1964 (4) TMI 97 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the assessment orders under the U.P. Sales Tax Act.
2. Authority of the State Government to issue notifications under sections 3-A and 3-AA.
3. Applicability of section 3-AA in relation to section 3-A.
4. Jurisdiction of the Sales Tax Officers in passing the assessment orders.
5. Availability and exhaustion of alternative remedies by the petitioners.

Detailed Analysis:

1. Validity of the Assessment Orders under the U.P. Sales Tax Act:
The petitioners, dealers in cotton yarn, sought certiorari against orders assessing them to sales tax on the turnover of sales of cotton yarn for various assessment years. The assessment was made at the rate of 2 nP. per rupee of turnover. The court noted that the assessment orders were based on notifications issued by the State Government, which were purportedly under sections 3-A and 3-AA of the U.P. Sales Tax Act.

2. Authority of the State Government to Issue Notifications:
The court examined the provisions of section 3-A and section 3-AA. Section 3-A allows the State Government to declare that the turnover of certain goods shall be taxable only at a single point in a series of sales and to fix the rate of tax, not exceeding 10 nP. per rupee. Section 3-AA, however, specifically dealt with cotton yarn and other declared goods, stating that the turnover shall be taxable only at the point of sale by a dealer to the consumer and that the rate of tax shall not exceed 2 nP. per rupee. The court found that section 3-AA did not authorize the State Government to issue any notification fixing the rate of tax.

3. Applicability of Section 3-AA in Relation to Section 3-A:
The court held that section 3-AA, being a specific provision for cotton yarn, superseded section 3-A. The Legislature itself fixed the point of sale for cotton yarn, thereby removing the State Government's power to select the point of sale or to fix the rate of tax under section 3-A. The notifications issued by the State Government under the purported exercise of power conferred by sections 3-A and 3-AA were deemed unauthorized and without effect.

4. Jurisdiction of the Sales Tax Officers:
The court acknowledged that the Sales Tax Officers had jurisdiction to pass the assessment orders. However, since no valid rate of tax was fixed for cotton yarn under any provision of the Sales Tax Act, the assessment orders could not be sustained. Despite this, the court noted that the petitioners did not raise the contention regarding the invalidity of the notifications before the Sales Tax Officers but brought it up for the first time in the petitions.

5. Availability and Exhaustion of Alternative Remedies:
The court emphasized that the petitioners had an alternative remedy available by way of appeals from the assessment orders, which they did not utilize. The court cited precedents where it was held that an assessee cannot bypass the departmental remedy and directly invoke the extraordinary jurisdiction of the High Court. The court also noted that some petitions were delayed as the petitioners applied for rectification instead of appealing in a timely manner.

Conclusion:
The court dismissed the petitions, holding that the notifications issued by the State Government were unauthorized and without any effect. However, the petitioners were not entitled to relief as they failed to exhaust the available alternative remedies and did not raise the relevant contentions before the Sales Tax Officers. The court exercised its discretion to refrain from quashing the assessment orders and let the parties bear their own costs.

Petition dismissed.