1958 (9) TMI 64 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of reopening of assessment under Sales Tax Act.
2. Failure to exhaust statutory remedies before approaching High Court under Article 226.
3. Liability of the petitioning company for additional sales tax.

Detailed Analysis:

1. Validity of reopening of assessment under Sales Tax Act:
The petitioner challenged the reopening of the assessment by the Sales Tax Officer, contending that there was no provision in the Sales Tax Act for such reopening. The petitioner argued that rule 71, which allowed for the reopening, exceeded the rule-making power conferred by the Act. The court noted that while the Sales Tax Act had been subsequently amended to include a specific provision (section 11-A) for reopening assessments, the issue raised was of academic interest. The court acknowledged that if rule 71 was valid, the Sales Tax Officer had the authority to reopen the assessment. However, the court did not delve into this question, as the petitioner had failed to exhaust statutory remedies before approaching the High Court under Article 226 of the Constitution.

2. Failure to exhaust statutory remedies before approaching High Court under Article 226:
The court emphasized the principle that a party aggrieved by an order under a statute must utilize all available remedies provided by that statute before seeking relief under Article 226. In this case, the petitioner had not availed of the right of appeal and revision provided under the Sales Tax Act. The court highlighted that the petitioner's appeal was ultimately heard on merits by the Commissioner and Chief Commissioner, with both authorities concluding that the additional sales tax was payable by the petitioner. The court held that the failure to exhaust statutory remedies was a sufficient ground to dismiss the petition.

3. Liability of the petitioning company for additional sales tax:
The court addressed the argument raised by the petitioner that it was merely a transferee of a company originally liable for the tax. However, the court ruled that this transfer did not absolve the petitioning company of liability, as it had acquired both the assets and liabilities of the previous company. The court noted that the issue of non-liability was not raised before the Sales Tax Officer, and the absence of the relevant order prevented a conclusive determination. Ultimately, the court dismissed the petition without awarding costs, considering that the petitioner had not suffered manifest injustice due to the dismissal.

In conclusion, the High Court dismissed the petition on the grounds of failure to exhaust statutory remedies and upheld the liability of the petitioning company for the additional sales tax, emphasizing the importance of adhering to statutory procedures before seeking relief through constitutional remedies.