1997 (4) TMI 425 - SC - VAT and Sales Tax

REASSESSMENT NOTICE PERIOD OF LIMITATION WHERE NO MATERIAL THAT ASSESSEE HAS FAILED TO DISCLOSE FULL TURNOVER

Summary

Issues:
- Reopening of assessment under the Bihar Sales Tax Act, 1959 beyond the statutory period.
- Obligation of the assessee to disclose particulars of turnover.
- Validity of penalty proceedings and conditions for imposition of penalty.
- Interpretation of section 18(1) of the Bihar Sales Tax Act, 1959.

Analysis:

The judgment by the Supreme Court pertains to a case under the Bihar Sales Tax Act, 1959, involving the reopening of assessments for the years 1964-65 and 1965-66. The appellant argued that notices for reopening the assessments were issued beyond the six-year period but within eight years from the end of the assessment period, as per section 18 of the Act. The appellant contended that there was no concealment, omission, or failure to disclose particulars of turnover by the assessee. The Court emphasized that notices for reopening assessments are mandatory and cannot be waived.

Furthermore, the appellant argued that there is no legal obligation for the assessee to disclose sales made outside the State, as the Sales Tax Officer's jurisdiction is limited to assessable transactions within Bihar. The Court highlighted that in penalty proceedings, the burden lies on the department to establish the grounds for imposing penalties. Similarly, for reopening assessments, the department must fulfill the conditions precedent for such action.

The Court found merit in the appellant's argument, stating that there was no evidence of non-disclosure by the assessee that warranted reopening of the assessments. The High Court's judgment lacked specifics on what the assessee failed to disclose as required by law. The Court noted the confusion in the legal provisions regarding the obligations of the assessee to disclose turnover fully.

Moreover, the Court observed that the High Court's decision to strike down the penalty proceedings due to lack of concealment raised questions about the justification for reassessment. The absence of material supporting the reopening of assessments beyond the six-year period under section 18(1)(a) of the Act further weakened the case against the appellant. Ultimately, the Court allowed the appeals, setting aside the High Court's judgment and ruling in favor of the appellant, with no order as to costs.