1962 (12) TMI 34 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Assessing Authority to make a best judgment assessment after the expiry of three years.
2. Adequacy and effectiveness of alternative remedies available to the petitioner.
3. The procedural validity of notices issued by the Assessing Authority.
4. The scope and timing of the Assessing Authority's decision to proceed with a best judgment assessment.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Authority to Make a Best Judgment Assessment After the Expiry of Three Years:
The petitioner argued that the Assessing Authority had no jurisdiction to assess the petitioner-firm after the expiry of three years from the end of the respective periods, much less to make a best judgment assessment after the expiry of that period. The petitioner contended that there was no finding on the record that the Assessing Authority proceeded to make a best judgment assessment within the stipulated three-year period. The respondents, however, argued that the assessment fell within the purview of section 11(3) and was lawful, asserting that the statutory notice was issued within the appropriate timeframe and that the assessment order was based on the examination of the petitioner's account books and evidence produced.

2. Adequacy and Effectiveness of Alternative Remedies Available to the Petitioner:
The court emphasized that the ordinary remedy provided by statute, such as appeal and revision, was both adequate and effective. The petitioner's argument that the remedy was ineffective because it required the deposit of the assessed tax was dismissed. The court noted that the petitioner had not demonstrated financial inability to deposit the tax. It was further observed that procedural measures for collecting taxes should be construed liberally to facilitate the object, especially in a welfare state.

3. The Procedural Validity of Notices Issued by the Assessing Authority:
The petitioner challenged the procedural validity of the notices issued by the Assessing Authority, specifically annexures "A" and "B." The court found that the first notice (annexure "A") dated 12th July 1960, informed the petitioner of the Assessing Authority's dissatisfaction with the return filed for the year ending 1957-58 and required the production of documents for assessment purposes. The second notice (annexure "B") was a memorandum in continuation of the first notice and did not bear any date. The court determined that the assessment order related to the year 1957-58, and thus, the procedural validity of the notices for other years was not relevant to the case at hand.

4. The Scope and Timing of the Assessing Authority's Decision to Proceed with a Best Judgment Assessment:
The petitioner argued that the Assessing Authority must make a note on the record indicating the decision to proceed with a best judgment assessment. The court, however, found that this was a question of fact to be determined by the appellate authority based on the specific circumstances of each case. The court observed that the impugned assessment was not a clear-cut case where it could be determined that the assessment was outside the statute and without the authority of law. The court further noted that too much interference through extraordinary remedies in the sphere of taxation could adversely affect fiscal administration and state revenue.

Conclusion:
The court dismissed both petitions, emphasizing the adequacy of statutory remedies and the necessity of pursuing them before seeking extraordinary writ jurisdiction. The court also highlighted the importance of facilitating tax collection in a welfare state and cautioned against undue interference in tax administration. The petitioner's failure to demonstrate any manifest error of law or procedural irregularity that would justify quashing the assessment order was noted, leading to the dismissal of the petitions with costs.

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