1954 (11) TMI 37 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality and validity of assessments without opportunity under section 12(5) of the Orissa Sales Tax Act, 1947.
2. Use of statements in the application for registration as legal evidence against the assessee.
3. Existence and effect of an agreement to waive the procedure of the Act.

Issue-wise Detailed Analysis:

1. Legality and Validity of Assessments Without Opportunity Under Section 12(5):

The High Court examined whether the assessments for the quarters ending 30th June, 30th September, and 31st December, 1948, were legal and valid in the absence of an opportunity given to the assessee under sub-section (5) of section 12 of the Orissa Sales Tax Act, 1947. The assessee contended that he was not liable for tax for these quarters since he started his business only on 17th April, 1948, and had not registered during those periods. The Court noted that the Sales Tax Officer did not provide the assessee with a reasonable opportunity to be heard, which is a mandatory requirement under section 12(5). The Court concluded that the non-observance of these mandatory provisions rendered the assessments illegal and invalid, as the assessee suffered serious prejudice due to the lack of opportunity to prove his non-liability.

2. Use of Statements in the Application for Registration as Legal Evidence:

The Court considered whether the statements made in the assessee's application for registration in January 1949, or the fact of that application itself, could be used as legal evidence against him for the liability of assessment for the three quarters in question. The Revenue Commissioner and the Sales Tax Officer had relied on the gross turnover stated in the registration application to assess the tax. However, the Court held that using this material against the assessee without giving him an opportunity to show that the statements were inaccurate was not permissible. The Court emphasized that the statements in the application for registration could not be used as legal evidence against the assessee in the absence of the opportunity mandated by section 12(5).

3. Existence and Effect of an Agreement to Waive the Procedure of the Act:

The Court addressed the contention raised by the Sales Tax Authorities that there was an agreement to waive the procedure of the Act, based on a Government Order which suggested that betel-leaf dealers should be assessed for the first three quarters of the year 1948-49 on the basis of the return for the last quarter. The Court found that there was no direct proof that the assessee was a party to this agreement, and even if such an agreement existed, it could not override the statutory rights provided under section 12(5) of the Act. The Court concluded that the assessments were not justified based on this alleged agreement, and the mandatory procedure of the Act could not be waived.

Conclusion:

The Court answered the questions as follows:
1. The assessments were not legal and valid in the absence of an opportunity given under section 12(5) of the Act.
2. The statements in the application for registration could not be used as legal evidence against the assessee for the liability of assessment for the three quarters in question.
3. There was no agreement to waive the procedure of the Act.

The reference was disposed of accordingly, with the petitioner entitled to the costs of the proceedings.