Case: Sales Tax Officer, Ganjam &amp; Anr Vs. M/S. Uttareswari Rice Mills

of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under Section 34 must also be communicated to the assessee" As the provisions of Section 12 (8) of the Act and Section 34 of the Indian Income Tax Act, 1922 are substantially similar, the dicta laid down in cases under Section 34 of the Indian Income Tax Act has, in our opinion, a direct bearing. 10. Mr. Gobind Das has tried to distinguish the cases under S. 34 of the Indian Income Tax on the ground that, unlike Section 12 (8) of the Act which also provides for the imposition of penalty, there was no mention of penalty in Section 34 of the Indian Income Tax Act. This circumstance, in our opinion, makes no substantial difference and cannot prevent the applicability of the dicta laid down in cases under Section 34 of the Indian Income Tax Act, 1922 to cases under Section 12(8) of the Act.The question of imposition of penalty can only arise at the time of making an order for reassessment. Mr. Ramachandran on behalf of the appellants has frankly stated that it would be only at that stage that the sales tax officer would go into the question as to whether the escapement or under-assessment or composition has been due to the fact that the dealer concealed particulars of his turnover or without sufficient cause furnished incorrect particulars thereof. The sales tax officer in such an event, it is not disputed, would have to give opportunity to the dealer to show cause why penalty in addition to the tax should not be imposed upon him. 11. Reference has also been made by Mr. Gobind Das to the fact that notice issued to the respondent on March 31, 1967 related not merely to the escaped assessment or under-assessment, it also called upon the respondent to show cause why penalty should not be imposed upon him. It is urged that such a combined notice is invalid even though it may be in accordance with Form VI prescribed by the rules. Calling upon the respondent to show cause why penalty should not be imposed upon him, according to the learned counsel, is premature at this stage. In this respect we find that no such ground was taken by the respondent in the writ petition before the High Court. As such, it is not necessary for the purpose of this case to express an opinion on the point as to whether a notice under Section 12 (8) should be struck down on the aforesaid ground. 12. There is nothing in the language of Section 12 (8) of the Act which either expressly or by necessary implication postulates the recording of reasons in the notice which is issued to the dealer under the above provision of law. To hold that reasons which led to the issue of the said notice should be incorporated in the notice and that failure to do so would invalidate the notice, would be tantamount to reading something in the statute which, in fact, is not there. We are consequently unable to accede to the contention that the notice under the above provision of law should be quashed if the reasons which led to the issue of the notice are not mentioned in the notice. At the same time, we would like to make it clear that if the sales tax officer is in possession of material which he proposes to use against the dealer in proceedings for reassessment, the said officer must before using that material bring it to the notice of the dealer and give him adequate opportunity to explain and answer the case on the basis of that material. 13. Mr. Gobind Das has also argued that the existence of a reason that the turnover of a dealer has escaped assessment or has been under-assessed (in cases not dealing with composition) is a condition precedent to the issue of a notice under Section 12 (8) of the Act. It is urged that such reason is not shown to have existed in the present case. Although we agree with the learned counsel that the existence of the reason that the turnover of a dealer has escaped assessment or has been under-assessed is a sine qua non for the issue of the notice, we are unable to accept the contention that the said reason has been shown to be non-existent in the present case. Although the High Court did not go into this aspect of the matter, we find that the respondent has brought material on the record to indicate that there did exist such reasons. Affidavit of Shri Prakash Chandra Mohanty, Sales Tax Officer, Intelligence Circle was filed in opposition to the petition. Shri. Mohanty is the successor of Shri Patnaik who had issued the notice under Section 12 (8) of the Act to the respondent. According to the affidavit of Shri Mohanty, the material on record indicates that Shri Patnaik issued the impugned notice after he had obtained information about certain clandestine dealings of the respondent. It was further stated that the seized documents disclosed prima facie material to hold that the respondent had failed to disclose his entire turnover. It was also mentioned that the details of the material which led to the initiation of proceedings under Section 12 (8) of the Act had been recorded in the relevant case file. The said file, it would appear from the affidavit of Shri Mohanty, was kept available for reference by the High Court at the time of hearing. No reference, it would seem, was however made to that file because the High Court did not feel the necessity of doing so. 14. In our opinion the view taken by the High Court in the judgment under appeal as well as in the earlier case of ILR (1967) Cut 446 (supra) was not correct.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]12. There is nothing in the language of Section 12 (8) of the Act which either expressly or by necessary implication postulates the recording of reasons in the notice which is issued to the dealer under the above provision of law. To hold that reasons which led to the issue of the said notice should be incorporated in the notice and that failure to do so would invalidate the notice, would be tantamount to reading something in the statute which, in fact, is not there. We are consequently unable to accede to the contention that the notice under the above provision of law should be quashed if the reasons which led to the issue of the notice are not mentioned in the notice. At the same time, we would like to make it clear that if the sales tax officer is in possession of material which he proposes to use against the dealer in proceedings for reassessment, the said officer must before using that material bring it to the notice of the dealer and give him adequate opportunity to explain and answer the case on the basis of that material13. Mr. Gobind Das has also argued that the existence of a reason that the turnover of a dealer has escaped assessment or has been under-assessed (in cases not dealing with composition) is a condition precedent to the issue of a notice under Section 12 (8) of the Act. It is urged that such reason is not shown to have existed in the present case. Although we agree with the learned counsel that the existence of the reason that the turnover of a dealer has escaped assessment or has been under-assessed is a sine qua non for the issue of the notice, we are unable to accept the contention that the said reason has been shown to be non-existent in the present case. Although the High Court did not go into this aspect of the matter, we find that the respondent has brought material on the record to indicate that there did exist such reasons. Affidavit of Shri Prakash Chandra Mohanty,Sales Tax, Intelligence Circle was filed in opposition to the petition. Shri. Mohanty is the successor of Shri Patnaik who had issued the notice under Section 12 (8) of the Act to the respondent. According to the affidavit of Shri Mohanty, the material on record indicates that Shri Patnaik issued the impugned notice after he had obtained information about certain clandestine dealings of the respondent. It was further stated that the seized documents disclosed prima facie material to hold that the respondent had failed to disclose his entire turnover. It was also mentioned that the details of the material which led to the initiation of proceedings under Section 12 (8) of the Act had been recorded in the relevant case file. The said file, it would appear from the affidavit of Shri Mohanty, was kept available for reference by the High Court at the time of hearing. No reference, it would seem, was however made to that file because the High Court did not feel the necessity of doing so14. In our opinion the view taken by the High Court in the judgment under appeal as well as in the earlier case of ILR (1967) Cut 446 (supra) was not correct.