1956 (7) TMI 38 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of Sales Tax Officer's reliance on the Inspector's report without providing a copy to the assessee.
2. Violation of the principle of natural justice.

Issue-wise Detailed Analysis:

1. Legality of Sales Tax Officer's reliance on the Inspector's report without providing a copy to the assessee:

In both Miscellaneous Judicial Case No. 414 of 1953 and Miscellaneous Judicial Case No. 415 of 1953, the primary issue was whether the Sales Tax Officer's assessment was legally valid given that the Inspector's report was not disclosed to the assessee before making the assessment. The Sales Tax Officer determined the taxable turnover and computed the sales tax based on the Inspector's report without providing a copy to the assessee or disclosing the material particulars of the report. The assessee argued that this reliance without disclosure violated the principle of natural justice.

The court acknowledged that the assessee did not file returns or produce account books for the relevant periods, allowing the Sales Tax Officer to make an assessment under section 13(4) of the Bihar Sales Tax Act to the best of his judgment. The court also noted that the Inspector's report was not confidential and was part of the record, which the assessee could have inspected if he had appeared before the Sales Tax Officer and requested it.

2. Violation of the principle of natural justice:

The assessee's counsel argued that the assessment was illegal due to the non-disclosure of the Inspector's report, thereby violating the principle of natural justice. The court, however, found that the material particulars of the report were elaborately set out in the Sales Tax Officer's order, and the assessee was aware of the report's contents after the assessment orders were made. The court also noted that the assessee challenged the Inspector's report on several points in his appeal to the Commissioner of Bhagalpur Division, indicating that the assessee had the opportunity to rebut the allegations at the appellate stage.

The court emphasized that the principle of natural justice, specifically "audi alteram partem" (the right to be heard), was not violated as the assessee had the opportunity to argue against the Inspector's report at the appellate and revisional stages. The court referred to the case of Sheopujan Chaudhary v. State of Bihar and Others, which stated that the principle of natural justice must be applied in the context of each case's circumstances and does not require a hearing at every stage of the administrative process.

The court also distinguished the present case from the Supreme Court decision in Dhakeshwari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal, where the assessment was invalidated due to the rejection of evidence offered by the assessee. In the present case, the assessee had the opportunity to present rebutting evidence at the appellate stages, and thus, there was no violation of natural justice.

Conclusion:

The court concluded that the assessment of sales tax for both periods was legally valid, and the non-disclosure of the Inspector's report at the initial stage did not constitute a violation of natural justice. The question referred to by the Board of Revenue was answered in favor of the State of Bihar and against the assessee. A consolidated fee of Rs. 250 was awarded for both cases.