1955 (11) TMI 31 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of Section 21 of the U.P. Sales Tax Act regarding the time limit for making an assessment on escaped turnover.
2. Determining whether the assessment, after a remand by the judge (Revisions), falls within the scope of Section 21 or Section 7 of the Act.

Analysis:
1. The petitioner, a managing agent of a company, contested a sales tax assessment for the year 1948-49 under the U.P. Sales Tax Act. The Sales Tax Officer issued a notice for assessment, which the petitioner challenged, claiming exemption as an agent. The judge (Appeals) set aside the assessment, but the judge (Revisions) remanded the case for a fresh assessment based on the account books' scrutiny to determine if the petitioner acted as an agent or a dealer. The petitioner argued that the three-year limitation period under Section 21 applied to escaped turnover assessments. The court held that the assessment must be made within three years from the end of the relevant assessment year, emphasizing that the limitation is for completing the assessment, not issuing a notice, unlike Income-tax Act provisions. The court rejected the State's argument that the assessment was not on escaped turnover, as it was initiated under Section 21 and remanded for a fresh assessment based on the account books' scrutiny.

2. The court addressed whether the assessment post-remand by the judge (Revisions) fell under Section 21 or Section 7 of the Act. The Sales Tax Officer contended that the three-year limitation did not apply post-remand, but the court disagreed. It clarified that any assessment made after the remand, even under superior authority's direction, is bound by the three-year limitation under Section 21. The court rejected the State's argument that post-remand assessments should not fall under Section 21 to avoid rendering the revision power infructuous. Drawing parallels with a Privy Council case, the court emphasized that the Sales Tax Officer had no jurisdiction to proceed with the assessment under Section 21 after the three-year period had lapsed, granting a writ of mandamus to prohibit the assessment.

In conclusion, the court upheld the petitioner's argument regarding the three-year limitation under Section 21, emphasizing that any assessment, even post-remand, must adhere to this limitation. The judgment clarified the scope and applicability of Section 21 in cases of escaped turnover assessments, ensuring compliance with statutory provisions and protecting taxpayers' rights against untimely assessments.