1. As both these writ applications involve the same question of law, they have been heard together and are being disposed of by this common Judgment.
2. Heard learned counsel for the petitioner and learned counsel for the State in both the Writ applications.
3. The matters under challenge are the review of the assessment of the sales tax, relating to the assessment years 2004-05 and 2005-06. The writ petitioner made some inter-State sales to unregistered dealers. For the inter-State transactions, the petitioner was exempted from the State tax under Section 7 (1-a) of the Bihar Finance Act, 1981, (herein after referred to as the 'State Act'), but was liable to pay tax under Section 8 of the Central Sales Tax Act (herein after referred to as the 'CST Act'). For the inter-State transactions made to the registered dealers, there is concessional rate of tax provided under Section 8 (1) of the CST Act, whereas for the inter-State transactions made to the unregistered dealers, higher rate of tax is provided under Section 8
(2) of the CST Act, which at the relevant time read as follows:-
"8. Rates of tax on sales in the course of inter-State trade or commerce,-
(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sales of goods in the course of inter-State trade or commerce not falling within sub section (1) -
(a) in the case of declared goods, shall be calculated at twice the rate applicable to the sale or purchase of such goods inside the appropriate State; and
(b) in the case of goods other than declared goods, shall be calculated at the rate of ten percent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher;
and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law."
4. The assessment of the tax was accordingly made by the Assessing Authority on 08.12.2005, and the said tax was also paid by the petitioner. Subsequently, the matter was reviewed pursuant to an audit objection, and after getting the consent of the Commissioner of the Commercial Taxes on 23.06.2009, and the assessment order was reviewed by the impugned order dated 01.10.2009, by the Assessing Authority, imposing surcharge on the assessed tax.
5. The audit objection has been brought on record, which shows that since the petitioner was liable to pay tax on the inter-State transactions with unregistered dealers, at the rate applicable as per the State Act, the petitioner was also liable to pay surcharge which was not levied at the time of passing the original assessment order. On the basis of this audit objection, notice was issued under Section 47 of the Bihar Finance Act, read with Rule 32 of the Bihar Sales Tax Rules, 1983, (herein after referred to as the 'Rules'), to the petitioner. The petitioner responded to the notice and the only point taken was that no surcharge was payable under the CST Act, and since transaction was taxable under the CST Act, there was no question of making the payment of surcharge. The review order was however, passed, imposing the surcharge upon the petitioner to the tune of Rs.4,89,441.10 paise, for both the assessment years taken together. The petitioner challenged the aforesaid order before the Appellate Authority, and after failing before the Appellate Authority, before the Commercial Taxes Tribunal, Ranchi, by filing revision petition Nos. Hz 77 and 78 of 2010, which were also dismissed by the Judgment dated 25.10.2011, holding that surcharge is nothing, but a higher percentage of tax. Aggrieved thereby, these Writ applications have been filed by the petitioner.
6. Learned counsel for the petitioner placing reliance on Section 47 of the Bihar Finance Act, submitted that for the purpose of review it was necessary that there should be a mistake apparent from the record, but since in the present case surcharge was not leviable under the CST Act, there was no mistake while making the original assessment of tax, and as such, no case for review was made out. Learned counsel also submitted, placing reliance upon Rule 32 of the Rules, that the review was permissible only after recording the reasons for doing so. It is submitted by learned counsel that in the review order dated 01.10.2009, whereby the surcharge was imposed upon the petitioner, no reason whatsoever has been assigned by the Assessing Authority for reviewing the order, showing his independent application of mind, except repeating the audit objection.
7. Placing reliance on Section 8 (2) of the CST Act, learned counsel for the petitioner has further submitted that in cases of the inter-State transactions made with the unregistered dealers, only "the tax" is leviable under Section 8 (2) of the CST Act. There is no mention of 'surcharge' under the CST Act. It is submitted that the word "tax" is not defined under the CST Act, rather it is defined under Section 2 (x) of the State Act, which states that the tax includes sales or purchase tax levied under Section 3 as also additional tax levied under Section 6 of this Act. It is submitted by learned counsel that provision for surcharge is under Section 5 of the State Act, and it is not included within the definition of 'tax' given in Section 2 (x) of the aforesaid Act.
8. In support of her contention that the review order without recording the reasons is bad in the eyes of law, once it is specifically provided in the Rules, learned counsel has placed reliance upon the decision of the Hon'ble Madras High Court in Seshasayee Paper and Boards Ltd. Vs. Commissioner of Income-Tax & Ors.,2003 SCCOnLineMad 1000 , as also upon the decision the of the Hon'ble Calcutta High Court in Apex Credit Pvt. Ltd. & Anr. Vs. Income Tax Officer, Kolkata & Ors.,2016 SCCOnLineCal 8192 , wherein it has been held that if the law requires the reasons to be recorded, any action without recording the reason is bad in the eyes of law.
9. Learned counsel for the State has also argued at length on the questions raised by the learned counsel for the petitioner. It is also submitted by learned counsel for the State that sufficient reasons have been stated in the review order by the Assessing Authority, and there is no illegality in the review order on this score.
10. We however, do not propose to enter into other questions of law raised by the learned counsel for the petitioner, in view of the express wordings of Rule 32 of the Bihar Sales Tax Rules, which reads as follows:-
"32. Review.- (1) When any authority appointed under section 9 reviews under section 47 any order passed under the Act it shall record reasons for doing so.
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11. Since this Rule clearly says that before passing the review order under the Act, the reasons are required to be recorded, which is a mandatory provision, the review order needs to be looked into, to see whether it passes the test of Rule 32 of the Rules. The relevant portion of the review order, shows that the only reason given therein reads as follows:-
"LANGUAGE"12. It is submitted by the learned counsel for the State that when the assessee admits that he has paid the tax at the maximum rate prescribed under the State Act, sufficient reason has been given by the Assessing Authority to impose the surcharge on the transactions made by the petitioner, particularly when the original assessment order is not challenged.
13. We cannot subscribe to the view of the learned counsel for the State on this count. We find that what has been stated by the Assessing Authority in his review order, is only that in view of the objection raised by the Audit Team, the review order is passed imposing the surcharge. No reason whatsoever has been given by the Assessing Authority, applying his own independent mind, whether in the inter-State transactions made with the unauthorized dealers, the surcharge is also payable by the assessee, and whether in failing to levy such surcharge, there was any mistake apparent on the record. In absence of any such reason given by the Assessing Authority, showing the application of his own independent mind, we are of the considered view that only recording the audit objection cannot mean the independent reasoning given by the Assessing Authority. When the Rule requires the Assessing Authority to record his reasons in writing, that means the Assessing Authority has to make out his own subjective satisfaction about the objection raised by the audit team, and if the Assessing Authority finds that the objection raised by the Audit Team is sustainable, he shall proceed to review order. He cannot proceed to review the order only on the basis of the objection raised by the Assessing Authority, without application of his own independent mind. Rule 32 of the aforesaid Rules is absolutely clear in these terms.
14. Since, we find that no reason has been assigned by the Assessing Authority in the review order dated 01.10.2009, the same cannot be sustained in the eyes of law. Accordingly, both the review orders dated 01.10.2009, with respec
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t to the assessment years 2004-05 and 2005-06, as challenged in both these writ applications are hereby, quashed. Consequently, the impugned order / Judgment passed by the Appellate Authority and the Tribunal, are also, set aside. 15. By order dated 28.03.2012, passed in these writ applications, while staying the levy of surcharge, this Court had directed the petitioner to furnish bank guarantee which was accordingly, furnished by the petitioner. Subsequently, by order dated 06.12.2018, the stay order was vacated, and the respondent-State was permitted to invoke the said bank guarantee, subject to the result of the writ applications. 16. In view of the fact that both these writ applications are allowed, setting aside the review orders imposing the surcharge, the petitioner shall be entitled to the refund of the entire amount with due interest thereon, or adjustment of the same against his future liability of the tax. 17. Both these writ applications are accordingly, allowed with the directions as above.