1971 (8) TMI 216 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Rule 14-A(8) of the Central Sales Tax (Andhra Pradesh) Rules.
2. Application of the time-limit for making best judgment assessments under the Central Sales Tax Act.

Issue-wise Detailed Analysis:

1. Validity of Rule 14-A(8) of the Central Sales Tax (Andhra Pradesh) Rules:

The petitioners contended that Rule 14-A(8) fixing the time-limit for making best judgment assessments in respect of escaped turnover is ultra vires and void as it exceeds the rule-making power of the State Government. They argued that the provision fixing the period of limitation was a substantive law and not a mere rule of procedure. The court examined whether the time-limits fixed under Rule 14-A(8) are periods of limitation forming part of substantive law or mere rules of procedure. The court noted that the substantive law defines the right and remedy, while the law of procedure defines the mode and conditions of application of one to the other. The court referenced the Supreme Court's observation in S.S. Gadgil v. Lal & Co. that the period prescribed for assessment is not a period of limitation but a fetter on the power of the assessing authority. The court concluded that Rule 14-A(8) is a procedural rule and not a substantive law, falling within the domain of adjective law. The court further examined whether Rule 14-A(8) is within the rule-making power conferred upon the State Government by section 13(3) or 13(4) of the Central Sales Tax Act. The court held that the power to make assessments includes the power to provide procedures for making assessments, including fixing a time-limit. Therefore, Rule 14-A(8) is within the rule-making power of the State Government.

2. Application of the time-limit for making best judgment assessments under the Central Sales Tax Act:

The petitioners argued that the Central Sales Tax Act incorporates the provisions of the General Sales Tax Act in force in Andhra Pradesh in 1956, which fixed a three-year period for assessing escaped turnover. Since the assessments in question were made beyond three years but within four years from the end of the assessment year 1963-64, they contended that the assessments were time-barred and illegal. The court examined whether the general sales tax law prevailing in Andhra Pradesh at the time when the Central Sales Tax Act came into force was incorporated into the latter Act or merely referred to in that Act. The court noted that the law draws a distinction between a mere reference to or citation of one statute in another and incorporation of one statute into another. The court held that section 9 of the Central Sales Tax Act merely refers to the provisions of the General Sales Tax Act and does not incorporate them. Therefore, the provisions of the Andhra Pradesh General Sales Tax Act, which fixed a four-year period for making best judgment assessments, apply to the case. The court concluded that the assessments made within four years from the end of the relevant assessment year were valid.

Conclusion:

The court dismissed the writ petitions, holding that Rule 14-A(8) of the Central Sales Tax (Andhra Pradesh) Rules is valid and within the rule-making power of the State Government. The court also held that the assessments made within the four-year period from the end of the relevant assessment year were valid. The petitioners' contentions were rejected, and the petitions were dismissed with costs.