REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1410 OF 2003
Supreme Paper Mills Ltd. ... Appellant
Versus
Asst. Commnr. Commercial Taxes
Calcutta & Ors ... Respondents
JUDGMENT
Dr. Mukundakam Sharma, J.
1. The issue that falls for consideration in the present appeal is whether
the show cause notice issued by the respondent is illegal and defective as the
same did not provide for a time period of 15 days as prescribed in the statute
and also because it did not disclose materials leading to the satisfaction of
the concerned authorities justifying the issuance of such a show cause
notice.
2. The appellant Company was carrying on the business of
manufacturing various types of papers at its paper mill situated at Village
Raninagar Chakdah, District Nadia, Kolkata. In the course of its carrying
on business it filed necessary returns as required under the Bengal Finance
(Sales Tax) Act, 1941 (for short the “1941 Act”) and also paid the taxes on
the basis of the said return. The Revenue also completed the assessment
proceeding which was deemed to have been made under Section 11 E (1) of
the 1941 Act by operation of law. Subsequently, however, the appellant
received a show cause notice from the Deputy Commissioner, Commercial
Taxes, Corporate Division whereby the appellant was directed to show cause
why deemed assessment case for the period mentioned in the said impugned
notices would not be re-opened. Since the validity of the aforesaid notices
has been challenged by the appellant herein, we would extract the relevant
contents of one of the notices which reads as follows:-
“Whereas I am satisfied that the returns filed by you
which formed the basis of the above mentioned deemed
assessment case exhibit incorrect statement of your
turnover/incorrect particulars of sales whereas it
appears to me that the assessment is required to be re-
opened, you are hereby directed to show cause on
29.6.99 at 11.00 a.m. why the assessment will not be
re-opened.”
3. The other notices which are also impugned herein have similar
contents. In terms of the aforesaid notices, the appellants were directed to
submit their reply to the show cause notice on 29.6.1999.
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4. Being aggrieved by the issuance of the aforesaid notices, the appellant
filed an application under Section 8 of the West Bengal Taxation Tribunal
Act, 1987 challenging the validity of the aforesaid notices issued by the
respondent proposing to re-open the deemed assessment for the four periods.
The West Bengal Taxation Tribunal heard all the four cases analogously and
by judgment dated 27.7.2001, dismissed the same.
5. Being aggrieved and dissatisfied by the aforesaid judgment and order
passed by the Tribunal, the appellant preferred a Writ Petition in the High
Court of Calcutta which was entertained. However, the High Court of
Calcutta dismissed the writ petition by the impugned judgment and order
dated 19.7.2002 which is under challenge in this appeal.
6. Counsel appearing for the appellant submitted before us that the
aforesaid show cause notice is illegal and without jurisdiction as a time
period of 15 days which is required to be given was not extended to the
appellant to submit its reply to the show cause notice. It was also
submitted that the said notices were invalid due to non-mentioning of
materials leading to the satisfaction of the authority for issuance of such a
notice.
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7. In support of the aforesaid contentions, counsel appearing for the
appellant relied upon the provisions of section 11E (2) of the Act as also on
the decision of the Calcutta High Court in Apollo Tyres Ltd. Vs. Deputy
Commissioner (Commercial Taxes) and Others reported in 2001 38 Sales
Tax Advices 4 and the decision in Hindustan Lever Ltd. Vs. Director
General (Investigation and Registration) and Anr. reported in (2001) 2
SCC 474.
8. Counsel appearing for the respondent, however, refuted the aforesaid
submission contending inter alia that what is challenged in the present case
is only a show cause notice and that no final order is yet passed. It was
also submitted that the pre-condition as mentioned in the statutory provision
is the satisfaction of the concerned Authority that the assessee had furnished
incorrect statements of his turnover or incorrect particulars of the sale
submitted under Section 10 or otherwise, and that such a satisfaction can be
derived on the basis of the information received by that Authority or
otherwise.
9. It was submitted that on fulfilling all the pre-conditions mentioned in
the statute itself and if the Commissioner is satisfied of the aforesaid
situation, it is possible for him to issue such a show cause notice. He also
submitted that the aforesaid show cause notice cannot be said to be invalid
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because of paucity of time granted to the appellant. We have considered the
aforesaid submissions of the counsel appearing for the parties in the light of
the records placed before us.
10. Section 11 E (2) in terms of which the aforesaid show cause notice is
issued reads as follows:-
“Sec. 11E (2) – Where the Commissioner is satisfied on
information or otherwise that a registered dealer –
(a) has concealed any sales or particulars thereof, or
(b) has furnished incorrect statement of his turnover or
incorrect particulars of his sales in the return submitted
under section 10 or otherwise.
relating to an assessment made under sub-section (1) which
has resulted in reduction of the amount of tax payable by him
under this Act in respect of any of the periods, the
Commissioner shall, subject to such conditions as may be
prescribed, within six years from the date of such assessment,
reopen in the prescribed manner the assessment for such
period and, after giving such dealer a reasonable opportunity
of being heard, make fresh assessment under sub-section (1)
of section 11 for such period to the best of his judgement.”
11. The aforesaid provision makes it crystal clear that if on information
received by the Commissioner or even otherwise, if he is satisfied that the
assessee namely the registered dealer has furnished incorrect statement of
his turnover or incorrect particulars of his sales in the return submitted or
even otherwise, he may issue a show cause notice to show cause as to why
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the assessment made should not be re-opened. It is crystal clear that the
show cause notice is issued with the purpose of giving the dealer a
reasonable opportunity of being heard before an order is passed for re-
opening of the assessment for the reason that he has furnished incorrect
statement of his turnover or incorrect particulars of his sales in his return.
12. In Sales Tax Officer, Ganjam Vs. M/s. Uttareswari Rice Mills
[(1973) 3 SCC 171], a similar issue as sought to be raised herein was urged
before the Supreme Court. In the said case, a similar notice was issued by
the Sales Tax Officer to the dealer contending inter alia that he had a reason
to believe that his turnover for the quarter ending 1963-64 on which sales tax
was payable under the Orissa Sales Tax Act, 1947 had escaped
assessment/had been under-assessed. In that view of the matter, the dealer
was called upon to submit his reply. The aforesaid notice was challenged
by filing a writ petition in the High Court of Orissa whereas the High Court
allowed the writ petition on the ground that the Sales Tax officer did not
indicate any reason for issuing notice under Section 12(8) of the Act. On
appeal being filed, this Court in that context considered sub-sections (5) and
sub-sections (8) of Section 12. After considering the aforesaid provisions,
the Supreme Court in paragraph 8 held as follows:-
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“8. Although the opening words used in Section 12(8) are
“if for any reason” and not “if the sales tax authority has
reason to believe”, the difference in phraseology, in our
opinion, should not make such material difference. A
reason cannot exist in vacuum. Somebody must form the
belief that reason exists and looking to the context in
which the words are used, we are of the view that it should
be the sales tax authority issuing the notice who should
have reason to believe that the turnover of a dealer has
escaped assessment or has been under-assessed. The
approach in this matter has to be practical and not
pedantic. Any view which would make the opening words
of Section 12(8) unworkable has to be avoided. It may be
noted in this context that in Form VI appended to the
rules, which has been prepared in pursuance of Rule 23,
the words used are “whereas I have reason to believe that
your turnover . . . . . . . . . . . . has escaped assessment . . . .
. . . . . . . .”
13. Then again in paragraph 14, this Court further held in the following
manner:-
“14. There is nothing in the language of Section 12(8) of
the Act which either expressly or by necessary implication
postulates the recording of reasons in the notice which is
issued to the dealer under the above provision of law. To
hold that reasons which led to the issue of the said notice
should be incorporated in the notice and that failure to do
so would invalidate the notice, would be tantamount to
reading something in the statute which, in fact, is not
there. We are consequently unable to accede to the
contention that the notice under the above provision of law
should be quashed if the reasons which led to the issue of
the notice are not mentioned in the notice. At the same
time, we would like to make it clear that if the Sales Tax
Officer is in possession of material which he proposes to
use against the dealer in proceedings for reassessment, the
said officer must before using that material bring it to the
notice of the dealer and give him adequate opportunity to
explain and answer the case on the basis of that material.”
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14. In our considered opinion, the ratio of the aforesaid decision of this
Court is squarely applicable to the facts of the present case. The expression
used in Section 11 E of the Act is that the Commissioner must be satisfied
on information or otherwise that the registered dealer has furnished incorrect
statement of his turnover or furnished incorrect particulars of his sale in the
return. A show cause notice is issued to the dealer with the purpose of
informing him that the department proposes to re-open the assessment
because the Commissioner himself is satisfied that the dealer has furnished
incorrect statement of his turnover or incorrect particulars of his sales in the
return submitted, so as to enable the dealer to reply to the show cause notice
as to why the said power vested on the Commissioner should not be
exercised.
15. A notice was issued in order to provide an opportunity of natural
justice to the dealer. There is nothing in the language of the aforesaid
provision which either expressly or impliedly mandates the recording of any
reasons. The provision of the Act nowhere postulates that the reasons which
led to the issue of the said notice should be incorporated in the notice itself,
and that in case of failure to do so, the same would invalidate the notice.
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16. The aforesaid provision is clear and explicit and there is no ambiguity
in it. If the legislature had intended to give any other meaning as suggested
by the counsel appearing for the appellant it would have made specific
provision laying down such conditions explicitly and in clear words. It is a
well-settled principle in law that the court cannot add anything into a
statutory provision, which is plain and unambiguous. Language employed
in a statute itself determines and indicates the legislative intent. If the
language is clear and unambiguous it would not be proper for the court to
add any words thereto and evolve some legislative intent not found in the
statute.
17. Here is a case where the section provides that if the Commissioner is
satisfied that the assessee namely the registered dealer has furnished
incorrect statement of his turnover or incorrect particulars of his sales in the
return submitted or even otherwise and in that event a notice would be
issued as envisaged therein to the dealer to show cause as to why the
assessment made should not be re-opened. Therefore, notice issued in the
present case giving the dealer an opportunity to show cause within a
stipulated period does not in any manner prejudice the right of the appellant
to file an effective reply. It was always possible for the appellant to seek for
further time, if according to him the time given by the authority for filing the
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reply was required to be extended in order to enable him to collect some
record. It cannot therefore be said that if detailed reasons for issuance of
notice being absent in the show cause notice, the same was invalid and void.
18. The aforesaid Section 11 E (2) nowhere specifically mentions that
factual basis of the ground of Deputy Commissioner’s satisfaction on either
or both the points mentioned in sub-Section 2(a) or 2(b) of Section 11 of the
Act are required to be incorporated in the notice for re-opening of the
deemed assessment and supplied to the dealer.
19. The appellant at this stage is simply called upon to file his objection
or show cause as to why the re-opening of the assessment should not be
done. Once he submits his reply to the show cause, he would also be heard
and would also be allowed to produce his records namely books of accounts,
only after which a decision would be taken whether the assessment already
done should be re-opened or not. Even after that, the appellant would
definitely get an opportunity of hearing in the fresh assessment proceeding.
In that view of the matter, we are of the considered opinion that the appellant
would not in any manner be prejudiced due to issuance of the aforesaid show
cause notice. We therefore, dismiss the appeal filed by the appellant,
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maintain the judgment and order passed by the Tribunal and upheld by the
High Court.
20. The appeal has no merit and is dismissed.
…………………………………J.
[D.K. Jain]
…………………………………J.
[Dr. Mukundakam Sharma]
…………………………………J.
[R.M. Lodha]
March 25, 2010
New Delhi.
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