1970 (3) TMI 155 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the notice issued by the Assistant Sales Tax Officer.
2. Constitutionality of Section 11(1) of the Bengal Finance (Sales Tax) Act, 1941, in relation to Article 14 of the Constitution of India.

Detailed Analysis:

1. Validity of the Notice Issued by the Assistant Sales Tax Officer:

Contention:
The petitioner challenged the notice dated August 5, 1965, issued by the Assistant Sales Tax Officer (respondent No. 2), arguing that he was not authorized to act as such at that time, rendering the notice invalid and the subsequent assessment ultra vires, illegal, and void.

Court's Observation:
The Chief Commissioner appointed respondent No. 2 as an Assistant Sales Tax Officer retrospectively from March 24, 1952, by an order dated March 30, 1966. The court referred to the Supreme Court's rulings in *Income-tax Officer, Alleppey v. M.C. Ponnoose* and *Dayal Bagh Co-operative House Building Society v. Sultan Singh*, which held that retrospective appointments cannot validate actions taken before the actual appointment date.

Conclusion:
The court held that respondent No. 2 had no competence to issue the notice dated August 5, 1965, making it invalid and non-existent in the eyes of law. However, the assessment made by respondent No. 1 after hearing the petitioner, who had the opportunity to present its case, was deemed valid. The court emphasized that the service of notice is procedural and not a condition precedent for assessment under Section 11(1).

2. Constitutionality of Section 11(1) in Relation to Article 14:

Contention:
The petitioner argued that Section 11(1) of the Act violates Article 14 of the Constitution by giving arbitrary, uncanalised, and unguided discretion to the assessing authority to impose penalties summarily, while Section 22(1)(b) requires a judicial prosecution for similar defaults.

Court's Observation:
The court distinguished the penalty provisions under Section 11(1) from the prosecution provisions under Section 22(1)(b). It noted that Section 22(2) requires the Commissioner's previous sanction for prosecution, providing a safeguard against arbitrary action. The court also highlighted that the two provisions serve different purposes: Section 11(1) aims to secure compensation for tax evasion, while Section 22(1)(b) seeks to punish deliberate infractions of the law.

Conclusion:
The court found no violation of Article 14, as the provisions under Sections 11(1) and 22(1)(b) are designed to serve different objectives and are not alternate but separate and independent remedies. The court cited *T.S. Baliah v. T.S. Rangachari, Income-tax Officer, Madras* to support its conclusion that the safeguards around prosecution provisions prevent any violation of Article 14.

Final Judgment:
The writ petition was dismissed, and the court upheld the validity of the assessment made by respondent No. 1. There was no order as to costs.