1962 (4) TMI 81 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Assistant Commissioner, Sales Tax, Bilaspur.
2. Nature of contracts - whether they were contracts for sale or "contracts of work."
3. Inclusion of receipts of S.P. Consolidated Engineering Co. (P.) Ltd. in the turnover.
4. Validity of the best judgment assessment and adherence to principles of natural justice.

Detailed Analysis:

1. Jurisdiction of the Assistant Commissioner, Sales Tax, Bilaspur:
The petitioner argued that the Sales Tax Officer, Raigarh, had already assessed him for the period from 1st March, 1958, to 30th June, 1958, and imposed a penalty of Rs. 2,000. Consequently, the Assistant Commissioner, Sales Tax, Bilaspur, lacked jurisdiction to initiate proceedings under section 18(6) of the M.P. General Sales Tax Act, 1958, for the same period. The court found no substance in this contention, stating that the Sales Tax Officer, Raigarh, lacked jurisdiction as the petitioner's principal place of business was Bilaspur. The assessment and penalty imposed by the Sales Tax Officer, Raigarh, were deemed null and void. Therefore, the Assistant Commissioner, Sales Tax, Bilaspur, was the appropriate authority to make the assessment under section 18(6) for the period from 1st March, 1958, to 30th August, 1960.

2. Nature of Contracts - Sale or "Contracts of Work":
The petitioner contended that the contracts for supplying ballast to the South Eastern Railways were not contracts for sale but "contracts of work." The court rejected this argument, stating that the transactions involved the sale of ballast extracted by the petitioner from quarries and sold to the railway authorities at contracted rates. The court emphasized that the supply of ballast constituted sale transactions, as there was an agreement to sell the material as such, making the transactions subject to sales tax.

3. Inclusion of Receipts of S.P. Consolidated Engineering Co. (P.) Ltd.:
The petitioner argued that the turnover assessed included receipts of S.P. Consolidated Engineering Co. (P.) Ltd., a different legal entity. The court noted the opponents' denial of this allegation and found no material evidence suggesting that the turnover of S.P. Consolidated Engineering Co. (P.) Ltd. was included in the petitioner's turnover. Therefore, this contention was deemed unsubstantial.

4. Validity of the Best Judgment Assessment and Principles of Natural Justice:
The petitioner claimed that the best judgment assessment was not based on any material and that he was not given an opportunity to rebut the information obtained from the railway authorities. The court found that the Assistant Commissioner had given the petitioner multiple opportunities to produce account books and documents, which the petitioner failed to do. The Assistant Commissioner had informed the petitioner of the material obtained from the railway authorities and had given him a chance to explain the discrepancies. The court concluded that the best judgment assessment was made after giving the petitioner a fair hearing and an opportunity to rebut the material, adhering to the principles of natural justice.

Conclusion:
The petition was dismissed with costs, as the court found that the Assistant Commissioner, Sales Tax, Bilaspur, had jurisdiction to make the assessment under section 18(6) of the M.P. General Sales Tax Act, 1958. The contracts for supplying ballast were deemed sale transactions, and there was no evidence to support the inclusion of receipts from S.P. Consolidated Engineering Co. (P.) Ltd. in the petitioner's turnover. The best judgment assessment was found to be valid and in accordance with the principles of natural justice.

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