Supreme Court of India
FERTILIZER CORPORATION OF INDIA LTD.versusSTATE OF BIHAR
- Citation
- 1987 INSC 359
- Decided
- 4 December 1987
- Disposal
- Appeal(s) allowed
- Bench
- SABYASACHI MUKHERJI
Holding
The assessee is entitled to the rebate because the condition of filing the return within the prescribed or an implied extended period is deemed satisfied.
Summary
Fertilizer Corporation of India Ltd filed its quarterly sales‑tax returns a few days late without seeking a formal extension, but it paid the tax before the due dates and claimed the 1% rebate under section 15 of the Bihar Sales Tax Act, 1959. The Tribunal and the High Court held that because the returns were not filed within the prescribed or an expressly granted extended period, the rebate was not payable. On appeal, the Supreme Court examined the statutory language of sections 14, 15 and 20, noting that the Act does not prescribe a specific procedure for obtaining an extension and that the procedural condition can be construed liberally so as not to frustrate the provision’s object of rewarding prompt tax payment. Observing that the assessing authority neither imposed a penalty nor made a best‑judgment assessment and had accepted the belated returns, the Court inferred that an implicit extension was present. Consequently, the Court held that the condition precedent for the rebate was satisfied and allowed the appeal, granting the rebate to the assessee.
Issues considered
- Whether the assessee is entitled to the 1% rebate under section 15 of the Bihar Sales Tax Act when the return is filed after the prescribed period without a formal extension but the tax is paid on time.
Legislation cited
- Bihar Sales Tax Act, 1959s. 14, s. 15, s. 16, s. 20
- Bihar Sales Tax Rules, 1959s. Rule 10
Subjects
sales taxrebatereturn filingstatutory interpretationextension of timetax assessmentpenaltybest judgment assessment
Judgment
FERTILIZER CORPORATION OF INDIA LTD.
A
v.
STATE OF BIHAR
""'
DECEMBER 4, 1987
ll [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]
Bihar Sales Tax Act, 1959: ss. 14, 15 & 20-Rebate-Belated
returns-Provisions for extension of time not availed of-Returns
otherwise accepted-Penal provision for delay not invoked-Tax
1
deposited within time-Assessee whether entitled to rebate.
c Interpretation of Statutes: Procedural provision-Interpretation
of-Can be construed liberally so long as the principal object is not
frustrated.
•
Section 14(1) of the Bihar Sales Tax Act, 1959 requires dealers to
I) furnish returns within such period and to such authority as may be
prescribed. Rule 10(2) of the Bihar Sales Tax Rules, 1959 requires the
assessee to file quarterly returns within one calendar month of the
expiry of the period to which they relate. Sub-section (3) of s. 14
provides for extension of time for submission of the return. Sub·
section (2) of s. 20 requires dealers to pay into the Government
f;: Treasury the full amount of tax due and furnish a receipt along with
the return. Section 15 entitles the assessee to rebate in tax on returns
...r
furnished under sub-s. (I) of s. 14 or within extended period. The
proviso to sub-s. (2) of s. 20 entitles a dealer to deduct from the
amount of tax due from him any amount which may be admissible as
rebate under the provisions of s. 15. (
F
The assessee filed its quarterly returns under s. 14(1) of the Act
late by a few days. There was no application made by it to the pres-
i
cribed authority for extension of time. The assessee, however, paid the .
tax before the due date of the respective returns and availed Itself of
G
the rebate by deducting the same while paying the tax due. ,_
The Tribunal held that as the assessee did not file its returns
within the prescribed period and had sought no extension, it was not ).
entitled to the rebate. The High Court upheld the view taken by the
Tribunal.
H Allowing the appeal,
148
FERIBJZER CORPN. v. STATE OF BIHAR 149
HELD: 1. The assessee was entitled to the rebate of tax provi- A
ded for ins. 15 of the Bihar Sales Tax Act, 1959. [156B)
2. The condition in s. IS referring to a return has a substantive
as well as procedural content. The latter should be construed
somewhat liberally and generously so long as the principal object of B
the provision is not frustrated. [tSSH; t56A)
C./. T. v. Kulu Valley Transport Co. Pvt. Ltd., [1970) 77 I.T.R.
)
518; Gursahai Saigal v.. C.I.T. (1963) 48 I.T.R. S.C. I; Allen v.
Trehearne. [1938] 22 T.C. 15 and C.J. T. v. Mahaliram Ramjidas,
r [1940] 8 I.T.R. 442. referred to.
3.1 The object of s. 15 of the Act is to confer a benefit on an
assessee for prompt payment of the tax. In the instant case, the
assessee had paid the tax before the due dates. The tax paid accords
with the tax due on the basis of returns. There was short delay only in
c
the filing of the returns. I153D-E)
D
y 3.2 The Act does not set out any particular procedure for
obtaining extention of time. It does not prescribe any form of appli-
cation. It does not require that the prescribed authority must pass an
order recording his satisfaction that the time should be extended and
granting time. it envisages three consequences to the assessee for
failure to file a return within the prescribed time, or extended time: (i) E
loss of rebate under s. 15, (ii) risk of a penalty under s. 14(4), and (iii)
risk of a best judgment assessment under s. 16(4). I154A-D I
3.3 In the instant case the assessing authority has neither levied
a penalty nor made a best judgment assessment nor recorded a finding F
that the delay was without reasonable cause. From these circum-
stances it is reasonable to infer that the returns, though filed bela-
tedly, have been accepted and acted upon by the prescribed authority,
An extention of time can thus be inferred from the attendant circum-
stances of the case. It54D-F)
3.4 The condition precedent for the grant of rebate that the G
assessee should have filed its return within the prescribed or extended
petjod, can, therefore, be said to have been fulfilled in the present
case. ll53H; 154A)
Jamuna Floor & Oil Mills Pvt. Ltd. v. State of Bihar, [1968] 22
S.T.C.1, approved.
H
150 SUPREME COURT REPORTS [1988] 2 S.C.R.
A CIVIL APPELLA1E JURISDICTION: Civil Appeal Nos.
948-950 of 1975.
From the Judgment and Order dated 12.9.1974 of the High
Court of Patna in Tax Case Nos. 2 to 4 of 1968.
B Harish N. Salve, Mrs. A.K. Verma, Ms. S. Sethna and Joel
Peres for the Petitioner.
' }
D. Goburdhan for the Respondent.
c
The Judgment of the Court was delivered by
RANGANATHAN, J. These three appeals by the Fertiliser
Corporation of India Limited (hereinafter referred to as 'the asses-
1
)
see') arise out of its sales tax assessments for the assessment years
1959-60, 1960-61 and 1961-62 under the Bihar Sales Tax Act, 1959,
{hereinafter referred. to as 'the Act'). They raise a very short but
p interesting questioll' regarding the entitlement of the assessee to the
rebate of tax provided for in section/5 of the Act.
At the outset, a reference may be made to the salient portions
of certain relevant provisions of the Act. Section 14(1) provides that
every registered dealer shall furnish such returns within such period _.,
E and to such authority as may be prescribed. The prescribed authority
is the Assistant Commissioner of Sales Tax who is also the assessing
authority. Under rule 10 of the Rules framed under the Act, the
~
assessee should file quarterly returns. Such returns are to .be filed
within one calendar month of the expiry of the period to which they
relate. Sub-section (3) of s. 14 provides for an extension of time for
f the filing of the return. It reads:
"If the prescribed authority is satisfied that a dealer is, for
reasonable cause, unable to furnish any return within the
prescribed period or the period fixed under the proviso to
sub-section (1), the said authority may extend the period
G for submission of the return."
Section 20 of the Act requires that, before any registered de!tler ~
furnishes a return under the Act, he should pay into a Government
Treasury the full amount of tax due under the Act according to such
return and should also furnish along with the return a receipt from
H s!lch Treasury showing the payment of the said amount. S. 15 is the
FERTILIZER CORPN. v. STATE OF BIHAR [RANGANATIIAN, J.) 151
provision entitling the assessee to a rebate. It reads as follows: A
"Rebate-A rebate at the rate of one per centum of the
amount of tax admitted to be due in the return furnished
under sub-section (!) of section 14 in the prescribed
manner and withih the prescribed or extended period shall
B
be allowed to a registered dealer who has paid such
amount according to the provisions of sub-section (2) of
section 20.
Provided that where the amount finally assessed on
the dealer is less than the admitted amount, rebate at the
said rate shall be allowed only on the amount so assessed: c
Provided further that the State Government may, by
notification, and subject to such conditions or restrictions
as may be specified therein, enhance or reduce the rate of
rebate in respect of registered dealers generally or any
D
class of such dealers."
It may be noted that, under the proviso to section 22 of the Act., a
registered dealer is entitled to deduct from the amount of tax due
from him under the Act according to his return any amount which
may be admissible as rebate under the provisions of section 15.
E
In the present case, the assessee filed its quarterly returns under
section 14(1) of the Act but, except for the second quarter of 1960-
61, the returns were all filed belatedly. To illustrate, the returns for
the second, third and fourth quarters of 1959-60, were filed by the
assessee only on the 7th 'November, 1959, llth February, 1960 and
Ist June 1960. In other words, the returns'were late by a few days. It F
is common ground that there was no application made by the assessee
to the prescribed authority for extension of the time prescribed under
the Act for the filing of the return. The assessee however, paid the
taxes before the due dates of the respective returns, availed itself of
the rebate and deducted the same while paying the tax due on the G
returns filed by it.
The short question that arose before the Tribunal as well as the
High Court was whether the assessee was entitled to the rebate under
section 15. The Tribunal held that the rebate is available to an
assessee only if-
H
152 SUPREME COURT REPORTS [1988] 2 S.C.R.
(i) the tax on the basis of returns is paid as prescribed in
A
section 20; and
(ii) the quarterly returns of the assessee had been filed within
the prescribed period or extended period.
'3 As the assessee had not filed its returns within the prescribed period
and, since the assessee had sought no extension, it was held that the
assessee ·was not entitled to the rebate. The assessee sought for a
reference and, before the High Court, relied on a decision of the
same High Court in Jamuna Flour & Oil Mills Pvt. Ltd. v. State of
Bihar, [1968] 22 S.T.C. 1. The facts of the case were similar to those.
C of the present case and the assessee had been held entitled to the
rebate. It is sufficient to extract the relevant portion of the head
note:
"For the quarter ending 30th June, 1961, the assessee had
paid the tax due before 3 lst July, 1961, but it actually
D filed the return only on Ist August, 1961. The assessee was
assessed on the basis of the return submitted by it but its
claim for rebate under section 15 of the Bihar Sales Tax
Act, 1959, was rejected by the taxing authority on the
ground that for the purpose of eligibility for rebate under
E
section 15, the assessee must fulfil two conditions, viz.,
( 1) the tax due for the quarter must be paid before the
end of succeeding month, and (2) the return must also be
1
filed by the end of the succeeding month: Held, that the
assessee was entitled to the rebate under section 15 for the
quarter ending 30th June, 1961.
F Although the return was submitted one day late, as
the assessee was assessed not under the best of judgment
principle but on the return submitted by it, it must be said
that, impliedly the period for furnishing· the return was
extended by one day as permitted by section 14(3). The
passing of an express order by the taxing authority, re-
garding its satisfaction about the existence of reasonable
cause for failure to furnish the return by 3 lst July 1961,
was not necessary.
On a proper construction of section 15 read with
section 20, the eligibility for claiming rebate arises if the
amount is paid under section 20(2) ..That portion of
FERTILIZER CORPN. v. STATE OF BIHAR (RANGANATIIAN, J.l 153
,I, section 15, which refers to the filing of return within the A
prescribed period, should not be construed as a condition
for a right to claim rebate. The reference to the return in
~· section 15 is for the purpose of ascertaining the amount of
tax admitted to be due and it is not meant to restrict the
assessee's right to claim rebate."
B
The two judges who heard the case of the assessee were divided in
their opinion on the question at issue. The matte\ was, therefore,
referred to a larger bench. This Bench (by a majority of 2 to 1) took
the same view as Tribunal. The assessee is in appeal before us,
convassing the correctness of the decision of the Full Bench.
We have given careful thought to the contentions of the counsel
c
for the parties and the differing views expressed by the Judges who
heard the above two cases. We have reached the conclusion that the
• view taken by the High Court in Jamuna Flour and Oil Mills (Pvt.)
Ltd. v. State of Bihar, 119681 22 S.T.C. 1, is the better view on a
proper construction of the relevant statutory provisions. The object D
of section 15 of the Act is to confer a benefit on an assessee for
" prompt payment of the tax. In this case there is no dispute that the
assessee had paid the tax before the due dates. There is also no
dispute that the tax paid accords with the tax due on the basis of
returns. The only question is whether the assessee should be pena-
'r lised by being denied the rebate due to it because there was a short E
delay in the filing of the returns.
\ The argument on behalf of the Revenue which has appealed to
~
the High Court is this. Section 15 is not a taxing provision but one
which confers a benefit or concession to assessee. Settled principles
of construction of taxing statutes require that such conditions should F
r be strictly construed. The section lays down two conditions for the
grant of benefit or concession of which one is not fulfilled. Though
the assessee had paid the taxes in time, it had neither filed returns
within the prescribed time nor cared to obtain an extension for filing
the same. There is no reason why such an assessee should be shown
-. any leniency and given a benefit which it does not deserve on the G
language of the statute.
'!--- Granting the correctness of the above argument and assuming
that it is also a condition precedent for the grant of rebate that the
assessee should have filed its return within the prescribed or exten-
ded period, we think it can be said that the said condition is fulfilled H
154 SUPREME COURT REPORTS [1988] 2 S.C.R.
A in the present case. The return was admittedly not filed within the
time prescribed under s. 14(1). Has it been filed, then, within the
extended period? In answering this question, certain features of the
Act have to be kept in mind. The first is that the Act does not set out
any particular procedure for obtaining extension of time. It does not
prescribe any form of application. It does not say that such appli·
B cation must be filed before the expiry of the prescribed period. It
does not require that the prescribed authority must pass an order
recording his satisfaction that the time should be extended and
granting time. The second is that, under the provisions of the Act
three consequences are envisaged where a return is not filed within
the prescribed time or extended time:
c (i) the assessee will lose the benefit of rebate under s. 15;
(ii) the assessee will run the risk of a penalty under s. 14(4);
(iii) the assessee will also run the risk of a best judgment
D assessment under s. 16(4).
In the present case, the assessing authority has neither levied a
penalty nor made a best judgment assessment. The assessment
orders, while adverting to the delay in the filing of the returns, do not
record a finding that the delay was without reasonable Cause. These are
E circumstances from which, we think, it is,reasonable to infer that the
returns, though filed belatedly, have been accepted and acted upon
by the prescribed authority. We see no reason why an extension of
F
time cannot be inferred from the attendant circumstances in this case.
Learned counsel for the assessee also suggests a different kind
of approach to the issue before us. He submits that all that s. 15 aims
at is to grant a tax rebate of 1% of the amount of tax admitted to be
r
y
due as per the return filed by the assessee. The further words used in
section 15 to describe the return, namely, that it should be a return
filed in the prescribed manner and within the prescribed or extended
period are merely words descriptive of the procedure of filling a
G return. The basic condition necessary for claiming the tax rebate is
only that there should be a valid return and that the tax on the basis
of the valid return should have been paid by the assessee. He submits
that while the substantive part of the condition should be strictly
construed by insisting upon the presence of a valid return, the
procedural aspect referred to can well receive a liberal construction.
H In the present case, he points out, there is no dispute that the returns
FERTILIZER CORPN. v. STATE OF BIHAR (RANGANATIIAN, J.] 155
filed by the assessee were valid. In fact the assessments have been A
made on the basis of the returns filed. The tax has been paid even
before the submission of the returns. There is no suggestion'that the
tax paid fell short of the tax due on the r<<.turn. This is also not a case
where the assessed tax is much higher than the tax admitted on the
basis of the returns. In these circumstances, he argues, the assessee
must be held to have fulfilled the conditions prescribed in s. 15. B
Learned counsel for the assessee referred to certain decisions in
support of such a rule of construction. In C./. T. v. Kulu Valley
Transport Co. Pvt. Ltd., [1970] 77 I.T.R. 518 the court had to
. construe a provision intended to benefit the assessee. Under s. 22
(2A) of the Income-Tax Act, 1922, a return of loss had to be filed
within the time prescribed for return under s. 22(1) if the assessee
c
wanted to carry forward the loss claimed. It was not so filed but was
nevertheless treated as a valid return by reading the provisions of
section 22( 1) and 22(3) of the Act jointly and giving a liberal inter-
pretation to s. 22(2A). In the case of Gursahai Saiga/ v. C.l. T.,
[1963] 48 I.T.R. S.C. 1 the question was regarding the charge of D
interest s. 18A(8) of the same.Act. This provision did reveal a lacuna
but reading the provision along with s. 18A(6), the Court gave effect
to the intendment of the Legislature. It was explained that s. 18A(8)
was not a provision creating a charge of tax but only laying down the
)-- machinery for its calculation or procedure for its collection. The
dictum of Scott LJ. in Allen v. Trehearne, [1938] 22 T.C. 15 that E
machinery provisions should be interpreted largely and generously in
order not to defeat the main object of liability laid down by the
statute was referred to. The following observations of the Privy
""( Council in C.l.T. v. Mahaliram Ramjidas, [1940] 8 I.T.R. 442 were
l also relied upon:
F
"The section, although it is part of a taxing Act, imposes
no charge on the subject, and deals merely with the
machinery of assessment. In interpreting provisions of this
kind the rule is that thai construction should be preferred
which makes the machinery workable."
G
Though the abo've decisions arose under a different enactment
and on different statutory language, they dealt with somewhat
analogous situations and furnish useful guidance here. They do lend
support to the assessee's contention. It does seem that the condition
in s. 15 referring to a return has a substantive as well as procedural
content and it may not be inappropriate to construe the latter H
156 SUPREME COURT REPORTS [1988] 2 S.C.R.
A somewhat liberally and generously so long as the principal object of
the provision is-not frustrated.
Fot these reasons, we are of the opinion that the High Court
should have answered the question, as re-framed by it, in the nega-
B tive and in favour of the assessee. We approve the decision in
Jamuna Flour & Oil Mills Pvt. Ltd. v. State of Bihar, [1968] 22
S. T.C. 1 and reverse the decision in the present case.
The appeal is allowed. But, in the circumstances of the case, we
.make no order as to costs.
C P.S.S. Appeal allowed.
r1
_..,/,,\ !
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