JUDGMENT
T.P.S. Chawla, J.
1. M/s. Bharat Electrical Equipment Corporation was a firm carrying on the business of manufacturing and selling of cable boxes and electrical goods. Their business premises were originally situated at Darya Ganj, but, subsequently, they shifted to Rohtas Nagar, Shahdara, Delhi. They were registered as a “dealer” both under the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi, and, also, under the Central Sales Tax Act, 1956 (the “local” and the “Central” Act).
2. For the financial year 1967-68, the firm filed returns under the local Act for the first, second and the third quarters. No returns was filed for the fourth quarter. Returns for all the four quarters were filed under the Central Act. Proceedings for assessment both under the local and Central Act were commenced towards the end of 1968. Despite service of notice in form ST XIV, no one appeared on behalf of the firm before the Sales Tax Officer. The case was repeatedly adjourned during the next two years and notices were sent to the firm. But no one appeared on their behalf. However, when the case stood adjourned to 16th February, 1971, a letter dated 8th February, 1971 was received by the Sales Tax Officer, in which it was said that the firm stood dissolved by a dissolution deed dated 25th March, 1970, which had already been filed, and, therefore, no assessment could be made on the firm as such. It was also stated that the books and records of the firm had yet to be traced and were not readily available. It was, therefore, requested that the notice for assessment “may be withdrawn and cancelled and the assessment proceedings be dropped”.
3. The case was adjourned a number of times thereafter at the request of the firm. In a letter dated 31st March, 1971, counsel for the firm informed the Sales Tax Officer, again, that the firm stood dissolved with effect from 25th March 1970, and no assessment could be “framed on it as such”. He, also, said that the partners who were familiar with the books of account were out of station, and prayed for an adjournment “to prove the dissolution”. Similar statements and requests were contained in a letter dated 14th May, 1971, sent by the firm to the Sales Tax Officer.
4. On 28th May, 1971, the Sales Tax Officer recorded the statement of Radha Krishan Lalwani, one of the partners of M/s. Bharat Electrical Equipment Corporation. He said that he had not brought any books of account or any documents because the landlord of their premises in Darya Ganj had fraudulently taken possession of the same due to non-payment of rent. He, further, said that although the firm had been dissolved, he did not have any “written evidence” available with him to prove the dissolution. He said, he would try to bring all the evidence on 31st May 1971, and, in case he failed to do so, an ex parte assessment may be made.
5. On 31st May, 1971, no one appeared on behalf of the dealer, and, consequently, by two orders of that date the Sales Tax Officer made assessments both under the local and the Central Act. Demands for tax were raised under both these orders.
6. For the financial year 1968-69, the firm did not file any return at all either under the local or the Central Act. Proceedings for assessment under both those Acts were commenced in or about the middle of 1971. There were repeated adjournments. Sometimes a partner of the firm would appear, and sometimes not. Finally, a notice dated 29th November, 1972 was sent to Radha Krishan Lalwani, and a copy to counsel for the firm, requiring them to appear before the Sales Tax Officer on 11th December, 1972. Since no one appeared on that date, ex parte assessment orders under the local and the Central Act were made on 12th December, 1972. Demands for tax were created by both these orders.
7. The firm filed four appeals, before the Assistant Commissioner of Sales Tax, against these various orders of assessment. Two of them were directed against the assessment orders made under the local and the Central Act for the year 1967-68, and the other two against the like orders for the year 1968-69. It was observed by the Assistant Commissioner that the firm had not paid the tax admitted to be due for the third and fourth quarters of 1967-68, and for all the quarters of 1968-69. The proviso to section 20(1) of the Bengal Finance (Sales Tax) Act, 1941 enjoins that “no appeal shall be entertained” by the appellate authority unless he is satisfied “that such amount of tax as the appellate may admit to be due from him has been paid”. In view of this provision, a notice was issued to the firm asking them to show cause why the appeals should not be dismissed for want of payment of the tax admitted to be due. On the date of hearing, counsel for the dealer appeared before the Assistant Commissioner of Sales Tax, but offered no explanation as to why the tax admitted to be due had not been paid. Consequently, by an order dated 17th October, 1973, the Assistant Commissioner dismissed the said four appeals in liming.
8. The firm then filed four petitions for revising that order before the Deputy Commissioner of Sales Tax. It was contended before him that the Assistant Commissioner had “erred in law in holding that the admitted amount of tax having not been paid, he had no jurisdiction to hear the appeals”. It was further contended that since the firm had been dissolved, and intimation about the same had been given to the Sales Tax Officer, no assessment against the firm could have been made.
9. By an order dated 28th March, 1974, the Deputy Commissioner held that having been informed that the firm had been dissolved, it was incumbent upon the Sales Tax Officer to make an inquiry into that matter, and he could not legally make an assessment without doing so. He then added : “For this reason, the question of payment of admitted tax for these two years does not arise.” In view of the conclusions which he reached, he set aside the assessment orders and remanded the cases with the direction to the Sales Tax Officer “to hold detailed inquiries regarding the plea of dissolution” and finalise the cases according to law.
10. Against that order, the firm filed four petitions for revision before the Financial Commissioner. They contended on the basis of Ranjit Singh v. Assessing Authority, Sales Tax Officer, Ward No. VII, Delhi [1972] 29 STC 499 (Delhi), that the Deputy Commissioner was in error in making the order of remand as it was not necessary for an inquiry to be held into the question whether the firm had, in fact, been dissolved. This argument was accepted by the Financial Commissioner in his order dated 9th December, 1974. He held that in view of Ranjit Singh’s case [1972] 29 STC 499 (Delhi) “there is no room for doubt (sic) for further investigation to find out the factum of dissolution”. Consequently, he held, that the order of remand made by the Deputy Commissioner was not justified, and set is aside.
11. It has been argued on behalf of the sales tax department before the Financial Commissioner, that it was not permissible for him or the Deputy Commissioner to go into the merits of the case, because the appeals filed by the firm before the Assistant Commissioner had been dismissed in liming as the tax admitted to be due by the firm had not been paid. The Financial Commissioner repelled this argument. One of the reasons which he stated for doing so was that “this plea was never taken up at the appellate or first revisional stage and the department even did not press for suo motu revision of the said orders”.
12. At the request of the Commissioner of Sales Tax the present four references of two identical questions of law, arising out of the order passed by the Financial Commissioner, have been made to this Court. Two references pertain to the assessments under the local, and the other two, under the Central Act. The questions referred are as follows :
“1. Whether, on facts and in the circumstances of the case, the learned Financial Commissioner was justified in quashing the assessment order and setting aside the order of the learned Deputy Commissioner, Sales Tax, who had remanded the case to the assessing authority for investigating the genuineness of the plea of dissolution on the ground that no further investigation was necessary to find out facts of the dissolution of a firm after intimation regarding the same was received by the sales tax department.
2. Whether, on the facts and circumstances of the case, the learned Financial Commissioner was justified in holding that the plea regarding the non-maintainability of the appeal could not be raised for the first time in revision.”
13. As regards question No. 1 we have today decided an identical question referred in S.T.R. Nos. 42 and 43 of 1977 entitled Commissioner of Sales Tax v. Benson Industries [1986] 62 STC 348. For the reasons stated in that judgment we answer question No. 1 in the negative : that is to say, the view of the Financial Commissioner was not justified, and he erred in setting aside the orders of remand made by the Deputy Commissioner for inquiring into the question whether the firm, M/s. Bharat Electrical Equipment Corporation, was, in fact, dissolved.
Question No. 2, it seems to us, is wholly misconceived. It assumes, as a fact, that the plea, that the appeals before the Assistant Commissioner were not maintainable as the tax admitted to be due by the firm had not been paid, was raised for the first time before the Financial Commissioner and not at any earlier stage. This assumption of fact is patently incorrect. The Assistant Commissioner dismissed the appeals before him on the very ground that the tax admitted to be due by the firm had not been paid. Whether this point was taken by the Assistant Commissioner suo motu or raised on behalf of the sales tax department is not clear from the order made by the Assistant Commissioner. But, that is immaterial. The fact remains that the point was discussed and decided, and therefore, very much alive.
It is also apparent from the passage I have quoted from the order of the Deputy Commissioner, that this very point was agitated before him on behalf of the sales tax department, but in his view “the question of payment of admitted tax for these two years (did) not arise”. From the earlier portion of his order, it appears, that one of the contentions of the firm was that the Assistant Commissioner had “erred in law in holding that the admitted amount of tax having not been paid he had no jurisdiction to hear the appeals”. Thus, there can be no doubt that the point was canvassed before the Deputy Commissioner.
The Financial Commissioner was, therefore, wholly mistaken in thinking that “this plea was never taken up at the appellate or first revisional stage”. It is on the basis of this mistaken statement made by the Financial Commissioner that question No. 2 has been formulated. Since, on the facts of this case, that question does not arise we decline to answer the same.
These references are answered accordingly. The Commissioner of Sales Tax will have the costs of these references. Counsel’s fee Rs. 500 in each case.
J.D. Jain, J.
14. I agree.
15. References answered accordingly.