In the High Court of Punjab and Haryana, Chandigarh CWP No. 8101 of 2001 Date of Decision: February 17, 2009 M/s Bal Chand Pardeep Kumar …Petitioner Versus State of Punjab and another …Respondents CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE H.S. BHALLA Present: Mr. Kashmiri Lal Goyal, Advocate, for the petitioner. Mr. Mr. Piyush Kant Jain, Addl. AG, Punjab, for the respondents. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? M.M. KUMAR, J. The dealer-petitioner has approached this Court for quashing order dated 23.4.2001 (Annexure P-6) passed by the Assessing Authority-cum-Excise & Taxation Officer, Ferozepur, re- assessing the tax liability of the dealer-petitioner on the basis of audit objection. It is appropriate to mention that the assessment for sales tax liability in respect of assessment year 1991-1992 was framed on 17.9.1993 (Annexure P-1) and tax deduction @ 8% in respect of cotton seet cake (khal) was also reflected in the assessment order. C.W.P. No. 8101 of 2001 However, on 26.9.1995, a notice was issued by the Assistant Excise & Taxation Commissioner-cum-Revisional Authority, under Section 21 of the Punjab General Sales Tax Act, 1948 (for brevity, ‘the Act’), proposing to make re-assessment. The dealer-petitioner filed reply contesting the proposal to re-assess (Annexures P-3 & P-4). However, no action was taken. On 18.6.1996, the Assessing Authority intimated the dealer-petitioner that definite information is in the possession of the Officer, which leads to the belief that the turnover of his business was liable to re-assessment. As a consequence thereof the re-assessment order was passed on 23.4.2001 (Annexure P-6). The Assessing Officer raised additional demand by levying tax under Section 4-B of the Act and levied tax @ 4% on the value of the cotton seed consumed in the manufacture of oil and oil cake sent on consignment basis. The Assessing Authority passed order by holding as under:- “Proportionate purchase value of cotton seed used for manufacture of cotton-seed oil cake and cotton seed oil so consigned 1 (consignment of cotton seed oil 5349162/- 2. Consignment of Cotton seed oil cake Rs. 15314401/-. A. Purchase value of cotton seed used in the manufacture of khal consigned with reference to ratio of 3/4 value Rs. 7240660/-. 2 C.W.P. No. 8101 of 2001 B. Purchase value of cotton seed used in the manufacture of cotton seed oil in the ratio of 3/4 equal to 5349162/-. C. Total cotton-seed consumed in the manufacture of cotton seed oil and cotton seed oil cake sent on consignment basis equal to 7240660/- + 2820000/- total 1,00,60,660/- Tax levied @ 4% come to Rs. 402426/- Tax already paid Rs. Nil Net due: Rs. 402426/- Issue TDN/challan form for 402426/- alongwith copy of order to the dealer with the directions to make the payment within 15 days from the date of receipt of orders.” 2. Mr. K.L. Goyal, learned counsel for the dealer-petitioner has vehemently argued that merely on the basis of audit objection, assessment proceedings cannot be re-opened, especially when the judgment of the Tribunal on the date of assessment i.e. 17.9.1993 were in favour of the dealer. He has placed reliance upon the judgments rendered in the cases of M/s Mittal Silicate & Oil Mills, Bathinda v. The State of Punjab, STI 1985 Pb. & Hy. (Tribunals) 239 and M/s D. Vir & Co., Abohar v. The State of Punjab, STI 1982 Pb. & Hy. (Tribunals) 129. He has further submitted that in a similar situation when re-assessment was framed on the basis of audit objection, a Division Bench of this Court in the case of Haryana 3 C.W.P. No. 8101 of 2001 Co-op Sugar Mills Limited, Rohtak v. State of Haryana, (1996) 8 PHT 144 (P&H), had held that re-assessment cannot be framed merely on the basis of audit objection because it would not constitute information as per the provisions of law. Mr. Goyal has maintained that while forming the opinion, the Division Bench has placed reliance on the judgment of Hon’ble the Supreme Court in the case of Indian and Eastern Newspaper Society v. Commissioner of Income-Tax, New Delhi, [1979] 119 ITR 996. 3. Mr. Piyush Kant Jain, learned Additional Advocate General, Punjab, has however, submitted that under Section 21 of the Act, no such bar could be incorporated as long as the tax liability is imposable and sustainable in the eyes of law. According to the learned counsel, the tax liability under Section 4-B of the Act is leviable as has been interpreted by the Tribunal in its order rendered in the case of M/s Dabra Industries Ltd., Muktsar and another v. State of Punjab, (1995) 1 PHT 107. 4. After hearing learned counsel for the parties and perusing the paper book with their able assistance, we are of the considered view that the instant petition merits acceptance. The assessment in respect of assessment year 1991-1992 in respect of the dealer-petitioner, has attained finality on 17.9.1993, when initial assessment was framed. The law does not permit re-assessment on the ground that an audit objection has been raised and such an objection would not constitute as ‘definite information’ within the meaning of Section 11A of the Act. In that regard, reliance has been 4 C.W.P. No. 8101 of 2001 rightly placed by the learned counsel for the dealer-petitioner on a decision of the Division Bench of this Court in the case of Haryana Co-op Sugar Mills Limited, Rohtak (supra), which deals with somewhat similar controversy. In that case the provision of Section 31 dealing with re-assessment under the Haryana General Sales Tax Act were under consideration, which is pari-materia to Section 11A of the Act. The Division Bench in para 4 has held as under:- “The question that arises for our consideration is whether the audit note as received by the Assessing Authority was ‘definite information’ within the meaning of Section 31 of the Act. In our opinion, the answer has to be in the negative. In the opinion of the audit party the tax was leviable under Section 9 and on receipt of the note the Assessing Officer changed his opinion and re-opened the assessment so as to levy tax under Section 9 of the Act. The opinion of the audit party cannot constitute information on the basis of which the Assessing Authority could re-open the assessment under Section 31 of the Act. The matter is not res integra. The question whether an audit objection constitutes information so as to entitle the Assessing Authority to re-open the assessment within the meaning of Section 31 stands concluded against the Revenue and in favour of the assessee by a judgment of the Supreme Court in Indian and Eastern Newspaper Society v. Commissioner of 5 C.W.P. No. 8101 of 2001 Income Tax 119 I.T.R. 996 and two Division Bench judgments of this Court in Commissioner of Income Tax v. Aggarwal Textile Mills, 154 I.T.R. 234 and in CWT vs. Smt. Savitri Devi and another, 114 I.T.R. 345.” 5. In the present case the dealer-petitioner filed its return on 17.9.1993 as per the law prevailing at that time, which is evident from the perusal of the order passed by the Tribunal in the cases of M/s Mittal Silicate and Oil Mills (supra) and M/s D. Vir & Co. (supra). The change of law subsequent to the finalisation of assessment on 17.9.1993 would not constitute a basis for framing re-assessment. Therefore, reliance of the revenue on the judgment of the Tribunal in M/s Dabra Industries Ltd. (supra) have to be ignored because that view was expressed on 29.4.1994, which is subsequent to the date of assessment. If such a course is permitted then every assessment would be liable to be re-opened under Section 11A of the Act, whenever new interpretation by higher Courts is received. Thus, it is not possible to permit re-assessment on that basis. 6. For the aforementioned reasons, this petition succeeds and order of re-assessment, dated 23.4.2001 (Annexure P-6) is set aside. (M.M. KUMAR) JUDGE (H.S. BHALLA) February 17, 2009 JUDGE Monika/Pkapoor 6