State of U.P. v. Dyer Meakin Breweries Ltd.

HEGDE, J. These are appeals by Special Leave. They related to penalty proceeding. 1'.he assessee, M/s. Dyer Meakin B~es Ltd., .is canying on· busmess of mantifacture and sale of wmes, bear and fruit juices, etc. at Ghaziabad. The assessee was re-gistered as a dealer under The Central Sales Tax Act, 1956 (hereinafter referred to as the Act) a_t 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 he was assessed by that Officer. Subsequently, the Sales· Tax Officer, Ghaziabad, came to know that the assessee had misused some ot 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 P. in thi; assessment year 1958-59 and goods worth Rs. 2,68,242.38 P. in the assessment year 1959-60. Hence, the Sales Tax Officer, Ghaziabad, issued to the assessee a notice on January 8, 1960 calling upon him to show cause why he should not impose penalty on him under Section 10-A of the Act. The assessee did not give any explanation. Some time thereafter, the assessee made an aP.Plication praying for condonation of his de-fault, 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 IO (b) of the Act. There-upon, the assessee submitted an application offering to compound the offence for a sum of Rs. 7,000/-. That offer was not accept-ed .. Subsequently, on January 23, 1961, the Sales Tax Officer again called upon the assessee to show cause why penalty should not be imposed on him under Section 10-A. After examining the representation made by the assessee, the Sales Tax Officer imposed on the assessee a penalty of Rs. 1,000/- in respect of the u.nlaw-ful purchases made by him during assessment year 1958-59 and a sum of Rs. 23,000/- in respect of the unlawful purchases made by him 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 ~sment year 1959-60 to Rs. 17,000/-. Thereafter, the assessee took up the matter in revision. The Revisional Authority dismissed the asses5ee's appeal in respect of the assessmept year 1958-59, but reduced the penalty fr0m 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 Tax Act :-

"!. Whether on the facts and circumstances of the case

the Sales Tax Officer, Ghaziabad being not seized

of the matter at the tin).e of making the penalty order the jurisdictl?n havin' ~n tramf~ ~~ I:ucknow circle, was nght and iust. m la'Y 'in m1tialing tlle penalty pr<>eeMing.o and 1U1posmg the fine ?

¶2Whether on the facts and circumstances of the c11Se

the additional Revising Authority, Sales Tax, Meerut Range was justified in holding that the appli· cants made the representations with a guilty mind fraudulently and goods falsely; with the full knowledge that the objected purchased were not covered by the registration certificate ?

¶3If the answer to question No. 2 is in the negatiye,

whether the imposition of penalty under section lO(b) of the Central Sales Tax Act was justified an<l right in law ?"

The High 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 the assessee ·as by the time he made his order, the juris-diction over the assessee had been transferred to the Sales T8.ll. Officer, Lucknow. Having answered the first question in favour of the assessee, the High Court thought it unnecessarv to answer the remaining two questions.

The only question that we have to decide is whether the High Court was justified in. coming to the conclusion that the Sales Tax Officer, Ghaziabad, had no' jurisdiction to impose penalty on the assessee. As mentioned earlier, the assessee was registered as a dealer before the Sales Tax Officer, Ghaziabad. The assessee had submitted his sales tax returns for tile assessment years 1958-59 and 1959-60 to the Sales Tax Officer, Ghaziabad. It is that Offi· cer who had assessed the assessee. in respect of those assessment years. The validity of those assessments have not been questioned at any stage. The registration of the assessee was transferred from Ghaziabad to Lucknow only on 28-3-1960. Till that dare, the assessee continued to be registered as a dealer in the office of the Sales Tax Officer, Ghaziabad. The penalty proceedings had bee.n ini?-ated on Jan~ary 8, 1960, i.e. IQng before the assessee's registration was transferred from the Sales Tax Officer, Ghaziabad to the ~ales Tax Officer, Lucknow. The High Court came to the conclus10n tl!at when the penalty was actually imposed on the assessee, the Sales Tax Officer, Ghaziabad, had no jurisdiction over the assess:e and hence the l!)vy made was invalid. We shall pr~ent!y c:xanune th~ correctness of that conclusion. But before doing so, 1t would be convenient to dispose off a new contention a~vanced by Mr. Singh, the learned counsel for tl!e assessee. Mr. Smgh contended that the registration of the assessee as a d~ler

652 SUPP.EME COUl\T P.BPOP.TS [1973] 3 s.c.a. before the Sales Tax Officer, Ghaziabad was an invalid registra-tion as the U.P. Sales Tax Act as well as the ·Central Sall:s Tax Act did not permit double registration of the same assessee. According to him the assessee's head office was at all time at Lucknow. . This is an entirely new contention. No such conten- . ti0n 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 befor~ us to show that during the relevant assessment years the assessee's head o.flice was at Lucknow. These are essen-tially questions of fact. We cannot go into tlibse questions at this stage. Hence:, we do not propose to go into the contention that the assessee's registration at Ghaziabad was invalid. We have to proceed on the basis that the assessee was properly regis-tered 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 being un-authorised.

This takes us to the question whether under Section 10-A of the Aot, the Sales Tax Officer, Ghazibad, bad competence to levy penalty on the asaessee. We shall first read Section 10 of the Act to the extent it is material for our present purpose. That ~ection says :-

"10. Ii any person-

(a) ....... ........ .

•'• (b) being a regisl4!£ed dealer, falsely represents when

purchasing any class ol goods that ,goods of such class are ~ by his ·certificate of registration; or (c) (d) (e) (f) he shall be punishable with simple imprisonment which may extend to six months, or with fine, or with both; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues".

Secition 10-A(I) says :- "If any person purchasing goods is guilty of an offence under clause (b) or.clause (c) .or clause (d) of section 10, the authority who granted to him or, cu the case ma,v be is competent to grant to him a certificate of registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times the tax which would have been levied under this Act in respect of the sale to him of the goods if the offence had not bieen committed:

Provided that no prosecution for an offence under seotion 10 ·shall be instituted in respect of the same facts on which a penalty has been imposed under this section. " (emphasis supplied) .

There is no dispute that the authority who granted the certi-ficate of registration was the Sales Tax Officer, Ghaziabad. There-fore, prima facie, he was competent to levy penalty on the assesscc. But it was contended on behalf of the assessee that on 28.3.1960, the registra!tion before the Sales Tax Officer, Ghaziabad, stood cancelled and thereafter the assessee was registered before the Sa)es Tax Officer, Lucknow, that being 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 gra.nted the certifi-cate of registration to an assessce is one of the authorities com-petent to levy penalty. Undoubtedly, the Sales Tax Officer, Ghaziabad, was the authority who granted the certificate of regis-tration to the assessee and that certificate was iu force durin11: the assessment years 1958-59 and 1959-60. Even though after 28.3.1960 he ceased to be the authority competent to grant cer-tificate 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 certificate of registration to the assessee. In this case, we are dealing with the penalty relating to offences committed during the assessment years 1958-58 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 years. the assessee in respect of the offences commit-ted during those In our opinion, the High Court did not properly appreciate the legal position in this case. The High Court was wrong in thinkjng that the proceedings initiated on January 9, 1960 stood tem1inated as a result of the subsequent notices issued by the Sales Tax Officer. The notices issued 1>y him are not statutory notices. Under Section 10-A of the Act tho Sales Tax Officer was only required to give reasonable oppor-tunity to the assessee to show cause why penalty should not be imposed on him.

In the result, we allow these appeals, set aside the order of the High Court and remand the case to the High Court for answer-ing the remaining questions. Costs of these appeals will be costs in the cause.