TaxTMI 
TaxTMI 
1998 (8) TMI 580
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....idavit in this Court and has issued orders, which prima facie have no legal sanction. 3.. Facts situation projected by the petitioner and almost undisputed by opposite parties are as follows: Petitioner is a wholly owned subsidiary of an international dredging company named Boskalis Westminister Dredging, Netherlands (hereinafter referred to as "the parent company"). Activities of the aforesaid concern involve providing specialised services of dredging of sea-beds, catchment area and land reclamation. Petitioner being a subsidiary is controlled by the parent company which has some dredging equipments. These equipments have been provided to the petitioner for execution of work awarded by the Paradeep Port Trust (hereinafter referred to as "the Port Trust"). An agreement relating to allotment of work was executed on March 19, 1996 and the parameter of work to be executed has been detailed in the said agreement. The consideration for which the contract has been awarded is nearly Rs. 18 crores. Break-ups for various descriptions of works and corresponding contract values have been indicated in the agreement itself. According to the petitioner, the work awarded did not invol....
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.... sales tax at the rate of 8 per cent amounting to Rs. 1,44,00,000. As the project was to be concluded shortly, he directed by his order dated September 10, 1996 the Port Trust not to clear final bill of the petitioner, until the aforesaid amount of tax is deducted from the bill of the petitioner and credited in favour of the department. The said order was challenged before this Court in O.J.C. No. 11083 of 1996 and by an interim order it was directed that the assessment proceeding initiated under section 12(5) of the Act was to be continued, subject to result of the writ petition. It was also stipulated that any deduction of sales tax beyond the statutory rate (which was undisputedly 4 per cent) was not to be made, and the purported request of sales tax authorities to the Port Trust was not to be given effect to beyond the statutory limit. After the writ application was filed, the Circle Officer issued a letter to the Sales Tax Officer, Jagatsinghpur Assessment Unit, inter alia, stating that the petitioner was an unregistered dealer within the territorial jurisdiction of his circle: that the proceeding under section 12(5) of the Act was initiated against the petitioner: that an enq....
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.... O.J.C. No. 10718 of 1997, challenge is to the order of assessment made. It is stated that the order of assessment was ante-dated and it was stated therein as if it was passed on March 1, 1997, though in reality it was passed on February 25, 1997. Records were manipulated to that extent. We shall deal with this aspect later on. We may note here that the periods for which the assessments were completed related to quarters ending June 30, 1996 and September 30, 1996, that is obviously parts of the assessment year 1996-97. Immediately after the order was passed, the Circle Officer issued a letter on March 5, 1997 to the Chairman of the Port Trust to the following effect: "In pursuance of judgment of honourable High Court of Orissa in O.J.C. No. 11083 of 1996 dated December 12, 1996 on account of M/s. Boskalis Dredging India Ltd., wherein the court has held that 'the T.D.S. kept by you Reported as Boskalis Dredging India (Pvt.) Ltd. v. Sales Tax Officer, Assessment Unit, Jagatsinghpur [1998] 108 STC 203 (Orissa). on account of aforesaid dealer-company should be credited in favour of Sales Tax Officer, Cuttack-II Circle, Cuttack' after the assessment completed. Assessment has been....
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....sonal presence for the present is dispensed with, in view of the unqualified apology tendered. ........................" 5.. It is to be noted that though challenge in O.J.C. No. 10718 of 1997 is to the validity of the assessment order passed by the assessing officer on the ground of manipulations and ante-dating, statutory appeals were filed under section 23 of the Act. The total tax payable was calculated to be Rs. 41,63,166 and after giving credit for a sum of Rs. 26,76,173 deducted as tax at source, balance demand raised was Rs. 14,86,993. The demand was reduced by the first appellate authority to Rs. 2,43,986. The said authority took note of the fact that a sum of Rs. 27,76,173 had been deducted at source under section 13-AA of the Act, and therefore, directed refund of Rs. 24,32,193. 6.. Grievance of the petitioner is that by manipulating records, keeping the matter in cold storage in order to stall grant of no-deduction certificate and by mala fide acts, the sales tax authorities managed to collect Rs. 67,36,998 in shape of tax deducted at source. Even though the Sales Tax Officer, Jagatsinghpur Assessment Unit, issued a certificate after disposal of the writ petiti....
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....shows that originally the date was "February 25, 1997" which was corrected as "March 1, 1997". Similar is the case in the order of assessment, the first page of which appears at page 254 where the date "February 25, 1997" has been corrected as "March 1, 1997". If the entry in the order-sheet is correct that the matter was to be placed on March 1, 1997 for orders, then the assessment order and the demand notice could not have been prepared on February 25, 1997 to be corrected as has been done. The statement that order was merely dictated is clearly false. Further manipulations of record appear from the first entry in the assessment records of the initial period. The order-sheet dated June 27, 1996 reads as follows: "Gleaned from the secret source that M/s. Boskalis Dredging India (P.) Ltd., Paradeep, is undertaking works contract at Paradeep but unregistered. Issue notice under section 12(5) of the O.S.T. Act fixing date to August 14, 1996 for the year 1995-96 & issue a reference to IST to submit a report regarding receipt of payments from M/s. PPT." (At two different places "S.T.O." is written in respect of the order.) The portion "& issue a reference to IST to submit a repor....
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....uotation and other documents on the basis of which the contractor relies his claim for no deduction or deduction of tax at source, as the case may be. (3) If the particulars and documents furnished by the contractor are correct and complete in all respects and after making such other enquiry as deemed necessary, the Commissioner is satisfied that the concerned works contract involves both transfer of property in goods and labour or service, or involves only labour or service and justifies deduction of tax or no deduction of tax, as the case may be, he shall after giving the appellant a reasonable opportunity of being heard, may grant a certificate in Part II of form XI-C within a period of one month from the date of receipt of the application and shall forward a copy of such certificate to the deducting authority under whom the work is executed." The form of application for issuance of the certificate is form XI-C, Part I and the form of certificate is Part II of the said form. After disposal of O.J.C. No. 4166 of 1997 by judgment dated April 9, 1997* the Sales Tax Officer, Jagatsinghpur Assessment Unit, has issued a certificate to the effect that keeping in the terms of the ....
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.... is against the very spirit of rule of law. Article 265 of the Constitution of India is a pointer in this regard. It is stated by the learned counsel for the Revenue that if the petitioner is permitted to take back the amount collected at source, there is likelihood of non-collection of tax if ultimately it is assessed. Learned counsel for the petitioner on the other hand contended that the petitioner is a company of repute and there is no question of it not paying taxes if ultimately assessed. In any event, the amount of tax which could have been deducted on the figures indicated in the certificate in form XI-C (Part II), even if they are accepted to be correct, for the sake of argument, is very much less than the actual deduction and collection made. This plea has substance. We are essentially concerned with the amount which could have been deducted at source legally. The question whether the petitioner would be able to pay an extra demand raised has nothing to do with the question of tax deduction at source. The modalities and the rate hive been indicated in the statute. As the present dispute, as indicated above, essentially relates to deduction at source, we have examined i....
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....essing officer and first appellate authority is not an easy one. One hand they have a duty to see that there is just assessment and there is no leakage of revenue. In that sense they are counsel of the Revenue. On the other hand, their job is similar to that of a Judge who has to take a decision. The functions have on many occasions conflicting aspects. Ultimately it has to be borne in mind by the assessing officers that they are watch-dogs of revenue and not blood hounds. Tax evasion is reprehensible, it is social injustice by the evader to his fellow citizens. Arbitrary or excessive assessment is equally reprehensible; it is social injustice by the tax collector to the people. Tax evasion aggravates arbitrary taxation, and arbitrary taxation aggravates tax evasion. To break the vicious circle, while there must be every attempt to check evasion, there must equally be every attempt to stop whimsical taxation. The radiating potencies of taxes go far beyond mere raising of revenue. They propel tendencies which can obstruct effort, deflect enterprise and constrict growth. Taxes are the lifeblood of any Government; but it cannot be overlooked that such blood is taken from the arteri....