1966 (7) TMI 67 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of assessments for the first two quarters of the assessment year 1956-57.
2. Interpretation of section 11(1) of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi.
3. Implications of rule 32 of the Delhi Sales Tax Rules, 1951.
4. Assessment order for the third quarter based on rule 28 of the Delhi Sales Tax Rules, 1951.

Analysis:

1. The petitioners filed returns and paid the due tax for the first two quarters of the assessment year 1956-57. A notice was issued by the Sales Tax Officer under section 11 of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, but it was vacated later. The contention was that assessment can only be made within 18 months of the expiry of each quarter. However, the court held that the limitation of 18 months applies only when best judgment assessment is required. If not, the authority can accept the returns filed by the dealer. In this case, since no best judgment assessment was necessary, the authority rightly accepted the returns and tax deposited by the petitioners. Therefore, the order dated 16th September, 1958, was upheld.

2. The next issue was the assessment order for the third quarter, where the Sales Tax Officer used rule 28 of the Delhi Sales Tax Rules, 1951, to determine the taxable turnover. However, in a previous judgment, rule 28 was declared ultra vires. The court acknowledged this declaration and quashed the assessment order for the third quarter. It was mentioned that the Assessing Authority could conduct a fresh assessment for this period if permissible by law. Consequently, the order dated 29th September, 1958, regarding the third quarter was set aside.

3. The court's decision highlighted the importance of adhering to the provisions of the Sales Tax Act and Rules while making assessments. It clarified the circumstances under which best judgment assessments are required and the role of notices under section 11(1) in such cases. The judgment emphasized the need for authorities to follow the prescribed procedures and rules to ensure the validity of assessments and the protection of the rights of registered dealers.

4. In conclusion, the petition was allowed in part, with the first two quarters' assessments being upheld due to the absence of the necessity for a best judgment assessment. However, the assessment order for the third quarter was quashed based on the invalid use of rule 28. The court provided the Assessing Authority with the opportunity to conduct a fresh assessment for the third quarter, subject to compliance with the applicable laws.