1957 (9) TMI 31 - HC - VAT and Sales Tax

Summary

Issues:
1. Petition under Articles 226 and 227 of the Constitution for quashing proceedings under section 12(7) of the Orissa Sales Tax Act, 1947.
2. Contention regarding exemption from sales tax on gold ornaments based on a government notification.
3. Dispute over whether the petitioner is a manufacturer of gold ornaments.
4. Jurisdiction of Sales Tax Officer to issue notice for reopening assessment under section 12(7) of the Act.
5. Adequacy of materials before the court to determine the petitioner's manufacturing status and tax liability.
6. Prematurity of the petition and dismissal with costs.

Analysis:

1. The petitioner filed a petition under Articles 226 and 227 of the Constitution seeking relief from the proceedings under section 12(7) of the Orissa Sales Tax Act, 1947. The petitioner, a registered dealer in bullion and gold ornaments, claimed exemption from sales tax based on a government notification. Despite obtaining exemption previously, the Sales Tax Officer issued notices for producing accounts and reopening assessments, leading to the present dispute.

2. The Sales Tax Officer contended that the petitioner was not a manufacturer of gold ornaments and did not separate the value of gold and cost of manufacture. Allegations were made that previous assessments exempting the petitioner from tax were erroneous, prompting the notice for reassessment under section 12(7) of the Act.

3. The petitioner's counsel did not contest the jurisdictional aspect of the Sales Tax Officer's actions under section 12(7) of the Act. The provisions of section 12(7) empower the Collector to call for returns and reassess tax within a specified period, including imposing penalties for under-assessment.

4. The court noted the wide powers vested in the Collector under section 12(7) and acknowledged factual disputes between the parties regarding the petitioner's manufacturing status and tax liability. Insufficient evidence was available to determine conclusively whether the petitioner qualified as a manufacturer of gold ornaments.

5. Emphasizing the need for a thorough examination of accounts to ascertain any under-assessment or other justifications for reassessment, the court highlighted the importance of scrutinizing the records afresh. Drawing on precedents, the court underscored that the Taxing Officer is not obligated to disclose the alleged escapement to the assessee before reassessment.

6. Ultimately, the court found the petition premature, given the unresolved factual disputes and the absence of complete materials for assessment. Consequently, the petition was dismissed with costs, with the court deeming further discussion unnecessary. The dismissal order was extended to related cases involving similar issues.