Case: State Of U.P Vs. Dyer Meakin Breweries Ltd

1. These are appeals by special leave. They related to penalty proceeding. The assessee, M/s. Dyer Meakin Breweries Ltd. is carrying on business of manufacture and sale of wines, beer and fruit juices, etc. at Ghaziabad. The assessee was registered as a dealer under the Central Sales Act, 1956 (hereinafter referred as "the Act") at Ghaziabad. During the assessment years 1958-59 and 1959-60, the assessee submitted its sales tax returns to the Sales Tax Officer at Ghaziabad and it was assessed by that Officer Subsequently, the Sales Tax Officer, Ghaziabad, came to know that the assessee had misused some of the C forms issued to it. According to his information, the assessee, by misusing the C form, had purchased goods worth Rs. 11,754.62 in the assessment year 1958-59 and goods worth Rupees 2,68,242-38 in the assessment year 1959-60. Hence the Sales Tax Officer, Ghaziabad issued to the assessee a notice on January 8, 1960, calling upon it to show cause why he should not impose penalty on it under S. 10-A of the Act. The assessee did not give any explanation. Sometime thereafter, the assessee made an application praying for condonation of its default, alleging that the defaults were committed due to ignorance of law. The Sales Tax Officer did not accept that explanation. The Sales Tax Officer, Ghaziabad, again issued a notice to the assessee on October 31, 1960, requiring it to show cause why it should not be prosecuted under Section 10 (b) of the Act. Thereupon, the assessee submitted an application offering to compound the offence for a sum of Rs. 7,000. That offer was not accepted. Subsequently, on January 23, 1961, the Sales Tax Officer again called upon the assessee to show cause why penalty should not be imposed on it under Section 10-A. After examining the representation made by the assessee, the Sales Tax Officer imposed on the assesses a penalty of Rs. 1,000 in respect of the unlawful purchases made by it during the assessment year 1958-59, and a sum of Rs. 23,000 in respect of the unlawful purchases made by it during the assessment year 1959-60. On appeal, the Assistant Commissioner (Judicial) reduced the penalty in respect of the assessment year 1958-59 to Rs. 750 and in respect of the assessment year l959-60 to Rupees 17,000. Thereafter, the assessee took up the matter in revision. The revisional authority dismissed the assessees appeal in respect of the assessment year 1958-59, but reduced the penalty from Rs. 17,000 to Rs. 15,000 in respect of the assessment year 1959-60. Thereafter, at the instance of the assessee, the revisional authority submitted the following questions to the High Court under Section 11 (1) of the U. P. Sales TaxWhether on the facts and circumstances of the case, the Sales Tax Officer, Ghaziabad, being not seized of the matter at the time of making the penalty order, the jurisdiction having been transferred to Lucknow Circle, was right and just in law in initiating the penalty proceedings and imposing the fine?(2) Whether on the facts and circumstances of the case, the Additional Revising Authority, Sales Tax, Meerut Range, was justified in holding that the applicants made the representations with a guilty mind fraudulently and falsely, with the full knowledge that the objected goods purchased were not covered by the registration certificate?(3) If the answer to question No. (2) is in the negative, whether the imposition of penalty under S. 10 (b) of the Central Sales Tax Act was justified and right inHigh Court answered the first question in favour of the assessee. It came to the conclusion that the Sales Tax Officer, Ghaziabad, had no jurisdiction to initiate penalty proceedings against assessee, as by the time he made his order, the jurisdiction over the assessee had been transferred to the Sales Tax Officer, Lucknow. Having answered the first question in favour of the assessee, the High Court thought it unnecessary to answer the remaining two questions.

Reasoning:
No such contention appears to have been taken either before the authorities under the Act or before the High Court. On the basis of the material on record it is not possible to come to a firm conclusion that the same assessee had been registered at two places. Further, there is no material before us to show that during the relevant assessment years the assessees head office was at Lucknow. These are essentially questions of fact. We cannot go into those questions at this stage. Hence, we do not propose to go into the contention that the assessees registration at Ghaziabad was invalid. We have to proceed on the basis that the assessee was properly registered as a dealer at Ghaziabad. If that was not so, the assessee would not have applied to the Sales Tax Officer, Ghaziabad, for registration; nor would it have submitted its sales tax returns to that officer. As mentioned earlier, the sales tax assessments for the years 1958-59 and 1959-60 were not challenged as beingis no dispute that the authority who granted the certificate of registration was the Sales Tax Officer, Ghaziabad. Therefore, prima facie, he was competent to levy penalty on thebeing so, the Sales Tax Officer, Ghaziabad, had no jurisdiction to levy penalty on the assessee. This contention overlooks the language of Section 10-A. That section definitely says that the authority who granted the certificate of registration to an assessee is one of the authorities competent to levy penalty. Undoubtedly, the Sales Tax Officer, Ghaziabad, was the authority who granted the the certificate of registration to the assessee and that certificate was in force during the assessment years 1958-50 and 1959-60. Even though after March 28, 1960, he ceased to be the authority competent to grant certificate of registration to the assessee, he still had the competence to levy penalty on the assessee in view of the fact that it was he who had granted the certificate of registration to the assessee. In this case, we are dealing with the penalty relating to offences committed during the assessment years 1958-59 and 1959-60. In fact the levy of penalty is one form of levying tax. If the Sales Tax Officer was competent to levy sales tax on the assessee in respect of those assessment years, he was equally competent to levy penalty on the assessee in respect of the offences committed during those years. In our opinion, the High Court did not properly appreciate the legal position in this case. The High Court was wrong in thinking that the proceedings initiated on January 8, 1960, stood terminated as a result of the subsequent notices issued by the Sales Tax Officer. The notices issued by him are not statutory notices. Under Section 10-A of the Act, the Sales Tax Officer was only required to give reasonable opportunity to the assessee to show cause why penalty should not be imposed on him.