1956 (2) TMI 43 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of notice issued by Sales Tax Officer under section 11A of the Bombay Sales Tax Act of 1946 for escaped assessment.
2. Interpretation of section 48(2) of the Act of 1953 regarding the repeal of the old Act and recovery of tax liabilities.
3. Jurisdiction of Sales Tax Authorities to assess based on the notice issued under the old Act versus the new Act.
4. Impact of differences in the form and duration of notices under the old Act and the new Act on the validity of assessments.

Detailed Analysis:
1. The petitioners challenged the validity of a notice issued by the Sales Tax Officer under section 11A of the Bombay Sales Tax Act of 1946 for escaped assessment. The notice was issued after the Act of 1953 came into force, raising the question of whether the notice should have been served under the old Act or the new Act.

2. Section 48(2) of the Act of 1953 deals with the repeal of the old Act and the recovery of tax liabilities accrued under the old Act. The provision ensures that tax liabilities under the old Act remain unaffected by the repeal, but the machinery for assessment and recovery must align with the provisions of the new Act.

3. The Sales Tax Authorities issued the notice under the old Act, while the petitioners argued that it should have been issued under the new Act based on section 48(2)(iii). The court noted the differences in the scope of taxation under the old and new Acts, emphasizing that the form and content of the notice and assessment order must correspond to the specific tax liabilities under each Act.

4. An important discrepancy arose regarding the duration of the notice required under the old Act versus the new Act. Under the new Act, the notice duration is counted from the date of service, unlike the old Act where it was counted from the date of issue. The court held that the duration of the notice is part of the assessment machinery, and if the new Act's provisions can be applied, they should take precedence over the old Act's rules.

In conclusion, the court found that the notice issued by the Sales Tax Officer was defective due to the improper duration, rendering the assessment order invalid. The court emphasized that the notice is a condition precedent to the jurisdiction of the Sales Tax Officer, and any defect in the notice undermines the validity of the assessment. Therefore, the court quashed the assessment order, dismissing the appeal on the grounds of the defective notice.