JUDGMENT
C.V. Jani, J.
1. The following questions have been referred to for the decision of this Court under section 69 of the Gujarat Sales Tax Act, 1969, hereinafter, referred to as “the Act” by the Gujarat Sales Tax Tribunal, Ahmedabad :
“(1) Whether, in the facts and circumstances of the case, the applicant established that the time-limit prescribed under section 42 of the Gujarat Sales Tax Act, 1969, for making the order of assessment under section 41(3) of the Gujarat Sales Tax Act, 1969, is applicable in a case where section 46A of the said Act is applicable and the order of assessment is to be passed under section 41(3) of the said Act read with section 46A thereof ?
(2) Whether, in the facts and circumstances of the case, the applicant established that the final order of assessment passed by the Sales Tax Officer is in contravention of section 46A of the Gujarat Sales Tax Act, 1969, and is void ab initio or is merely an irregular order ?
(3) If the answer to question No. (2) above is in the negative, whether in the facts and circumstances of the case, the applicant is justified in claiming refunds of the amount of tax remitted ?”
2. The following are the relevant facts :
(i) The applicant, M/s. Bhupendra Iron & Steel Re-rolling Mills, which manufactures iron bars from scrap at Bhavnagar, is a dealer registered under the Act. The Sales Tax Officer (2), Division-1, Bhavnagar, passed the final order of assessment under section 41(3) of the Act in respect of the applicant on February 2, 1981 for the period from April 1, 1977 to March 31, 1978 raising the additional demand of Rs. 36,977.62 consisting of Rs. 27,189.48 by way of tax and Rs. 9,788.14 by way of penalty under section 45(6) of the Act. The proceedings initiated before the Sales Tax Officer in December 1979 could not be completed within a reasonable time as the case was adjourned from time to time at the instance of the applicant, and also because the applicant had requested the Sales Tax Officer to stay the assessment proceedings till the outcome of the representations made by the Indian Steel Re-rollers Association, Bhavnagar, of which the applicant was also a member, to the Chief Minister of the State of Gujarat, for granting necessary reliefs to such dealers, so as to avoid double taxation in view of the Supreme Court judgment in the case of State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319.
(ii) Exactly, one year thereafter, i.e., on February 2, 1982, the Sales Tax Officer initiated the assessment proceedings against the applicant in respect of the financial year 1978-79 and passed an order of assessment under section 41(3) of the Act on March 31, 1982, raising the additional demand of Rs. 42,965.12 consisting of Rs. 31,592 by way of tax and Rs. 11,373.12 by way of penalty under section 45(6) of the Act. The assessment proceedings could not be completed within a reasonable time because the applicant had attempted to take some time on the ground that Special Civil Application No. 3712 of 1981 filed by the Association of Indian Steel Re-rollers was admitted by the High Court of Gujarat.
(iii) Being aggrieved by the aforesaid order of assessment the applicant preferred two first appeals before the Assistant Commissioner of Sales Tax (Appeals-10), Range-6, Bhavnagar. It was contended before the Assistant Commissioner of Sales Tax that admittedly both the assessments involved the question of additional demand of tax exceeding Rs. 25,000 and so it was incumbent upon the Sales Tax Officer, to serve on the applicant a draft order in form 50A of the Act read with rule 39A of the Rules, but the Sales Tax Officer, had failed to follow this procedure. It was therefore, contended that both the orders of assessment were clearly without jurisdiction and have been ab initio void. The Assistant Commissioner did not accept this contention and held that the assessment orders passed by the Sales Tax Officer were not cases of lack of initial jurisdiction, but of irregular assumption of jurisdiction. He, therefore, set aside both the orders and remanded the matter to the Sales Tax Officer for according due opportunity of hearing to the applicant to make fresh assessment in accordance with law.
(iv) These appellate orders were challenged by the applicant by filing two second appeals Nos. 88 and 98 of 1983. During the hearing of the second appeals before the Tribunal the same contentions were advanced on behalf of the applicant and reference was made to certain judgments of the Supreme Court and the High Court in order to fortify the submission that non-compliance with the provision of section 46(A) of the Act which was mandatory in character would have the effect of rendering the order of assessment a nullity in the eye of law and so the question of remanding the matter to the Sales Tax Officer for passing appropriate orders after compliance with those provisions did not arise. The Tribunal found that the orders of the Sales Tax Officer were clearly not in accordance with the provision of the Act in view of certain admitted facts but those orders could not be said to be null and void and completely without jurisdiction in view of the fact that they had been passed by the Sales Tax Officer under the powers vested in him under section 41 of the Act. The Tribunal found that though the Sales Tax Officer possessed the initial jurisdiction to assess a dealer under section 41 of the Act, he had not served on the appellant a draft order of assessment in the prescribed manner and so the Assistant Commissioner had passed a proper order of remand in order to enable the Sales Tax Officer to follow the requisite procedure of law and to give the dealer an opportunity of raising his objections. The Tribunal accordingly dismissed the second appeals.
(v) The applicant, therefore, filed Reference Application No. 1661 of 1984 in the Tribunal for referring the aforesaid three questions to this Court. These applications were allowed and the reference is made to this Court at the instance of the applicant.
3. Mr. R. D. Pathak, learned advocate appearing for the applicant-dealer, concentrated his submission on the second question which relates to the effect of non-compliance with the procedure prescribed in section 46A of the Act. He submitted that the orders of assessment passed by the Sales Tax Officer without issuing a draft order in accordance with the provision of section 46A(1) of the Act, were null and void ab initio, and so the appellate authority had no jurisdiction to remand the assessment proceedings to the Sales Tax Officer. He further submitted that if this contention is not accepted by this Court then the third question would naturally be answered in the negative, and it would not be necessary to answer question No. 1 which is widely worded.
4. Under section 41 of the Act, the sales tax authority can assess an amount of tax due from the registered dealer for each year. Under sub-section (3) of section 41 if the Sales Tax Officer is not satisfied about the correctness or completeness of the declarations or returns furnished by the dealer he can serve a notice requiring him to attend and produce all the evidence relied upon by him in support of his declarations or returns and the sales tax authority can assess the amount of tax due from the dealer after considering such evidence. If a dealer fails to comply with the terms of any notice issued under sub-section (3) of section 41 the sales tax authority has the power to assess the amount of tax due to the best of his judgment. As per section 42 no order of assessment can be made under sub-section (3) or (4) of section 41 at any time after the expiry of two years from the end of the year in which the last monthly and quarterly or the annual return is filed. It is also provided that fresh assessment can be made at any time within three years from the date of any order passed under section 65, 67 or 69 by the appellate or revisional authority or from the date of any order of any court or authority for fresh assessment.
5. The relevant portion of section 46A of the Act which is material for deciding the question under reference reads as under :
“46A. (1) Where any sales tax authority mentioned in section 27 exercising the powers under section 41 proposes to make an order of assessment under that section and, such order if made, would in the opinion of such authority, impose on a dealer a liability to pay an amount not less than Rs. 25,000 by way of tax in respect of a period in addition to amount of tax indicated by the dealer in his declaration or return in respect of that period, such authority shall serve in such manner as may be prescribed on such a dealer a draft order and invite his objections in relation to it.
(2) ………..
(3) Where the dealer to whom the draft order is served under sub-section (1) or (2) communicates in writing to the authority his objections in relation to the draft order within a period of thirty days from the date of service of the draft order, the authority shall transfer the proceedings to such other sales tax authority to which an appeal against the order would have lied under section 65 and thereupon the other authority to which the proceedings have been transferred shall exercise the powers under section 41, 44, 45, or, as the case may be, 46 in relation to those proceedings :
Provided that nothing in section 82 shall apply to any transfer of proceedings made under this sub-section.
(4) Where the dealer to whom the draft order is served under sub-section (1) or (2) fails to communicate in writing to the authority his objection in relation to the draft order within a period of thirty days from the date of service of the draft order, the authority shall make an order of assessment or, as the case may be, an order imposing penalty under section 41, 44, 45 or, as the case may be, 46 in accordance with the draft order.”
As per sub-section (1) if the sales tax authority while proposing to make an order of assessment under section 41 is of the opinion that such order would impose a liability to pay an amount not less than Rs. 25,000 by way of tax in respect of the period, in addition to the amount of tax indicated by the dealer in his declaration or return he shall serve on the dealer a draft order and invite his objections in relation thereto. If the dealer to whom a draft order is served communicates his objection to the draft order within a period of 30 days from the date of service of the draft order the sales tax authority has to transfer the proceedings to the appellate authority under sub-section (3) and thereupon such appellate authority can exercise the powers under section 41, 44, 45 or 46 in relation to these proceedings. At the same time if the dealer to whom the draft order is served fails to communicate in writing to the authority his objections in relation to the draft order within a period of 30 days from the date of service of the draft order, the authority can make an order of assessment or order imposing penalty in accordance with the draft order under sub-section (4) of section 46A.
6. Thus, the sales tax authority has jurisdiction to initiate the assessment proceedings under sub-section (1) of section 46A of the Act read with section 41 of the Act, but his jurisdiction to pass an order of assessment would be divested only when the dealer communicates the objections in relation to the draft order within a period of 30 days. He has also jurisdiction to pass the final order of assessment if he does not receive any written objection within the stipulated period. It is, therefore, clear that the assessment order passed by the sales tax authority in the present case did not lack initial jurisdiction in respect of subject-matter of the assessment under the Act but his order suffered from irregular exercise of jurisdiction due to non-compliance with the provision contained in sub-section (1) of section 46A. If the requisite procedure is not complied with naturally the appellate authority can always remand the matter to the original authority for following the procedure prescribed under the law after setting aside the illegal order passed by him. The assessment order passed by the Sales Tax Officer was no doubt illegal, but it has to be set aside by the appellate authority by directing the sales tax authority to make fresh assessment under the third proviso to section 42.
6A. As indicated earlier, the appellate authority has already found that the assessment proceedings initiated before the Sales Tax Officer would not be completed within a reasonable time as the cases had to be adjourned from time to time at the instance of the applicant, and the applicant would not be justified even otherwise to invoke the limitation contained in section 41 of the Act.
6B. It is also to be noted that the entire section 46A has been deleted by the Gujarat Act No. 14 of 1986, and so after amendment the procedure prescribed in the said section 46A is not required to be followed.
7. Mr. Pathak heavily relied on the Full Bench judgment of this Court in Ahmedabad Cotton Mfg. Co. Ltd. v. Union of India (1977) 18 Guj LR 714. In the said case the trade notice issued by the Collector of Central Excise was challenged by the petitioner on the ground that it was totally null and void as it can counter to the illegal tariff item. It was contended that against such an ultra vires order no appeal was contemplated and, therefore, the petitioner was not bound to exhaust any alternative remedy. It was held that when the petitioner is to be asked to exhaust his alternative remedy provided under the Act before entertaining the writ petition it will always have to be decided whether the order is a nullity as being ex facie without jurisdiction or due to non-compliance with the provisions of the Act or the essential principles of justice or any other ground. However, it was accepted that the word “jurisdiction” has both a narrow and a wider meaning. In the sense of the former it means the authority to embark upon an inquiry and in the sense of the latter the decision of the Tribunal may be suffering from non-compliance with the provisions of the Act. A determination by a Tribunal of a question other than the one which the statute directs it to decide would be a decision not under the provisions of the Act and, therefore, in excess of its jurisdiction. Apart from the aspect that the question of alternative remedy is not involved in the present proceedings it is clear that the sales tax authority had the initial jurisdiction to assess the amount of tax due from the registered dealer. He had also jurisdiction to pass the assessment order if the registered dealer did not communicate his objection within the prescribed period. There was no lack of initial jurisdiction to start the assessment proceedings. The failure on the part of the Sales Tax Officer to issue a draft order has been corrected by the appellate authority by setting aside his subsequent assessment order and by directing him to follow the prescribed procedure.
8. In Central Potteries Ltd. v. State of Maharashtra [1962] 13 STC 472, the Supreme Court pointed out the distinction between want of jurisdiction and irregular assumption of jurisdiction. It was held that an order passed by the authority with respect to the matter over which it had no jurisdiction is a nullity, but the order passed by the authority which has jurisdiction over the matter, but which he has assumed it otherwise than in the mode prescribed by law, is not a nullity. It was further held that even if proceedings for assessment wee taken against non-registered dealer without issue of a notice under section 10(1) that would be a mere irregularity in the assumption of jurisdiction and the orders of assessment passed in those proceedings cannot be held to be without jurisdiction.
9. Mr. R. D. Pathak, referred to the judgment in B. C. Malliah v. State of Karnataka [1981] 47 STC 190 (Kar). The question involved in that judgment was whether after the issue of general order by the Commissioner of Sales Tax divesting Commercial Tax Officer of the jurisdiction to take proceedings in all cases where tax liability was Rs. 50,000 or more and vesting it on the Assistant Commissioner of Commercial Taxes the proceedings commenced by the Commercial Tax Officer for assessment were without jurisdiction. Such a question does not arise in the present case inasmuch as the Sales Tax Officer has jurisdiction to initiate the assessment proceedings, but having failed to issue a draft order, in the facts of the case, the ultimate order of assessment became illegal.
10. The Tribunal, has, therefore, rightly held in appeal that the untenable order passed by the sales tax authority by not complying with the provision of section 46A(1) would at the most be regarded as irregular and illegal rather than null and void ab initio. The second question will therefore have to be answered accordingly, and so far as the third question is concerned, the applicant would not be justified in claiming the amount of tax remitted by him.
11. In view of our aforesaid answers to question No. 2, it is not necessary to answer question No. 1 as it is widely worded and Mr. Pathak also concedes that it would not be necessary to answer question No. 1.
12. We, therefore, hold that the final order of the assessment passed by the Sales Tax Officer in contravention of section 46A of the Gujarat Sales Tax Act, 1969, was not void ab initio, but merely an irregular order and that the applicant was not justified in claiming refund of the amount of tax remitted by him. We do not think it necessary to answer question No. 1 in the facts and circumstances of the case.
13. The reference is answered accordingly in favour of the Revenue. There will be no order as to costs in the circumstances of the case.
14. Reference answered accordingly.