1951 (1) TMI 30 - HC - VAT and Sales Tax

Summary

Issues:
Jurisdiction of Assistant Commissioner to issue notice for re-examination of assessment under Section 15(1) of the Central Provinces and Berar Sales Tax Act, 1947 without proper authority and hearing the petitioners.

Analysis:

The petitioners, a firm engaged in the business of manufacturing and selling bidis, challenged a notice received from the Assistant Commissioner of Sales Tax to re-examine their assessment. The main contention was that the Assistant Commissioner lacked the jurisdiction to issue such a notice and demand the production of documents. The State argued that the Assistant Commissioner had the authority under Section 15(1) of the Sales Tax Act, delegated by the Commissioner, to require the production of relevant documents for inspection. Section 15(1) empowers the Commissioner to demand accounts, registers, or documents necessary for the Act's purposes. However, this power can only be exercised when inspection is required "for the purposes of this Act."

Another provision cited was Section 22(5) of the Act, granting the Commissioner the power to revise any order passed under the Act. The Commissioner sought to re-examine the petitioners' accounts to determine if the assessment needed revision, falling within the Act's scope. Notably, Section 22(7) mandates that the Commissioner cannot exercise this power without hearing the affected party, which was not done in this case. The State argued that the Commissioner's direction to the Assistant Commissioner was administrative, not judicial. However, as there is no provision for administrative orders in the Sales Tax Act, the order must be deemed judicial. Failure to hear the petitioners before issuing the direction was the only error, not the Commissioner's competence to issue the order.

Consequently, the court held that the Assistant Commissioner's proceedings initiated at the Commissioner's behest were without jurisdiction. The petitioners were not obligated to comply with the notice issued by the Assistant Commissioner. The court suggested that the Commissioner could issue a notice under Section 22(7) after hearing the petitioners to decide on the assessment's reopening. The petition was allowed with costs, emphasizing the importance of proper procedure and hearing before exercising such powers under the Act.