TaxTMI 
TaxTMI 
1995 (9) TMI 333
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....e writ petition. On March 19, 1983, in compliance to notice under section 8(2) of the Act, the petitioner-company produced its books of account before the respondent No. 2, the Superintendent of Taxes in support of the returns filed. On examination of the accounts and documents, the respondent No. 2 completed the assessments of the above periods, vide orders of assessment dated March 19, 1983, under section 8(3) of the Act. In the assessment orders, the respondent No. 2 recorded its finding that the dealer purchased pine square beams only during the period concerned and that the purchases were recorded properly and also supported by audited balance sheet. The turnover shown in the returns was accepted and demand of taxes was raised at the rate of 15 per cent of the said turnover. The rate of 15 per cent tax was applied as applicable to converted timber under the Act. Rate of tax as prescribed by the Schedule to the principal Act as amended from time to time was raised on the petitionercompany since it had paid the demanded tax already as admitted taxes along with the returns filed. The assessment order is quoted below: "Shri A.P. Singh, Accountant of the dealer appeared in compl....
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....rcement Branch) at the lower rate of 15 per cent of Meghalaya Purchase Tax in respect of timber logs purchased by you instead of the relevant rate of 30 per cent as per provisions of the Meghalaya Purchase Tax Act you are hereby required to show cause in writing so as to reach this office on or before August 23, 1988 as to why the aforesaid assessment orders should not be cancelled and order for a fresh assessment be passed as per provision of section 41(1) of the Meghalaya Purchase Tax Act." Thereafter the time for submission of reply was extended up to October 28, 1988 by the respondent No. 3 vide his letter dated September 6, 1988. The petitioner-company filed a reply to the show cause notice vide its petition dated October 6, 1988/October 24, 1988, submitting that pine square beams purchased by it were converted timber and the original assessment were properly made. The aforesaid reply is annexure III to the writ application and that is quoted below: "We are in receipt of your above quoted letter allowing time up to October 28, 1988, in the above matter. This is to submit before your honour that we purchased pine square beams which are classified as roughly converted timb....
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....other than firewood-Fifteen paise per rupee value at which the taxable goods are purchased. Therefore, we conclude by stating that the assessments have been properly done." Similar is the reply in respect of all other civil rules. The points which were highlighted in the reply were, inter alia, as follows: (i) Letter dated September 26, 1988, issued by the Conservator of Forests, Meghalaya, stating that pine square beams are classified as roughly converted timber. (ii) Letter dated September 14, 1988, issued by the officer-in-charge, Composite Wood Branch, Government of India, Forest Research Institute P.O. New Forest, Dehradun (U.P.) clarifying the classification of timber in the commercial sense into three categories which were quite different and distinct from each other. (iii) The respondent No. 3 vide his letter dated December 31, 1988 (annexure IV) cancelled the original assessments with a direction to make fresh assessments by holding that pine square beams were unconverted timber and the tax rate of 15 per cent was wrongly applied. That annexure IV is quoted below: "Dealer is absent. Heard the dealer and perused the case record with reference to the doc....
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....tioner that the pine square beams, purchased by him were converted timber and taxable at the rate of 15 per cent cannot, therefore, be accepted. The reason being the such pine square beams are nothing but pine square logs obtained from round logs by peeling off the bark and roughly slicing the sides to facilitate transport, stacking, etc., and it cannot be said after such type of so-called conversion that they are new commercial articles different from timber logs. The meaning must be given as understood in common parlance and in this connection the decision of the Supreme Court in Ganesh Trading Co. v. State of Haryana reported in [1973] 32 STC 623 is very relevant. In this case, the Supreme Court has firmly held that in finding out the true meaning and entries mentioned in the Sales Tax Act, what is relevant is not the dictionary meaning, but how these entries are understood in common parlance specially in commercial circles. As such, the pine square beams purchased by the dealers cannot, therefore, be equated with converted timber such as plank, scantlings, etc., which are commercial articles different from pine square logs or pine square beams from which they are sawn. Therefor....
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....ri B.P. Bajoria, a partner appeared in compliance to the notice under section 8(2) and produced the abovementioned account books and documents only which were examined. The dealer purchased pine square logs only. On examination of the accounts produced, it was found that the dealer purchased logs worth Rs. 3,30,671. Purchases were found to be recorded properly and also vouched for. No irregularity was observed. Assessment is made as follows: Rs. Turnover 3,30,671.00 Tax at 15 per cent 49,600.65 Tax paid vide: (a) Ch. No. 1024/B dated March 24,1982 (b) Ch. No. 654/B dated June 21, 1982 40,627.00 Tax due 8,973.65 Surcharge 485.00 Surcharge paid Nil Surcharge due 496.00 Interest 11,453.64 Interest paid Nil Interest due 11,453.64 Assessment under section 8(3) Draw up assessment order and issue Demand notice Sd/D.R. Lanong 25-4-1983 Superintendent of Taxes, Meghalaya, Shillong." Similar order was passed in the other civil rules. The petitioner-firm filed revisions against the assessment orders dated April 25, 1983, before the respondent No. 3 under section 41(2) of the Act. Prayer for stay was also made. The respondent No. 3 vide order....
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....treated as converted timber inasmuch as it is virtually sized log only peeled off for the convenience of transportation and it needs further conversion for preparation of sawn timber. Timbers which are not fully converted into sawn timbers are considered as unconverted logs. In C.R. No. 915 of 1987 group in the affidavit-in-opposition it is stated, inter alia, as follows: 1. Interest has been levied as per the provision of section 21 of the Act and rule 22 of the Rules. Non-submission of return means non-payment of tax due as per return. I have heard Mr. J.P. Bhattacharjee, learned counsel for the petitioner in both the group of civil rules and Mr. N.M. Lahiri, learned Advocate-General, Meghalaya for the respondents in both the groups of civil rules. The contentions of Mr. Bhattacharjee in C.R. No. 547 of 1989 group are as follows: 1.. The impgned order is arbitrary, illegal, without jurisdiction and not tenable in law. Pine square beams are converted timber and not logs. So, tax payable on it as per entry No. 5(a) shall subsist at the rate of 15 per cent. 2.. The earlier order cannot be cancelled by resorting to suo motu power of revision under section 41(1) ....
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....e prescribed. (2) Where on making the assessment, the Commissioner finds that a dealer has not maintained the account books properly and thereby he has suppressed the purchase of goods in any period, the Commissioner may direct him to pay interest as prescribed in sub-section (1). If the amount of tax payable under the Act has been reduced in appeal or revision, the interest may be calculated on the reduced amount. (3) If any registered dealer does not pay into the Government treasury the amount of tax within the date as provided in sub-section (4) of section 20 or any instalment of the tax within the extended date as per proviso to sub-section (1) of section 23 of the Act, interest as provided in sub-section (1) shall be payable from the first day of the month next following the said date by the dealer upon the amount by which the tax, if any, paid falls short of the amount of tax payable under the Act." Rule 22 of the Rules reads as follows: "22. If a dealer does not submit the return and pay the amount of tax due from him within the date specified in rule 16, he shall be liable to pay a simple interest at the rate of six per cent per annum on the amount of tax....
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....eet the demands of all classes of markets whether local or distant. 'Conversion' itself is generally taken to mean the process of producing sawn timber from the log. A rough classification of timber in the commercial sense is as follows: 1.. Timber in the round, or logs. 2.. Roughly converted timber, or timber squared with the axe, usually called baulks or rough squares. 3.. Sawn timber such as squares, beams, sleepers, scantlings and planks. (Source: Indian Woods Volume I, Delhi)." 4.. In Indian Forest Utilisation description of conversion is given as follows: "Description of converted wood: The nomenclature of converted wood varies but broadly speaking, the following are the most common terms used: (1) Squares or baulks .. These may be with or without wane. (2) Beams .. Usually rectangular and free from wane. Rough conversion in the forest: Timber can be squared in the forest by means of an axe into baulks or rough squares, when a special demand exists for this class of produce or when it is necessary to reduce the weight of timber to facilitate transport. Rough squaring is usually done in the Himalayan forests. This is, however, a wasteful pr....
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....Carbon Ltd. v. State of Assam), where there was a difference of opinion and on such difference, the matter was placed before the third Judge and the third Judge in para 59 of the judgment has laid down as follows: "A combined reading of section 35A and rule 42A makes it clear that the latter has transgressed the provision finding place in the former inasmuch as according to the section interest becomes due on the amount determined on the basis of the return whereas under the rule the interest has been made payable on the amount of the tax assessed. It is too well-known that the amount assessed in many cases exceed the amount of return. As a rule cannot overstep a section, in my opinion, rule 42A has to read down in the sense that interest has to be determined on the basis of the return filed and not on the basis of the tax assessed. Another overstepping of the rule which has been brought to my notice is that the rule applies to all dealers whereas the section speaks of registered dealer. As to this the submission of Shri Talukdar is that section 9 of the State Act visualises compulsory registration also not much difference has been created by the two different terminology use....
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.... Commercial Taxes Officer) where in para 9 (at pages 432-433 of STC) and 16 (at pages 436-437 of STC) the Supreme Court pointed out as follows: "Before we proceed further we must emphasise that penalty provisions in a statute have to be strictly construed and that is why we have pointed out earlier that the considerations which may weigh with the authority as well as the court in construing penal provisions would be different from those which would weigh in construing a provision providing for payment of interest on unpaid amount of tax which ought to have been paid. Section 3, read with section 5 of the Act, is the charging provision whereas the rest of the provisions provide the machinery for the levy and collection of the tax. In order to ensure prompt collection of the tax due certain penal provisions are made to deal with erring dealers and defaulters and these provisions being penal in nature would have to be construed strictly. But the machinery provisions need not be strictly construed. The machinery provisions must be so construed as would enable smooth and effective collection of the tax from the dealers liable to pay tax under the statute. Section 11B provides for lev....