1957 (11) TMI 10 - HC - VAT and Sales Tax

Issues Involved:
1. Statutory authority for an appeal being heard by the Assistant Commissioner.
2. Merits of the assessment authority's decision regarding exemptions.
3. Legality of assessing sales tax on inter-State transactions.

Issue-wise Detailed Analysis:

1. Statutory Authority for an Appeal Being Heard by the Assistant Commissioner:
The applicant contended that there is no statutory authority for an appeal being heard by the Assistant Commissioner. This objection is covered by grounds (a) to (f) of paragraph 20 of the petition. The applicant argued that under sections 3, 4, and 15 of the Bengal Finance (Sales Tax) Act, the Commercial Tax Officers and Assistant Commissioners are only to assist the Commissioner, and their acts should be deemed as acts of the Commissioner. Consequently, an appeal against an order deemed to have been passed by the Commissioner himself cannot be preferred to the Commissioner or any officer subordinate to him. The applicant also argued that the provision for appeal in the Bengal Sales Tax Rules is ultra vires the Act's spirit.

The Court found this objection without merit. Section 3 of the Act defines the "taxing authorities," including the Commissioner and other assisting persons. Section 15 allows the Commissioner to delegate powers to these officers. Section 20 provides for appeals against assessments, and Rule 74 specifies that appeals against orders of assessment by a Commercial Tax Officer lie to the Assistant Commissioner. The Court concluded that the delegation of powers and the appeal provisions are intra vires the Act, and Rule 74 is valid.

2. Merits of the Assessment Authority's Decision Regarding Exemptions:
The applicant argued that the assessing authority made a mistake in not allowing the exemptions claimed under section 5(2)(a)(ii) of the Act. Specifically, the applicant contended that the assessment included Rs. 9,453-6-0 from transactions outside Bengal, which should be exempt from sales tax.

The Court examined the assessment order and found no such division of the sum in question. The assessment showed that the gross turnover did not include the sum of Rs. 9,453-6-0 and that the books of account did not indicate any part of this sum as transactions outside Bengal. The Taxing Officer had disallowed the claim for exemptions based on several reasons, including abnormal transaction sizes, cash-only transactions, and discrepancies in declaration forms. The Court found these reasons cogent, satisfactory, and convincing, and concluded that the Taxing Officer's findings should not be interfered with by a constitutional writ.

3. Legality of Assessing Sales Tax on Inter-State Transactions:
The applicant contended that the assessment of sales tax on the amount realized from inter-State transactions was illegal. The Court found that the relevant statutory provisions, particularly sections 5(2)(a)(ii) and (v) of the Act, were correctly applied by the Taxing Officer. The officer had examined the claim for exemptions and provided reasons for disallowing certain transactions, including the abnormal size of transactions, cash-only dealings, and discrepancies in declaration forms.

The Court concluded that the assessment order was justified by substantial evidence and that the Taxing Officer's decision was neither unnatural nor prima facie bad. The Court emphasized that constitutional writ proceedings should not be used to re-examine facts or introduce new evidence, especially when the Act provides ample remedies through appeals to the Assistant Commissioner, Commissioner, or Board of Revenue.

Conclusion:
The application was dismissed, and the rule was discharged. The Court found no merit in the objections raised by the applicant and upheld the validity of the statutory provisions and the assessment order. No order as to costs was made.

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