1960 (11) TMI 107 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against sales tax assessment for multiple years based on omnibus assessments under the General Sales Tax Act, 1125.

Analysis:
The petitioner challenged the sales tax assessments for the years 1952-53, 1953-54, 1954-55, and 1955-56, arguing that the omnibus assessments covering the turnover of all non-resident principals were not authorized by the Act. The State contended that such assessments were justified under section 18 of the General Sales Tax Act, 1125, which deems the agent of a non-resident to be the dealer for assessment purposes. However, the Court noted that section 18 required separate assessments for each non-resident principal, rejecting the State's argument that a single assessment for all principals was permissible.

The Court referenced a similar provision in the Madras General Sales Tax Act, 1939, and a relevant case law to emphasize that the agent is assessed on behalf of the non-resident principal, with the turnover of the agent being the total sales on the principal's account. It was highlighted that each non-resident principal should have a separate assessment, aligning with the legal fiction created by the statute.

The Court explicitly stated that section 18 did not allow for the type of assessment challenged in the case, emphasizing the need for individual assessments for each non-resident principal. The judgment clarified that attempting to consolidate assessments for all principals would violate the statutory provisions and the legal fiction established by the section.

The Court dismissed the State's reliance on a previous decision, Union Leather Company v. State of Madras, finding it inconsequential to the present case. Consequently, the Court ruled in favor of the petitioner, quashing the challenged assessments and leaving other raised contentions for future consideration.

Moreover, the Court allowed the Department to conduct fresh assessments in compliance with the law, with an agreement that no limitation defense would be raised against such assessments. This decision was influenced by the agreement between the parties and aimed to provide a remedy without requiring the petitioner to follow the regular appeal and revision process under the Act.

In conclusion, the petitions were allowed, and no costs were awarded, with the assessments being quashed based on the lack of statutory authorization for omnibus assessments under the General Sales Tax Act, 1125.