1969 (5) TMI 51 - HC - VAT and Sales Tax

Issues Involved:
1. Competency of the assessing authority to consolidate demands for several quarters in one assessment proceeding.
2. Validity of the consolidated assessment order and subsequent proceedings.
3. Estoppel against the petitioner for submitting a consolidated return.
4. Limitation period for issuing demand notices.

Issue-wise Detailed Analysis:

1. Competency of the Assessing Authority to Consolidate Demands:
The core legal question was whether the assessing authority under the Bengal Finance (Sales Tax) Act, 1941, could consolidate the demand for several quarters in one assessment proceeding. The petitioner, a registered dealer, failed to furnish returns for the quarters of the Akshoytritiya year 1951-52. Consequently, the assessing authority issued a single notice for all four quarters. The petitioner filed a consolidated return, which led to a consolidated assessment order. The court analyzed various provisions of the Act, including sections 4, 10, and 11, and relevant rules, concluding that the assessment should be made with respect to each return period, not consolidated. This was supported by Supreme Court decisions in Ghanshyamdas's case and Anandji v. Kushare, which emphasized separate assessments for each quarter.

2. Validity of the Consolidated Assessment Order and Subsequent Proceedings:
The court held that the consolidated assessment order and subsequent proceedings were ultra vires the statutory provisions of the Act. The Act's scheme required assessments to be made for each return period, as evidenced by the definitions and rules governing return periods and assessments. The court noted that combining several return periods in one assessment order would affect the assessee's right to make periodical payments and could lead to different legal incidents for each period. Therefore, the consolidated assessment order was invalid, and all subsequent proceedings based on it were also invalid.

3. Estoppel Against the Petitioner for Submitting a Consolidated Return:
The respondents argued that the petitioner was estopped from challenging the consolidated assessment because they had voluntarily submitted a consolidated return. The court rejected this argument, stating that the initial submission of separate returns and the subsequent consolidated return under some misapprehension did not give the assessing authority jurisdiction to make a consolidated assessment. The principle that there cannot be an estoppel against a statute was upheld, citing various decisions that an ultra vires act is a nullity, even if agreed upon by the parties.

4. Limitation Period for Issuing Demand Notices:
In C.R. 828, the petitioner argued that the demand notice was barred by limitation, as it was issued more than four years after the end of the assessment period. The court agreed with the appellate authority that the limitation period should be computed from the last day of the accounting period, not the calendar year. The court clarified that the word "assessment" in section 11(2a) of the Act did not include the procedure for recovery of the assessed amount. The proceeding for assessment was completed once a final order of assessment was made, as supported by the Supreme Court's observation in Ghanshyamdas's case.

Conclusion:
The court quashed the consolidated assessment orders and all subsequent proceedings, allowing the respondents to proceed afresh in accordance with the law, if not otherwise barred. The operation of the order was stayed for six weeks upon the respondents' request.

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