1968 (6) TMI 56 - HC - VAT and Sales Tax

Issues Involved:

1. Validity and legality of the notice issued by the Assistant Commissioner of Sales Tax under section 31 of the Bombay Sales Tax Act, 1953.
2. Whether the proceedings initiated by the Assistant Commissioner of Sales Tax were barred by limitation.
3. Competence of the Assistant Commissioner of Sales Tax to set aside the orders of the Sales Tax Officer and remand the case for de novo assessment.
4. Justification of the Assistant Commissioner of Sales Tax in adopting the ratio proportion method for arriving at the turnover for the purpose of deduction under section 11(1)(a) and rule 6(1).

Issue-wise Detailed Analysis:

1. Validity and Legality of the Notice:
The first issue pertains to whether the notice issued by the Assistant Commissioner of Sales Tax on 19th July 1961, under section 31 of the Bombay Sales Tax Act, 1953, was valid and legal. The court found that the Assistant Commissioner was within his rights to issue the notice based on the records of the Sales Tax Officer, which showed erroneous deductions leading to substantial revenue loss. The court held that the Assistant Commissioner was correcting illegalities found in the Sales Tax Officer's order, and thus, the notice was valid and legal under section 31 of the Act.

2. Limitation of Proceedings:
The second issue concerns whether the proceedings initiated by the Assistant Commissioner were barred by limitation. The court referred to the Supreme Court's decision in Swastik Oil Mills' case, which clarified that no period of limitation is prescribed for the exercise of revisional powers under section 31 of the Act. Therefore, the court held that the proceedings initiated by the Assistant Commissioner were not barred by limitation.

3. Competence to Set Aside and Remand:
The third issue examines whether the Assistant Commissioner was competent to set aside the orders of the Sales Tax Officer and remand the case for de novo assessment. The court noted that section 31 of the Act allows the revising authority to pass such orders as it thinks fit to correct the illegality of the order being revised. The court concluded that the Assistant Commissioner was within his rights to remand the case back to the Sales Tax Officer for a fresh assessment, thus affirming the Assistant Commissioner's competence.

4. Adoption of Ratio Proportion Method:
The fourth issue questions whether the Assistant Commissioner was justified in adopting the ratio proportion method for determining the turnover for deduction purposes. The court observed that the Assistant Commissioner did not direct the Sales Tax Officer to adopt this method but merely mentioned it as an equitable method. Since no explicit directions were given, the court deemed it unnecessary to express an opinion on this matter, stating that the question does not arise for consideration.

Conclusion:
The court answered the questions as follows:
1. The notice issued by the Assistant Commissioner was valid and legal.
2. The proceedings were not barred by limitation.
3. The Assistant Commissioner was competent to set aside the orders and remand the case.
4. The question regarding the ratio proportion method does not arise.

The court directed the assessee to pay the costs of the reference to the State of Gujarat. Reference answered accordingly.

← Previous Next →