1970 (3) TMI 124 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the respondent to initiate proceedings.
2. Maintainability of the writ petition under Article 226 of the Constitution of India.
3. The legality of assessing a dissolved association of persons.
4. Burden of proof and sufficiency of evidence for sales tax assessment.

Detailed Analysis:

Jurisdiction of the Respondent to Initiate Proceedings:
The petitioners contended that the respondent lacked jurisdiction to initiate proceedings under the Bombay Sales Tax Act, 1959, as they did not effect any sales in Maharashtra. They argued that no particulars of such sales were furnished despite several requests, making the impugned order illegal. The respondent countered by asserting that the onus was on the petitioners to prove that they did not sell the imported goods in Maharashtra and maintained that he was justified in issuing the notice under section 33 of the Act.

The court concluded that the respondent acted without jurisdiction, as there was no material evidence or reasonable data suggesting that the petitioners sold goods in Maharashtra. The court emphasized that an assessing authority must have jurisdictional facts as the foundation for its power to act. The absence of such facts rendered the respondent's actions arbitrary and without jurisdiction.

Maintainability of the Writ Petition under Article 226:
The respondent argued that the writ petition was not maintainable as no part of the cause of action arose within the jurisdiction of the Madras High Court. The court disagreed, stating that under Article 226(1-A) of the Constitution, the High Court has the power to issue directions if any part of the cause of action arises within its jurisdiction. The court found that the service of notice to the petitioners in Tamil Nadu constituted a part of the cause of action, thereby giving the court jurisdiction to entertain the writ petition.

The court further held that a writ of prohibition is appropriate when an authority acts without jurisdiction. It is not necessary for an aggrieved person to wait for a final order and exhaust all statutory remedies if the initial action itself is without jurisdiction.

Legality of Assessing a Dissolved Association of Persons:
The petitioners argued that the association of persons was dissolved on 9th June 1965, and hence, no proceedings could be initiated against them under the Bombay Sales Tax Act, 1959. The court agreed, noting that there was no express provision in the Act allowing for the assessment of a dissolved association of persons. The court referred to the Supreme Court decision in State of Punjab v. Jullundur Vegetables Syndicate, which held that a dissolved firm cannot be assessed unless there is a statutory provision permitting such assessment.

The court found that sections 18 and 19 of the Bombay Sales Tax Act did not provide sufficient authority to assess a dissolved association of persons. The court emphasized that fiscal laws must expressly provide for the taxation of specific transactions or entities, and in the absence of such provisions, the respondent could not assume jurisdiction.

Burden of Proof and Sufficiency of Evidence for Sales Tax Assessment:
The court observed that the respondent failed to provide any material evidence or reasonable data to support the claim that the petitioners sold goods in Maharashtra. The court held that a sale cannot be assumed and that the burden of proof lies with the assessing authority to establish the occurrence of a sale. The court criticized the respondent for not disclosing the names of the local buyers or providing any specific details of the alleged sales.

The court concluded that the respondent's notice was based on vague and imaginary conclusions without any factual basis. The court reiterated that the petitioners could not be called upon to prove a negative, i.e., that they did not sell goods in Maharashtra. The lack of material evidence rendered the respondent's actions beyond the scope of his authority.

Conclusion:
The court allowed the writ petition, holding that the respondent acted without jurisdiction and that the impugned notice was illegal. The court emphasized the importance of jurisdictional facts and material evidence in exercising assessing authority and highlighted the necessity of express statutory provisions for assessing dissolved entities. The petitioners were awarded costs of Rs. 250.

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