1964 (5) TMI 41 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the order of the Assessing Authority dated 22nd January, 1963.
2. Jurisdiction of the Assessing Authority to assess sales tax before the expiry of the assessment year.
3. Interpretation of Sections 4, 5, 10, and 11 of the Punjab General Sales Tax Act, 1948.
4. Applicability of the Supreme Court decision in Mathra Parshad and Sons v. State of Punjab.

Issue-Wise Detailed Analysis:

1. Validity of the order of the Assessing Authority dated 22nd January, 1963:
The petitioner challenged the validity of the assessment order dated 22nd January, 1963, which assessed sales tax for the two quarters ending 30th June, 1962, and 30th September, 1962. The petitioner argued that the liability to pay tax under Section 5 of the Punjab General Sales Tax Act, 1948, arises only on the expiry of the year to which the tax relates. The court found that the assessment made before the expiry of the financial year was not valid, as the tax is considered a yearly tax, and the assessment should be made at the end of the year.

2. Jurisdiction of the Assessing Authority to assess sales tax before the expiry of the assessment year:
The petitioner contended that the Assessing Authority lacked jurisdiction to assess sales tax before the end of the financial year. The court examined the provisions of Sections 10 and 11 of the Act, which relate to the method of collection and the procedure for assessment. The court concluded that the Assessing Authority did not have the jurisdiction to make an assessment before the expiry of the assessment year, as the tax is a yearly tax, and the assessment should be made at the end of the year.

3. Interpretation of Sections 4, 5, 10, and 11 of the Punjab General Sales Tax Act, 1948:
The court analyzed the relevant sections of the Punjab General Sales Tax Act, 1948. Sections 4 and 5 were identified as the charging sections, referring to the yearly turnover. Section 10 allows for the filing of quarterly or monthly returns, and Section 11 provides the procedure for assessment based on these returns. The court emphasized that while the method of collection allows for periodic returns, the tax itself is for the entire year. The court noted that Section 11-A, which allows for reassessment within one year from the date of the order of assessment, further supports the view that the assessment should be made at the end of the year.

4. Applicability of the Supreme Court decision in Mathra Parshad and Sons v. State of Punjab:
The court considered the Supreme Court decision in Mathra Parshad and Sons v. State of Punjab, which held that the tax is a yearly tax and the method of collection at intervals does not change its yearly nature. The court found that the observations of the Supreme Court in this case supported the petitioner's contention that the assessment should be made at the end of the year. The court noted that the decision of Mahajan, J., in Tara Chand Lajpat Rai v. The Excise and Taxation Officer, which allowed for assessment based on quarterly or monthly returns, did not align with the Supreme Court's interpretation.

Conclusion:
The court allowed the petition, quashing the order of assessment made by the respondent on 22nd January, 1963. The court held that the Assessing Authority should make a proper order of assessment on the expiry of the assessment year, in line with the yearly nature of the tax as interpreted by the Supreme Court in Mathra Parshad and Sons v. State of Punjab. The parties were left to bear their own costs.