1965 (1) TMI 64 - HC - VAT and Sales Tax

Issues Involved:

1. Validity of the amendments made to the appellant's registration certificate.
2. Legality of the appellant's tax-free purchases of bullion and specie.
3. Authority of the Commissioner to compound offences and validate declaration forms.
4. Jurisdiction of the successor Commissioner to review and revise the predecessor's order.
5. Compliance with the statutory requirement of providing a reasonable opportunity of being heard.

Issue-Wise Detailed Analysis:

1. Validity of the Amendments Made to the Appellant's Registration Certificate:

The appellant, a partnership firm dealing in bullion and ornaments, was initially registered under the Bengal Finance (Sales Tax) Act, 1941, with a certificate allowing tax-free purchases of bullion for manufacturing purposes only. However, post the 1955 amendment, the appellant's registration certificate required modification to include taxable transactions in bullion and specie. The appellant mistakenly believed that the amendments to its registration certificate covered such transactions, leading to tax-free purchases of bullion for resale.

2. Legality of the Appellant's Tax-Free Purchases of Bullion and Specie:

Post-amendment, the appellant continued making tax-free purchases of bullion for resale, assuming its registration certificate covered these transactions. This led to a notice from the Commercial Tax Officer in 1958, citing unauthorized purchases and false representation under sections 22(1)(c) and 14(1) of the Act. The appellant compounded the offence by paying Rs. 500 initially and later an additional Rs. 2,000, as directed by the Commissioner, Commercial Taxes. Despite this, the Commercial Tax Officer disallowed these purchases, making the appellant liable for sales tax.

3. Authority of the Commissioner to Compound Offences and Validate Declaration Forms:

The appellant argued that the offence was compounded twice under section 23, which empowered the Commissioner to compound offences under section 22(1). The Commissioner's order on January 20, 1959, included a direction to treat the declaration forms issued by the appellant as valid. This was challenged by the successor Commissioner, who deemed the order void ab initio, arguing that the validation of declaration forms was beyond the Commissioner's authority under section 23.

4. Jurisdiction of the Successor Commissioner to Review and Revise the Predecessor's Order:

The appellant contended that the successor Commissioner, Mr. S.K. Ghosh, lacked jurisdiction to review the order dated January 20, 1959, under section 20(4) of the Act, which allows review only by the person who passed the order. However, rule 82 of the Bengal Sales Tax Rules permits a Commissioner to review an order made by a predecessor, thus validating Mr. Ghosh's jurisdiction to review the order.

5. Compliance with the Statutory Requirement of Providing a Reasonable Opportunity of Being Heard:

The appellant argued that the order dated March 15, 1960, was made without giving a reasonable opportunity to be heard, violating section 20(5) of the Act. This provision mandates that any order adversely affecting a person must be preceded by a reasonable opportunity for the affected party to be heard. The court found no evidence that such an opportunity was provided, making the order procedurally flawed.

Conclusion:

The court held that while the Commissioner had jurisdiction to make the order dated January 20, 1959, and the successor Commissioner had the authority to review it, the review order dated March 15, 1960, violated section 20(5) due to the lack of a reasonable opportunity for the appellant to be heard. Consequently, the appeal was allowed, the order dated March 15, 1960, was quashed, and a writ of mandamus was issued to prevent further effect to the said order. The respondents were directed to act according to law, with each party bearing its own costs.

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