to the Commissioner. On that basis the court concluded that the petitioner's conduct did not disentitle it to relief; the court did not apply the precedent to refuse relief on that ground. |
Court's Reasoning and Analysis
The court proceeded through the following analytical steps, drawing on facts as pleaded and on statutory/regulatory provisions referenced in the record:
- Interpretation of "failed to get itself registered" under S.11(2): The court explained that a dealer could be said to have "failed to get himself registered" where he takes no steps to obtain registration. Conversely, where the dealer has applied for registration and has not obstructed the process, but the authorities are unable to complete registration in time, the dealer cannot be said to have "failed" to get registered. This formulation framed the assessment of whether S.11(2) properly applied.
- Chronology and adequacy of petitioner's steps: The court noted that the petitioner's taxable quantum exceeded the limit about two months prior to 12 September 1952, but that the petitioner did not apply for registration until 7 November 1952. The initial application of 7 November 1952 was defective (missing signatures of all partners and attesting witnesses as required by columns 8 and 9 of Form No.1(a) of the Sales Tax Rules). The defects were remedied by a revised application on 18 December 1952. Given this, the Sales Tax Authorities could not have proceeded on the earlier defective application.
- Duties of the authority and reasonable time for enquiries: The court referred to R.5 of the Sales Tax Rules, Form No.1(a), S.7(3) of the Act, and R.6 of the Rules to explain the Commercial Tax Officer's duty to make enquiries and satisfy himself of particulars in the registration application. The court emphasized that a reasonable time must be afforded to the authority to perform these enquiries, and what is reasonable depends on circumstances; no hard-and-fast rule exists.
- Assessment of delay: The registration certificate was issued on 17 February 1953 — less than two months after the regular application was filed on 18 December 1952. On the facts, and given the need for enquiries, the court found no unreasonable delay by the Sales Tax Authorities and therefore concluded that issuance of a notice under S.11(2) and the resultant assessment were not unjustified on account of authority delay.
- Procedural versus jurisdictional error: The court stressed that Section 11 is a machinery/procedural provision. S.11(1) concerns assessment of registered dealers; S.11(2) concerns procedure for unregistered dealers who have "failed to get themselves registered." Even if the Assistant Commissioner should not have proceeded under S.11(2), that would constitute an irregularity in procedure rather than a lack or excess of jurisdiction. The court noted that the Authorities had jurisdiction to assess once the petitioner's turnover exceeded the taxable quantum under S.4(2), and after the petitioner was placed on the register it would have been open to proceed under S.11(1) for earlier periods as appropriate.
- Remedy by appeal and petitioner conduct: The court considered the respondent's submission that the petitioner failed to appeal under S.20 and thus should be denied discretionary relief under Article 226. The court observed that the petitioner did file an application for review on 24 April 1954 under S.20(4), though beyond the 30-day limit prescribed by R.80. The Assistant Commissioner did not reject the review as time-barred but asked the petitioner to appeal to the Commissioner. On these facts the court concluded the petitioner's conduct did not disentitle it to relief under Article 226.
- Conclusion on merits: Having found that the petitioner had not established illegality or want of jurisdiction in the assessment (and that any incorrect application of S.11(2) would be at best procedural irregularity), the court concluded that the petition must fail.
Holding and Implications
Holding: The Rule is discharged and the petition under Article 226 is dismissed.
Direct implications for the parties:
- The challenge to the assessment dated 6 February 1954 and the associated notice was rejected; the court did not quash the assessment on the grounds urged by the petitioner.
- The court found no unreasonable delay by the Sales Tax Authorities in issuing the registration certificate such as to invalidate the notice or assessment under S.11(2).
- There will be no order as to costs.
Broader implications: The opinion does not announce or establish a new precedent beyond its application to the facts of this case. The court treated any mistaken application of S.11(2) as a procedural irregularity rather than deprivation of jurisdiction.
1. This is an application under Article 226 of the Constitution for an appropriate Writ quashing an order of assessment dated the 6th February 1954 made under the provisions of the Bengal Finance (Sales Tax) Act, 1941 and directing the respondents to forbear from giving effect to the said assessment order and to the notice issued in connection with the said assessment proceedings.
2. The petitioner is a registered partnership firm carrying on business in timber as wholesale and retail dealer since 8th August, 1952 at 40 Chetla Road, P.S Alipore, in the district of 24-Parganas. It is alleged that on the 7th November, 1952 the petitioner applied before the Commercial Tax Officer, Bhowanipore, for a registration certificate after the taxable quantum in respect of sale of timber in the said business exceeded the limit specified under the Bengal Finance (Sales Tax) Act 1941 but the authorities concerned delayed in granting the registration certificate and it was after the lapse of more than 4 months that the Sales Tax Authorities granted the certificate of registration in the prescribed form on the 17th February, 1953. Thereafter on 2nd March, 1953 a nonce in Form No. 6 as prescribed by the Sales Tax Rules was issued to the petitioner, for assessment under S. 11(2) of Act, directing the petitioner to be present with the necessary books of accounts for assessment of sales tax in respect of the period from 12th September, 1952 to 16th February, 1953. It appears that the petitioner appeared before the Commercial Tax Officer pursuant to such notice and made representations on the lines set out in paragraph 5 of the petition and objected to the jurisdiction of the Sales Tax Authorities to make the assessment in respect of the said period and under the said provisions of S. 11(2) of the Act. The Commercial Tax Officer however overruled the said objection and assessed a sum of Rs. 2,202-15-9 as the sales tax payable by the petitioner in respect of the period from 12th September, 1952 to 16th February, 1953 under S. 11(2) of the Act. Thereafter on or about 11th February, 1954, the Commercial Tax Officer issued a notice in form No. VII of the Sales Tax Rules directing the petitioner to deposit the amount assessed, into the Reserve Bank, Calcutta, by the 20th of March, 1954. The petitioner thereafter filed an application on the 24th April, 1954, for review of the order of assessment dated the 6th of February, 1954 before the Commercial Tax Officer who had made the said assessment but the Commercial Tax Officer did not allow the said application of the petitioner. The petitioner has raised various grounds challenging the validity of the order of assessment, in paragraphs 9 to 14 of the petition, but the Rule Nisi which was issued by Sinha, J. on the 26th May, 1954 was limited to grounds (e), (g), (h) and (i) as set out in paragraph 13 of the petition.
3. Mr. Anil Kumar Sinha, the learned Advocate for the petitioner, has argued that the notice given by the Commercial Tax Officer under S. 11(2) in Form No. 6 on 2nd March 1953 flor assessment for the period from 12th September, 1952 to 16 February, 1953 and the actual assessment made under S. 11(2) of the Act is illegal and without jurisdiction. It is submitted by Mr. Sinha that in order to attract S. 11(2) of the Act it is to be established that the petitioner “failed to get itself registered” within the meaning of those words as used in S. 11(2) of the Act, but as the petitioner had applied for registration on 7th November, 1952 and the Sales Tax Authorities took four months' time to get the petitioner registered, and actually put the petitioner on the register on the 17th February, 1953, it cannot be said that the petitioner failed to get itself registered. It appears to me that a person can be said to have failed to get himself registered when he does not take any steps whatsoever to obtain a registration certificate; but when he has applied for registration and has not thereafter done anything to prevent or obstruct registration but the authorities concerned are unable for some reasons or other, to complete registration before a certain time, the dealer concerned cannot be said to have failed to get himself registered. It appears however in the present case that although the taxable quantum of the petitioner had exceeded the specified limit two months prior to 12th September, 1952 the petitioner did not put in an application for registration before the 7th November, 1952 and it appears that even this application which was put in on the 7th of November, 1952 was not in order as it did not contain the signatures of all the partners of the petitioner firm nor did it contain the signatures of the attesting witnesses as required under columns 8 and 9 of the prescribed Form No. 1(a) of the Sales Tax Rules. The defects appear to have been remedied on the 18th December, 1952 when the petitioner put in a revised application. It is therefore clear that the Sales Tax Authorities were not in a position to take any action or steps on the application for registration until a regular application was put in, on the 18th of December, 1952. It appears from R. 5 of the Sales Tax Rules as also from the prescribed Form No. 1(a) that various particulars have to be set out in an application for registration which is made under the provisions of the Act; and it is incumbent upon the Authority dealing with that application to satisfy himself upon proper enquiry that the particulars required to be set out in Form No. 1(a) read with R. 5 of the Sales Tax Rules are correct and complete. Reference may be made to S. 7(3) of the Act and R. 6 of the Sales Tax Rules for showing that such is the duty of the Commercial Tax Officer who deals with such application for registration. So it cannot be expected that the Commercial Tax Officer will complete the registration on the very next day or within a very short time thereafter. The Authority must have some reasonable time given to him for making the enquiries in respect of the particulars set out in the petition and satisfying himself that they are correct and complete. What is reasonable time will depend upon the particular circumstances of each case. No hard and fast rule can be laid down in respect of such a matter. It is also possible that the volume or pressure of work in the hands of the particular officer concerned, may be such as not to enable such officer to take action on the application for registration that is filed, by a particular individual, as soon as the application is made. So having regard to these facts it cannot be said that the Commercial Tax Officer was guilty of any unreasonable delay in granting the certificate of registration in respect of the application which was filed by the petitioner. As I have pointed out already the certificate of registration was issued on the 17th of February, 1953, that is, in less than two months from the date when a regular application for registration was put on the file of the Sales Tax Department. In the circumstances of this case, therefore, it cannot be said that the Sales Tax Authorities were not justified in issuing a notice under the provisions of S. 11(2) of the Act or in making an order of assessment under the same section. It may be that the Sales Tax Officer could have issued the registration certificate a fortnight or a month prior to the date when the certificate was actually issued in this case. It appears however from paragraph 7 of the counter-affidavit that as proper enquiries according to law had to be made, the registration certificate could not be issued before the 17th of February, 1953.
4. Mr. Majumdar has argued that as the petitioner did not appeal under Section 20 of the Sales Tax Act and moved this Court under Article 226 of the Constitution after the remedy by way of appeal became barred by lapse of time, the discretionary relief under Article 226 of the Constitution should not be granted to the petitioner. Reliance is placed on a decision of Sinha, J. reported in Promode Lal Maitra v. Additional District Magistrate, 24-Parganas, 61 Cal WN 11 : (AIR 1957 Cal 164) (A)). It may be noted however that although the petitioner did not file any appeal, an application was made by the petitioner for review of the order as provided by S. 20(4) of the Act. This was a remedy which was open to the petitioner to take. The Assistant Commissioner however did not entertain this application for review but asked the petitioner to prefer an appeal against the order to the Commissioner. This petition for review was filed on the 24th April, 1954 and was thus beyond the period of limitation of 30 days which is prescribed as the period of limitation for such application for review under R. 80 of the Sales Tax Rules. There is of course a proviso to R. 80 under which it is open to the applicant for review, to satisfy the officer concerned that the applicant had sufficient cause for not presenting the application within the prescribed period. It appears however that the Assistant Commissioner did not throw out the application on the ground that the application was barred by limitation. He did not apply his mind to this aspect of the matter at all but declined to entertain the application and advised the petitioner to appeal to the Commissioner against his order. I do not therefore think that the conduct of the petitioner in the present case has been such as to disentitle the petitioner to any relief under Article 226 of the Constitution.
5. It is also to be noted that the petitioner's gross turnover had exceeded the taxable quantum about two months prior to 12th of September, 1952 and so the petitioner became liable to pay the tax under the provisions of S. 4(2) of the Act. So there cannot be any question that the Sales Tax Authorities had jurisdiction to assess the petitioner. Section 11 is a procedural or machinery section as it is called, laying down the manner in which Sales Tax Authorities should proceed to make assessment of Sales Tax in respect of business of dealers. Section 11(1) deals with cases of assessment of taxes due from registered dealers and S. 11(2) deals with the procedure to be adopted in case of assessment of tax from unregistered dealers who have failed to get themselves registered under the Act. So even if it is held that the Assistant Commissioner in the present case was not justified in proceeding under S. 11(2) as the petitioner had not failed to get himself registered within the meaning of those words as used in S. 11(2) in respect off the entire period under assessment, action of the Assistant Commissioner can be at the most an irregularity in the procedure but it would not be a case of want of or excess of jurisdiction. The, Authorities had jurisdiction to make assessment in respect of business of the petitioner as soon as the petitioner's turnover exceeded the taxable quantum according to the provisions of S. 4(2) of the Act. So I do not see why after the petitioner was brought on the register he could not be proceeded against under S. 11(1) of the Act, in respect of the period in question, though anterior to the date of registration. It is however not necessary for the purpose of this case to decide definitely whether the petitioner's case would come under S. 11(1) of the Act, the petitioner having been registered on the 17th February, 1953 and the notice that was issued in Form No. 6 having been issued’ thereafter in March, 1953. If S. 11(1) is applicable to the petitioner's case then unless the petitioner could show that the petitioner had suffered any injustice by reason of an irregularity in the procedure which was adopted by the Assistant Commissioner in making assessment under S. 11(2) of the Act this Court would not have interfered under Article 226 of the Constitution. But as I have pointed out already, in my opinion, the case of the petitioner comes under S. 11(2) of the Act, and so this question need not be considered any further.
6. In my view, this petition should fail. The Rule is accordingly discharged.
7. There will be no order as to costs.
K.S.B
8. Rule discharged.
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