2000 (3) TMI 987 - SC - VAT and Sales Tax

Jurisdiction of High court - Held that - Appeal allowed. On the plain language of the section and on examining the impugned notice, we are not in a position to come to the conclusion that either the revisional authority lacked jurisdiction in issuing the notice in question nor can it be said that the necessary ingredients for exercising that power, as conferred by the statute have not been specified. In this view of the matter, no hesitation to come to the conclusion that the High Court exceeded its jurisdiction in interfering with the notice issued by the revisional authority

Summary

Issues:
1. Jurisdiction of revisional authority to revise assessment orders based on new information.
2. Interpretation of Section 40 of the Haryana General Sales Tax Act, 1973.

Issue 1: Jurisdiction of revisional authority to revise assessment orders based on new information:
The petitioner, a company registered under the Companies Act, 1956, was assessed to sales tax for multiple assessment years for the manufacture and sale of surgical cotton. The assessing authority initially taxed the surgical cotton at 4 per cent based on a previous tribunal decision treating cotton and surgical cotton as one item. However, a subsequent Supreme Court decision clarified that surgical cotton is distinct and should be taxed differently. The revisional authority then sought to revise the assessment orders and levy tax at 8.8 per cent instead of 4 per cent. The petitioner challenged this notice, arguing that the revisional authority lacked jurisdiction to revise the assessment based on post-assessment information. The High Court relied on a previous decision and set aside the notice. The Supreme Court, following a division bench decision, held that the revisional authority had the power to revise the assessment orders if the assessing authority had erred in assessing the surgical cotton at 4 per cent instead of 8 per cent. The Court quashed the High Court's order and directed the revisional authority to proceed with the matter in accordance with the law.

Issue 2: Interpretation of Section 40 of the Haryana General Sales Tax Act, 1973:
The appeal before the Supreme Court centered on the interpretation of Section 40 of the Haryana General Sales Tax Act, 1973, which empowers the Commissioner to call for records and pass orders to ensure the legality and propriety of proceedings or orders made by assessing or appellate authorities. The Court found that there were no limitations on the revisional authority's power to issue notices and review cases to determine the legality or propriety of assessment orders. The revisional authority's wide powers included rectifying errors made by the assessing authority, such as taxing surgical cotton at an incorrect rate. The Court concluded that the High Court had exceeded its jurisdiction by interfering with the notice issued by the revisional authority. Therefore, the Supreme Court allowed the appeal, quashed the High Court's order, and directed the revisional authority to continue with the matter in accordance with the law, granting the assessee three weeks to file a reply.

This detailed analysis of the judgment highlights the issues of jurisdiction and statutory interpretation involved in the case, emphasizing the Supreme Court's decision and reasoning in resolving the legal dispute.