JUDGMENT
DR. B.P. Saraf, J.
1. By this reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the assessee, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion :
“Whether, on the facts and circumstances of the case, and in view of the provisions contained in sections 33(1) and 33A of the Bombay Sales Tax Act, 1959, the Tribunal was justified in law in holding that the applicant has adopted transitional accounting year, so as to be liable to single assessment for the period of 21 months from July 1, 1987 to March 31, 1989 ?”
2. The assessee, who carries on the business of manufacture and sale of screw jacks and automotive components, is registered as a dealer under the Bombay Sales Tax Act, 1959 (“the Act”). The accounting year of the assessee was the co-operative year commencing from July 1 and ending on June 30 of each year. For the co-operative year 1987-88, the assessee maintained its books of account for the period from July 1, 1987 to June 30, 1988. Accordingly, the accounts of the said year were closed on June 30, 1988 and the profit and loss account was drawn for the said period. The balance sheet was also prepared as on June 30, 1988. The assessee submitted its quarterly returns to the Sales Tax Officer as required by the Act. As the assessee’s turnover of sales and purchases in the year did not exceed Rs. 12 lakhs, it was not liable to pay turnover tax under section 9 of the Act on its turnover of Sales. The assessee also filed quarterly returns for the quarters commencing from July 1, 1988 as usual. The assessee, however, closed his account for the year commencing from July 1, 1988 on March 31, 1989, instead of June 30, 1989. This was done in compliance of the requirement of section 3 of the Income-tax Act, 1961, as substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989, which provides that the previous year for the purposes of that Act means financial year only and not “any accounting year comprised of a period of twelve months adopted by the assessee” as was the case prior to the said amendment. The Sales Tax Officer, while making assessment of the assessee under the Bombay Sales Tax Act, made the assessment not for the period of 12 months from July 1, 1987 to June 30, 1988, but for the period of 21 months from July 1, 1987 to March 31, 1989. This he did by relying on section 33A of the Act which was inserted by the Maharashtra Act No. 22 of 1988 with effect from April 1, 1988.
The assessee was aggrieved by the assessment being made for a period of 21 months because, as a result of it he was made liable to pay turnover tax at the rate of one and a quarter per cent on the turnover of sales of goods during the period July 1, 1987 to June 30, 1988, to which he was not liable, as his turnover in respect of the turnover of all sales or all purchases in that year was Rs. 11,35,867 which was below the limit specified in that section for the purpose of levy of turnover tax. He, therefore, appealed to the Assistant Commissioner of Sales Tax against the above action of the Sales Tax Officer. The Assistant Commissioner approved the assessment made for a period of 21 months on the ground that it was permissible under section 33A(1) of the Act and rejected the appeal of the assessee. The assessee went in further appeal to the Maharashtra Sales Tax Tribunal (“the Tribunal”). But there too he failed. His appeal was dismissed by the Tribunal. Hence this reference at the instance of the assessee.
3. Two questions arise for consideration. Firstly, whether under the facts and in the circumstances of this case, the Sales Tax Officer was justified in making assessment for a period of 21 months by reference to the transitional provisions contained in section 33A of the Act or he was obliged to make two assessments under section 33(1) of the Act, one for the period of one year from July 1, 1987 to June 30, 1988 and another for a part of the year from July 1, 1988 to March 31, 1989. Secondly, whether a dealer who is not liable to turnover tax under section 9 of the Act in any year by virtue of his turnover in that year being less than Rs. 12 lakhs, can be made liable to pay the same by making an assessment for a period longer than the accounting year of 12 months by taking resort to section 33A of the Act. For that purpose it may be expedient to refer to the provisions of sections 33 and 33A of the Act.
Section 33 of the Act deals with assessment of taxes, Sub-section (1) thereof, with which we are concerned in the present case, reads :
“33. Assessment of taxes. – (1) The amount of tax due from a dealer liable to pay tax shall be assessed separately for each year during which he is so liable :
Provided that, the Commissioner may, subject to such conditions as may be prescribed, and for reasons to be recorded in writing, assess the tax due from any dealer during a part of a year :
Provided further that, when a registered dealer fails to furnish any return relating to any period of any year, by the prescribed date, the Commissioner may, if he thinks fit, assess the tax due from such dealer separately for different parts of such year.”
“Year” has been defined in clause (37) of section 2 of the Act to mean :
“(a) the financial year;
(b) in relation to any particular registered dealer for the purposes of this Act (except section 3 and Chapter IV thereof), the year by reference to which the accounts of that dealer are ordinarily maintained in his books, but the dealer may by written declaration made by him in this behalf opt for the financial year :
Provided that, where an option has once been exercised by a registered dealer, he shall not, except with the consent of the Commissioner and upon such conditions as the Commissioner may determine, make any variation in respect thereof.”
Section 33A of the Act which contains special provisions for transitional accounting year reads :
“33A. Special provisions for transitional accounting year. – (1) If, in order to comply with the requirements of the Income-tax Act, 1961, as amended by the Direct Tax Laws (Amendment) Act, 1987, any dealer has changed the year by reference to which the accounts of that dealer are ordinarily maintained in his books of account, and if the dealer has adopted a transitional accounting year of a duration longer than his earlier accounting year as an incident of such change, then notwithstanding anything in this Act or the rules made and notifications issued thereunder, but subject to such conditions as may be prescribed, the provisions of this Act, rules made and notifications issued thereunder, shall, in respect of the transitional accounting year, apply in the manner hereinafter provided in this section.
(2) The amount of tax due from a dealer liable to pay tax may be assessed or reassessed by a single order of assessment in respect of the transitional accounting year.
(3) Except for the purposes of section 3 and except where the context requires otherwise, the word ‘year’, wherever it occurs, shall be deemed to include the transitional accounting year and the provisions of this Act, rules made and notifications issued thereunder shall be construed accordingly.
(4) Except for the purposes of section 3, and except where the context requires otherwise, any reference in this Act, the rules made and notifications issued under this Act to any amount or amounts in relation to a year shall be construed for the purposes of the transitional accounting year as a reference to the said amount or amounts as increased by multiplying each such amount by a fraction of which the numerator is the number of months in the transitional accounting year and the denominator is twelve :
Provided that where the transitional accounting year includes a part of a month, then, if such part is of fifteen days or more, it shall be increased to one complete month and if such part is of less than fifteen days, it shall be ignored.
(5) If any difficulty arises in giving effect to the provisions of this section, during the period of three years from the date of commencement of the Bombay Sales Tax (Amendment and Validating Provisions) Act, 1988, the State Government may, as occasion arises, by order published in the Official Gazette, do anything not inconsistent with such provisions which appears necessary or expedient for the purpose of removing the difficulty.”
On a conjoint reading of clause (37) of section 2, sub-section (1) of section 33 and section 33A, the following position emerges in regard to the period for which assessment of taxes due from a dealer can be made :
(1) The assessment of the amount of tax due from a dealer has to be made separately for each year during which he is so liable. [Sub-section (1) of section 33].
(2) Year means (i) the financial year or (ii) the year by reference to which the accounts of the dealer are ordinarily maintained.
Even in a case falling under clause (ii) above, where a year different from the financial year is followed, for the purposes of section 3 and Chapter IV of the Act “year” : will be the “financial year”. [Sub-clause (b) of clause (37) of section 2].
(3) Assessment may also be made of the tax due from any dealer during a part of a year, if there are reasons for doing so. [First proviso to sub-section (1) of section 33].
(4) The amount of tax due from a dealer liable to pay tax may be assessed by a single order of assessment in respect of a transitional year referred to in section 33A of the Act, (i) if the dealer has changed the year by reference to which his accounts were ordinarily maintained in his books of account, and (ii) if he has adopted a transitional accounting year of a duration longer than his earlier accounting year as an incident to such change. (Section 33A).
It is thus clear that the normal rule is a single assessment for one financial year or accounting year comprising of period of twelve months. Assessment can be made for a part of the year also, if required. The transitional provisions contained in section 33A are intended to meet the situation that may arise consequent to adoption by a dealer of an accounting year of a duration longer than the earlier accounting year in order to comply with the requirements of the Income-tax Act, as amended by the Direct Tax Laws (Amendment) Act, 1987. It is a procedural provision intended to get over certain difficulties in the matter of assessment. Resort to this section would be necessary only if the dealer has changed the year by reference to which his accounts were ordinarily maintained and has adopted a year of a duration longer than his earlier accounting year.
4. We now turn to the facts of the present case to ascertain whether assessment can be made separately for the period July 1, 1987 to June 30, 1988 and July 1, 1988 to March 31, 1989 or it is necessary to make a single order of assessment in respect of the entire period of 21 months by taking resort to section 33A of the Act. The assessee had been following the co-operative year commencing on July 1 and ending on June 30 for the purpose of maintenance of accounts of its business. This he did up to June 30, 1988. The accounts for a period of twelve months commencing on July 1, 1987, were closed as usual on June 30, 1988. So far as the accounts in relation to period commencing from July 1, 1988 are concerned, they were closed on March 31, 1989, after the expiry of nine months only, keeping in view the amendment of the Income-tax Act, 1961. Thus, so far as the year commencing from July 1, 1987 and ending on June 30, 1988 is concerned, there was no change. The change was effected in the year commencing from July 1, 1988. This year was changed by the assessee and the accounts were closed three months earlier on March 31, 1989. In such a situation, resort to the special provisions for transitional accounting year contained in section 33A was not necessary. The assessments could have been completed under section 33 itself by making one assessment order for the year commencing on July 1, 1987 and ending on June 30, 1988 and another for a part of the next year commencing on July 1, 1988 and ending on March 31, 1989, by exercising the powers under the first proviso to section 33(1) of the Act. This was not done by the Sales Tax Officer. He rather took resort to section 33A of the Act and made a single order of assessment for a period of 21 months. This action of the Sales Tax Officer is not correct for more than one reason. First, section 33A enables the assessing officer to make a single assessment in respect of a year of a duration longer than the earlier accounting year of the dealer, contrary to the scheme of the Act in regard to assessment which provides for assessment for a year or a part thereof, only in a case where the dealer has adopted a transitional accounting year of a duration longer than 12 months. That is not the case here. Here the dealer has adopted his regular accounting year of twelve months till June 30, 1988 by closing the accounts as usual on that date. He has maintained a transitional accounting year of 9 months from July 1, 1988 to March 31, 1989. He cannot therefore be assessed for a period of 21 months by a single assessment order. He has to be assessed separately for the year July 1, 1987 to June 30, 1988, under section 33(1) of the Act and for the period of 9 months from July 1, 1988 to March 31, 1989, under the first proviso to sub-section (1) of section 33. Secondly, section 33A being a procedural section, enacted to meet the problems that were likely to arise as a result of change of accounting year by the assessee to comply with the requirement of the Income-tax Act which provided for assessments under that Act only on the basis of the financial year as the previous year adoption of the procedure laid down therein cannot have the effect of enhancing the liability of the dealer to pay the tax or making him liable to pay the tax if otherwise he was not liable to pay the same. In other words, assessment of the amount of tax due from a dealer liable to pay tax by a single order of assessment in respect of the transitional year comprising of a duration longer than his earlier accounting year cannot in any way affect the amount of tax which the dealer was liable to pay under the charging section. The charging section is section 3. Section 9 provides for levy of turnover tax. The liability of a dealer to pay tax under the said section has to be determined with reference to the provisions of that section. Under that section, turnover tax would be leviable only where the turnover of either of all sales or of all purchases by any dealer liable to pay tax under this Act “exceeds twelve lakhs of rupees in any year”. In the context of this section, year will therefore mean the “year” as defined in section 2(37) of the Act and not the “transitional year”. This is clear from sub-section (3) of section 33A which specifically says that the word “year”, wherever it occurs in the Act, shall be deemed to be the transitional year except for the purposes of section 3 and except where the context requires otherwise. Obviously, the context of section 9 clearly required otherwise. We do not propose to discuss in any detail this aspect of the matter as it is not necessary to do so in this case in view of our finding that in the facts and circumstances of the present case, the Sales Tax Officer should have made two assessments, one for the period of twelve months from July 1, 1987 to June 30, 1988 and another for a period of 9 months from July 1, 1988 to March 31, 1989, under sub-section (1) of section 33 and the proviso thereto respectively.
5. In view of the above we are of the opinion that the Tribunal was not justified in holding that the assessee had adopted transitional accounting so as to be liable to single assessment under section 33A of the Act for the period of 21 months from July 1, 1987 to March 31, 1989.
6. Accordingly, we answer the question referred to us in the negative and in favour of the assessee.
7. In the facts and circumstances of the case, there shall be no order as to costs.
8. Reference answered in the negative.