1959 (11) TMI 42 - HC - VAT and Sales Tax

Summary

Issues:
Re-assessment proceedings under Sales Tax Act for the assessment year 1952-53; Jurisdiction of Commercial Tax Officer under section 12 and rule 17(3-A) of Sales Tax Rules; Validity of rule 17(3-A) in light of rule-making power of the Government under section 19(2)(f) of the Act.

Analysis:
The judgment by the High Court of Madras pertains to re-assessment proceedings under the Sales Tax Act for the assessment year 1952-53. The petitioner-assessee was initially assessed to sales tax on an estimated turnover by the Deputy Commercial Tax Officer, acting as the assessing authority. Subsequently, the Commercial Tax Officer issued a notice for revision under section 12 of the Act, based on an examination of accounts. The Commercial Tax Officer, after considering the objections raised by the assessee, assessed an additional turnover amount. The Tribunal viewed this as a re-assessment under rule 17(3-A) of the Sales Tax Rules. The Tribunal did not rule on the vires of rule 17(3-A) but upheld the assessment on merits, dismissing the appeal.

The first contention raised by the counsel for the assessee was that the order passed by the Commercial Tax Officer should be linked only to the notice issued under section 12, and not rule 17(3-A). The Court held that even if there was a wrong reference to a statutory provision, it would not invalidate the order if the authority had the jurisdiction to pass it. The failure to specifically mention rule 17(3-A) did not invalidate the order, as it was clear the assessment was related to escaped turnover. The Court agreed with the Tribunal's view that the assessment was valid under rule 17(3-A).

The second contention was regarding the vires of rule 17(3-A). The counsel argued that the rule exceeded the rule-making power as it vested re-assessment authority in an entity other than the assessing authority. The Court, however, noted that the State Government had the power under section 19(2)(f) to make rules for assessing escaped turnovers and designate the authority for such assessments. Rule 17(3-A) was found to be within the rule-making power, as it provided for assessments by appellate and revisional authorities specified in the Act. The Court distinguished a case from Andhra Pradesh where a rule conflicted with a specific statutory provision, which was not the case under the Madras Act.

Ultimately, the Court held that rule 17(3-A) was valid, as it did not conflict with any express statutory provision in the Madras General Sales Tax Act. Since the validity of rule 17(3-A) was the main issue, and it was found to be valid, the petition was dismissed with costs.

In conclusion, the judgment clarifies the jurisdiction of the Commercial Tax Officer under section 12 and rule 17(3-A) for re-assessment proceedings and upholds the validity of rule 17(3-A) within the rule-making power of the Government under the Sales Tax Act.