1961 (11) TMI 52 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notice issued by the Deputy Commissioner of Sales Tax under Section 31 of the Bombay Sales Tax Act, 1953.
2. Applicability of the period of limitation for revisional powers under the Bombay Sales Tax Acts of 1946, 1953, and 1959.

Detailed Analysis:

1. Validity of the Notice Issued by the Deputy Commissioner of Sales Tax:
The petitioner sought a writ under Article 226 of the Constitution to quash a notice dated 17th June, 1960, issued by the Deputy Commissioner of Sales Tax, Bombay. The notice aimed to revise the assessment orders of the Sales Tax Officer and the Assistant Collector of Sales Tax. The petitioner argued that the Deputy Commissioner had no right to enhance the assessment as it was time-barred by the period of limitation.

The Sales Tax Officer initially assessed the petitioner's firm for the period between 1st April, 1949, and 31st October, 1952. This assessment included goods sent to branches in Delhi and Calcutta, which were taxed at half the usual rate under a proviso to section 6(1) of the Bombay Sales Tax Act, 1946. The Assistant Collector later revised this assessment, excluding the value of these goods from the taxable turnover, resulting in a refund to the petitioner.

Nearly four years later, the Deputy Commissioner issued a notice under Section 31 of the Bombay Sales Tax Act, 1953, to revise the assessment orders. This notice was later withdrawn and replaced by the impugned notice dated 17th June, 1960. The petitioner contended that the Deputy Commissioner's right to revise the assessment was time-barred and should be quashed.

2. Applicability of the Period of Limitation for Revisional Powers:
The court examined the provisions of the Bombay Sales Tax Acts of 1946, 1953, and 1959 to determine the applicability of the period of limitation for revisional powers. Section 11A of the 1946 Act allowed re-assessment if the turnover had escaped assessment, with a limitation period of five years for cases involving concealment and three years otherwise. Section 22 of the same Act provided revisional powers to the Collector without a specified period of limitation for suo motu actions.

The 1953 Act, which came into operation on 25th March, 1953, contained similar provisions under Sections 15 and 31. The amending Act No. 22 of 1959 clarified that the periods of limitation for re-assessment did not apply to proceedings for assessment under Section 14 or revision under Section 31.

The 1959 Act introduced Sections 35 and 57, which materially differed from the earlier Acts. Section 35 allowed re-assessment within specified periods, and Section 57 provided a two-year limitation for the Commissioner to exercise revisional powers suo motu. Section 77 of the 1959 Act continued the provisions of the 1953 Act for prior assessments, subject to Sections 35 and 42.

The court found that the Deputy Commissioner's proposed action fell within the powers granted under Section 35 of the 1959 Act. Since the action was barred by the period of limitation specified in Section 35, the Deputy Commissioner could not proceed under Section 31 of the 1953 Act. The court held that the respondent could not take recourse to any provision of the 1953 Act for re-assessing the petitioner, as the proposed action was covered by Section 35 of the 1959 Act.

Conclusion:
The court quashed the notice dated 17th June, 1960, issued by the Deputy Commissioner of Sales Tax, Bombay, and directed the respondent not to act in furtherance thereof. The rule was made absolute in terms of prayers (a) and (b), and the respondent was ordered to pay the petitioner's costs of the petition, quantified at Rs. 500.

Petition allowed.

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