1970 (8) TMI 69 - HC - VAT and Sales Tax

Summary

Issues:
- Interpretation of section 44 of the Madhya Pradesh General Sales Tax Act regarding the authority to make a reference.
- Determination of whether an order of remand by the Board of Revenue affects the liability of the dealer to pay tax.
- Comparison of the phrases "liability already incurred" and "liability of any dealer to pay tax" in different sections of the Act.
- Analysis of previous cases to determine the maintainability of a reference against an order of remand.

Analysis:

The judgment by the High Court of Madhya Pradesh involved three connected references under section 44 of the Madhya Pradesh General Sales Tax Act. The Board of Revenue had directed a remand of the case to the assessing officer after giving its opinion on questions of law for fresh assessment proceedings. The primary issue revolved around the liability of the assessee, a members' club, to pay sales tax. The club contended that it was not a dealer and therefore could not be assessed for tax. The Commissioner of Sales Tax, after hearing the assessee, concluded that the club could not escape assessment and remanded the case for the determination of facts and levy of tax and penalty. The subsequent appeal to the Tribunal upheld the order of remand, leading to the present references questioning the jurisdiction of the Commissioner to revise the order and the liability of the club to pay tax.

A preliminary objection was raised regarding the competency of the references, arguing that since the order only remanded the case for assessment, it did not affect the preexisting liability to pay tax. The interpretation of section 44 of the Act was crucial in determining whether the impugned order affected the liability of the dealer to pay tax. The court analyzed the phrase "affecting the liability of any dealer to pay tax" and distinguished between the primary liability to be assessed and the liability arising after assessment. It was held that for a reference to be competent, the impugned order must alter the tax payable by the assessee, affecting the liability created by assessment.

The court also compared the language of section 52 of the Act, which deals with the effect of subsequent legislation on liabilities already incurred, with the language of section 44. It was emphasized that the phrase "liability of any dealer to pay tax" in section 44 referred to the payment of a specified amount of tax after assessment. The judgment highlighted previous cases, including Commissioner of Sales Tax v. Minerva Minerals, to establish that a reference lies only when there is a question of preexisting liability to pay tax being affected by the impugned order.

Referring to a specific case, the court reiterated that a reference against an order of remand where no final assessment had been made and no liability to pay tax had been affected was deemed incompetent. Ultimately, the court held that the references in the present case were incompetent, and the papers were returned to the department with parties bearing their own costs.