1968 (8) TMI 179 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of recovery proceedings based on appellate orders.
2. Effect of reduction in tax liability by appellate and revising authorities on recovery proceedings.
3. Application of the doctrine of merger in tax assessment cases.

Analysis:
1. The petitioner, a partnership firm, was assessed to sales tax for multiple years and a recovery proceeding was initiated based on the assessment orders. Subsequently, during the pendency of appeals, appellate orders partially allowed the appeals, reducing the tax liability. The petitioner challenged the recovery proceeding, which was quashed by the Court as it was based on assessment orders that had been superseded by appellate orders.

2. Fresh notices of demand were issued for the reduced tax liability after the quashing of the initial recovery proceeding. The petitioner then applied for revision against the appellate orders, resulting in a further reduction of the tax liability by the Additional Revising Authority. The Court held that recovery proceedings based on the original appellate orders, which were subsequently reduced in revision, were not valid. It was emphasized that a fresh notice of demand must be issued when the tax liability determined by an appellate order is reduced in revision.

3. The Court distinguished the present case from a previous Supreme Court judgment by highlighting that the subject matter of the appeal and revision remained the same, resulting in a continuous reduction of the tax liability assessed. The doctrine of merger was not applicable in this scenario. Consequently, the recovery proceedings for the years where the tax liability was reduced by the appellate and revising authorities were quashed, while the recovery proceeding for the remaining year was upheld as no revision application had been filed against it.

In conclusion, the Court allowed the petition, quashing the recovery proceedings for certain years based on the reduced tax liability determined by the appellate and revising authorities. The application of the doctrine of merger was discussed in light of the continuous reduction in tax liability throughout the assessment, appeal, and revision stages.