1961 (8) TMI 25 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge against orders of provisional assessment to sales tax under rule 41(3) of the U.P. Sales Tax Act.
2. Compliance with sub-rules (5) and (6) of rule 41 regarding final assessment and tax adjustments.
3. Undertakings by the learned Advocate-General regarding final assessment, modification of provisional assessments, and non-realization of tax demand until final assessment.
4. Observations on the conduct of Sales Tax Officers in conducting proceedings and filing counter-affidavits.
5. Requirements for determining a person as a "dealer" under the Sales Tax Act.
6. Judicial functions of Sales Tax Officers in making assessments and the necessity for a detailed analysis before final assessment.
7. Directions for final assessment, opportunity for evidence production, disclosure of collected information, and non-realization of tax demand until final assessment.
8. Observations on the filing of counter-affidavits and the importance of proper verification and content.

Analysis:
The judgment pertains to writ petitions challenging provisional assessment orders under the U.P. Sales Tax Act. The judge noted the provisions of rule 41(5) and (6) which mandate a final assessment after the expiry of the assessment year, allowing for adjustments in tax amounts deposited. The learned Advocate-General provided undertakings ensuring final assessments, modification of provisional orders, and non-realization of tax demand until final assessment, along with opportunities for evidence presentation. The judge emphasized the importance of Sales Tax Officers conducting thorough assessments, giving petitioners opportunities to establish their status as "dealers" under the Act, and analyzing evidence before final assessments.

The judge criticized the conduct of Sales Tax Officers for their superficial reasoning in assessments and inadequate counter-affidavits, emphasizing the judicial nature of their functions. Specific requirements for determining a person as a "dealer" were outlined, including the need to prove business activities, authority to buy/sell goods, and customary business practices. The judge highlighted the necessity for Sales Tax Officers to carefully scrutinize evidence, including printed forms, to prevent evasion of tax liability.

Furthermore, the judgment stressed the importance of proper verification and content in counter-affidavits, directing Sales Tax Officers to adhere to rules regarding personal knowledge and sources of information. The judge warned against careless assessments causing hardships for the public and potential cost implications for the State. The judgment concluded with directions for final assessments, evidence production opportunities, disclosure of collected information to petitioners, and non-realization of tax demands until final assessments, subject to the provision of sufficient security. No costs were awarded in the petitions, and the judgment required certified copies to be placed on record for each case.