1970 (10) TMI 56 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Sales Tax Officer to make a provisional assessment under Rule 41(3) of the U.P. Sales Tax Rules.
2. Whether a dealer is entitled to deposit the tax admitted by him to be due.
3. The binding nature of obiter dictum versus ratio decidendi in judicial decisions.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Sales Tax Officer to Make a Provisional Assessment:
The primary issue revolves around whether the Sales Tax Officer has the jurisdiction to make a provisional assessment under Rule 41(3) of the U.P. Sales Tax Rules. The court compared the provisions of Section 7 of the U.P. Sales Tax Act with Rule 41 of the U.P. Sales Tax Rules. It was determined that Section 7 does not explicitly provide for provisional assessments, whereas Rule 41 does. The court concluded that the jurisdiction of the Sales Tax Officer is limited under sub-rule (3) of Rule 41. The officer can only determine the turnover to the best of his judgment if no return is submitted within the prescribed period or if the return is submitted without payment of tax in the manner prescribed. The tax payable, as per sub-rule (2), is the amount calculated by the dealer himself. Therefore, if the dealer believes no tax is due or a lower tax rate applies, the Sales Tax Officer cannot override this belief for provisional assessment purposes.

2. Dealer's Entitlement to Deposit the Tax Admitted by Him to Be Due:
The court examined whether a dealer is entitled to deposit the tax admitted by him to be due. It was established that sub-rule (2) of Rule 41 allows the dealer to calculate the tax based on his turnover and the rate he believes applicable. The court emphasized that the dealer's calculation of the tax due must be respected for provisional assessment purposes. This interpretation aligns with the Supreme Court's ruling in State of Rajasthan and Others v. Ghasilal, which clarified that tax is not "due" until determined by the dealer or assessing authority. Therefore, a dealer can deposit the tax he admits to be due, and the Sales Tax Officer cannot question this calculation during provisional assessment.

3. Binding Nature of Obiter Dictum Versus Ratio Decidendi:
The court discussed the binding nature of obiter dictum versus ratio decidendi, referencing several legal texts and precedents. It was clarified that only the ratio decidendi, the rule of law applied by the court, is binding. Obiter dictum, statements made by the way or not necessary for the decision, do not carry binding authority. The court analyzed the Full Bench decision in Messrs Adarsh Bhandar v. Sales Tax Officer, Aligarh, and concluded that its observations on the jurisdiction of the Sales Tax Officer were obiter dicta, not binding as a precedent. Consequently, the current Full Bench was competent to reconsider the matter without referring it to a larger Bench.

Conclusion:
The court concluded that a dealer is entitled to deposit the tax admitted by him to be due, and the Sales Tax Officer does not have the power to make an enquiry into the dealer's assumed liability during provisional assessment. The observations made in the Full Bench decision of Messrs Adarsh Bhandar v. Sales Tax Officer, Aligarh, were deemed obiter dicta and not binding. Thus, the court's answer to the referred question was that the assessing authority lacks the jurisdiction to question the dealer's calculation of tax due during provisional assessment under Rule 41(3) of the U.P. Sales Tax Rules.