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PETITIONER: STATE OF U.P.

       Vs.

RESPONDENT: DYER MEAKIN BREWERIES LTD.

DATE OF JUDGMENT08/03/1973

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. REDDY, P. JAGANMOHAN KHANNA, HANS RAJ

CITATION:  1973 AIR 2366            1973 SCR  (3) 649  1975 SCC  (3)   1

ACT: Central   Sales   Tax  Act,  1956,   Section   10-A-Assessee registered   as  dealer  in   Gaziabad-Penalty   proceedings initiated    against   assessee--Subsequently,    assessee’s registration  transferred to Lucknow--Sales Tax Officer  had jurisdiction  to  impose  penalty  on  assessee  even  after transfer of registration.

HEADNOTE: The  assessee was registered as a dealer under  the  Central Sales  Tax  Act,  1956,  at  Ghaziabad.   For  the  relevant assessment  years,  be was assessed by the  Tax  Officer  at Ghaziabad.   The Sales Tax Officer, Ghaziabad,  subsequently came  to know that the assessee had misused some of the  ’C’ Forms  and, therefore, issued a penalty notice u/s  10-A  of the  Act  on  January 8, 1960. During the  pendency  of  the penalty   proceedings,   the   assessee   transferred    his registration to Lucknow.The Sales Tax   Officer,   Ghaziabad imposed the penalty on the assessee for the misuse of  Form ’C’.  At  the  instance  of  the  assessee,  the  Revisional Authority under the Statute referred three questions of  law to High Court under section 11(1) of the U.P. Sales Tax Act, the principal question being whether the Sales Tax  Officer, Ghaziabad,  had  jurisdiction  to impose  penalty  when  the registration  was  transferred to Lucknow.  The  High  Court answered the question against the State. On appeals by special leave, allowing the appeals, HELD,:  Prima  facie, the Sales Tax Officer,  Ghaziabad  was competent to levy the penalty on the assessee. Section  10-A definitely   says  that  the  authority  who   granted   the certificate  of  registration to an assessee is one  of  the authorities competent to levy penalty. Undoubtedly the Sales Tax  Officer, Ghaziabad, was the authority who  granted  the certificate  of  ’registration  to  the  assessee  and  that certificate  was  in force during  the  relevant  assessment years. Even though after 28-3-1960, the date of ,transfer of registration,  he  ceased to be the authority  competent  to grant  certificate of registration to the assesses 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. The levy of penalty is One  of

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levying tax. If the Sales-tax Officer was competent to  levy sales-tax  on  the  assessee  in  respect  of  the  relevant assessment  years, he was equally competent to levy  penalty on the assessee in respect of the offences committed  during these years. [653 D]

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 1655  and 1656 of 1970. Appeals  by special leave from the judgment and order  dated 1st  January 1970 of the Allahabad High Court in  Sales  Tax Reference Nos. 15 and 16 of 1968. N. D. Karkhanis and 0. P. Rana, for the appellant. D. P. Singh, S. C. Agarwal, V. J. Francis and R. P. Singh, for the respondent, 650 The Judgment of the Court was delivered by HEGDE, J. These are appeals by Special Leave.  They  related to  penalty  proceeding.  The assessee,  M/s.   Dyer  Meakin Breweries  Ltd., is carrying on business of manufacture  and sale  of  wines, bear and fruit juices, etc.  at  Ghaziabad. The  assessee was registered as a dealer under  The  Central Sales Tax Act, 1956 (hereinafter referred to as the Act)  at 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 of 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 the 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 application praying for condonation of his default, 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 10(b) of the  Act. Thereupon, the assessee submitted an application offering to compound  the offence for a sum of Rs. 7,000/-.  That  offer was  not  accepted. 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 unlawful 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 assessment year 1959-60  to  Rs.  17,000/-. Thereafter,  the  assessee took up the matter  in  revision. The Revisional Authority dismissed the assessee’s appeal  in respect  of  the assessment year 1958-59,  but  reduced  the penalty from 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

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questions to the High Court under Section 11 (1) of the U.P. Sales Tax Act :-               "1. Whether on the facts and circumstances  of               the  case  the Sales  Tax  Officer,  Ghaziabad               being not seized 651               of  the  matter  at the  time  of  making  the               penalty  order  the jurisdiction  having  been               transferred  to Lucknow circle, was right  and               just   in  law  in  initiating   the   penalty               proceedings and imposing the fine ?               2.  Whether on the facts and circumstances  of               the  case the additional  Revising  Authority,               Sale$  Tax,  Meerut  Range  was  justified  in               holding   that   the   applicants   made   the               representations    with    a    guilty    mind               fraudulently   and  falsely,  with  the   full               knowledge  that the objected  goods  purchased               were   not   covered   by   the   registration               certificate               3.If  the answer to question No. 2 is  in  the               negative,  whether the imposition  of  penalty               under  section 10(b) of the Central Sales  Tax               Act was justified and 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,  jurisdiction  over  the  assessee  had   been transferred  to  the  Sales  Tax  Officer,  Lucknow,  Having answered  the first question in favour of the assessee,  the High  Court thought it unnecessary 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 the assessment years 1958-59 and 1959-60  to the  Sales Tax Officer, Ghaziabad.  It is that  Officer  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 date, the assessee continued to be registered as a dealer  in the office of the Sales Tax  Officer,  Ghaziabad. The  penalty  proceedings had been initiated on  January  8, 1960,  i.e.  long  before  the  assessees  registration  was transferred  from the Sales- Tax Officer, Ghaziabad to  the, Sales  Tax  Officer, Lucknow.  The High Court  came  to  the conclusion that when the penalty was actually imposed on the assessee,   the  Sales  Tax  Officer,  Ghaziabad,   had   no jurisdiction  over the assessee and hence the levy made  was invalid.   We  shall  presently examine the  correctness  of that   conclusion.   But  before  doing  so,  it  would   be convenient  to dispose off a new contention advanced by  Mr. Singh,  the  learned counsel for the  assessee.   Mr.  Singh contended that the registration of the assessee as a dealer 652 before  the  Sales  Tax Officer, Ghaziabad  was  an  invalid registration  as  the  U.P. Sales Tax Act  as  well  as  the Central Sales 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

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contention.   No such contention 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 before us to show that during  the  relevant assessment  years the assessees head office was at  Lucknow. These are essentially questions of fact.  We cannot go  into those 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  registered  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 unauthorised. This takes us to the question whether under Section 10-A  of the Act, the Sales Tax Officer, Ghazibad, had competence  to levy  penalty on the assessee.  We shall first read  Section 10  of the Act to the extent it is material for our  present purpose.  That section says :- "10. If any person- (a).................. (b)  being  a  registered dealer,  falsely  represents  when purchasing  any class of goods that goods of such class  are covered 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". 653               Section 10-A(1) 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, as the case  may  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  been               committed :               Provided  that no prosecution for  an  offence               under  section  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. Therefore, prima facie, he was competent to levy penalty  on the assessee. But it was contended on behalf of the assessee that  on  28.3.1960,the registration before  the  Sales  Tax Officer,  Ghaziabad,  stood  cancelled  and  thereafter  the assessee  was  registered  before  the  Sales  Tax  Officer, Lucknow, that being so, the Sales Tax Officer,Ghaziabad, had

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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 granted  the certificate  of registration to an assessee is one  of  the, authorities  competent  to levy  penalty.  Undoubtedly,  the Sales  Tax Officer,Ghaziabad, was the authority who  granted the  certificate  of registration to the assessee  and  that certificate was in force during the assessment years 1958-59 and 1959-60. Even though after 28.3.1960 he ceased to be the authority competent to grant certificate 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 the assessee in respect of  the  offences  committed  during  those  years.  In  our opinion,  the  High Court did not  properly  appreciate  the legal  position  in this case. The High Court was  wrong  in thinking  that the proceedings initiated on January 9,  1960 stood  terminated  as a result of  the  subsequents  notices issued by the Sales Tax Officer.  The notices issued by 654 him  are not statutory notices.  Under Section 10-A  of  the Act  the  Sales  Tax  Officer  was  only  required  to  give reasonable  opportunity  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 answering  the remaining questions.  Costs of these  appeals will be costs in the cause. S.B.W.                      Appeals allowed. 655