1961 (9) TMI 63 - HC - VAT and Sales Tax

Summary

Issues:
Validity of assessment based on rule 34(1) of Mysore Sales Tax Rules, 1948.

Analysis:
The judgment in this civil revision petition revolves around the interpretation of rule 34(1) of the Mysore Sales Tax Rules, 1948, specifically regarding the respondent's right to assess the petitioner for the assessment year 1952-53. The key question is whether the assessment order, made on the basis of a voluntary return submitted by the assessee, is barred by rule 34(1) of the Rules. The petitioner contended that the assessment order relates to an "escaped assessment" and is therefore unsustainable due to the time limitation imposed by the rule. The rule allows the Assessing Authority to assess tax on any turnover that has escaped assessment within a specified period after issuing notice to the dealer. The petitioner argued that the assessment was beyond the prescribed time limit, rendering it invalid.

The material facts of the case indicate that the original assessment order was set aside, and a fresh enquiry was ordered by the Deputy Commissioner of Commercial Taxes. Subsequently, the petitioner filed a return of turnover, which was not accepted by the Assessing Authority. Instead, the Authority determined the net taxable turnover based on "best of judgment." The petitioner challenged this assessment order, claiming it was made after the period fixed in rule 34(1) and therefore barred.

The judgment delves into the distinction between an assessment based on an "escaped assessment" and one made on the basis of a voluntary return. The Tribunal concluded that the order in question does not relate to an "escaped assessment" and, being based on the voluntary return, is not open to challenge. However, the Court found that the return submitted by the assessee was not accepted, and the assessment was indeed made on "best of judgment," not on the basis of the voluntary return. Therefore, the argument that the assessment was valid due to the voluntary return was dismissed.

The Court referred to relevant legal precedents, including a decision of the Supreme Court, to interpret the scope of the expression "escaped assessment." Drawing parallels with similar provisions in other statutes, the Court concluded that the language of rule 34(1) is broader than other statutes, thus applying the legal principles with greater force to the present case. Consequently, the Court held that the decision of the Sales Tax Appellate Tribunal was incorrect, and the assessment order was set aside. The revision petition was allowed, with no order as to costs, in light of the circumstances of the case.

In summary, the judgment clarifies the application of rule 34(1) of the Mysore Sales Tax Rules, 1948, in determining the validity of an assessment order. It distinguishes between assessments based on "escaped assessment" and voluntary returns, ultimately setting aside the assessment order made on "best of judgment" grounds due to being beyond the prescribed time limit under the rule.