1969 (8) TMI 77 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notification fixing the rate of tax on oil-seeds.
2. Bar of limitation on fresh assessment.
3. Jurisdiction of the Sales Tax Officer, Etawah, to assess the firm.

Detailed Analysis:

1. Validity of the Notification Fixing the Rate of Tax on Oil-Seeds:
The petitioner argued that the turnover of oil-seeds was not liable to assessment due to the absence of a valid notification specifying the rate of tax. Article 286(3) of the Constitution and sections 14 and 15 of the Central Sales Tax Act, 1956, were referenced, highlighting the special importance of oil-seeds in inter-State trade and commerce. Section 3-AA of the U.P. Sales Tax Act, effective from April 1, 1956, provided that oil-seeds would be taxed at a rate not exceeding two naye paise per rupee. Notification No. ST-2933/X-902(7)-56 dated August 1, 1958, declared a tax rate of three pies per rupee effective from April 1, 1956. However, this notification was challenged as ultra vires, as section 3-AA(1) did not empower the making of a notification fixing a rate of tax. The court referenced Ram Niwas Sant Lal v. Sales Tax Officer, Basti, which held that section 3-AA(1) did not lay down a rate of tax nor the authority to fix it. The Uttar Pradesh Bikri Kar (Sanshodhan) Adhiniyam, 1964, amended section 3-AA(1) to allow the State Government to declare the rate of tax by notification. Section 3 of the Amendment Act validated prior notifications. Despite this, the court found the notification invalid as it was made with retrospective effect without legislative authority, rendering it ineffective even prospectively. Consequently, no valid rate of tax was fixed for oil-seeds for the assessment years 1957-58 and 1958-59, making the turnover non-assessable.

2. Bar of Limitation on Fresh Assessment:
The petitioner contended that fresh assessment on remand was barred by limitation. The remand order was issued on May 4, 1965. Section 21(2) of the U.P. Sales Tax Act stipulates a four-year limitation period for making an assessment order, with an exception for assessments made in consequence of an order under section 9. The court held that the remand order was made under section 9, and thus, the assessment proceeding on remand was not barred by limitation.

3. Jurisdiction of the Sales Tax Officer, Etawah, to Assess the Firm:
The petitioner argued that the Sales Tax Officer, Etawah, lacked jurisdiction as the firm operated within the jurisdiction of the Sales Tax Officer, Mainpuri. The Commissioner had transferred the cases to Etawah under rule 81 of the U.P. Sales Tax Rules, which allows case transfers. The petitioner claimed rule 81 only permitted intra-circle transfers, but the court found no such limitation in the rule's language. The court also rejected the argument that rule 81 was ultra vires for conferring unlimited transfer power, referencing Pannalal Binjraj v. The Union of India, which upheld similar provisions in the Income-tax Act, 1922. The court concluded that rule 81(1) was not ultra vires, and the transfer to Etawah was valid.

Conclusion:
The petitions were partly allowed. The court quashed the orders of the Assistant Commissioner (Judicial) Sales Tax and the Additional Judge (Revisions) to the extent they affected the turnover of oil-seeds. The remaining reliefs were refused, and each party was ordered to bear its own costs.

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