1972 (9) TMI 126 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction of Assistant Sales Tax Officer in issuing notice under section 21
2. Validity of transfer of the case from Assistant Sales Tax Officer to Sales Tax Officer
3. Applicability of assessment under section 21 versus section 7(3) of the U.P. Sales Tax Act

Jurisdiction of Assistant Sales Tax Officer:
The case involved questions regarding the jurisdiction of the Assistant Sales Tax Officer in issuing a notice under section 21 of the U.P. Sales Tax Act and whether the assessment could be completed by the Sales Tax Officer. The High Court clarified that the Assistant Sales Tax Officer had the authority to issue the notice under section 21, as there was no limitation on the pecuniary jurisdiction of the Assistant Sales Tax Officer. The Court referred to a government order authorizing Assistant Sales Tax Officers to perform duties within their sales tax circle without any monetary limit. Additionally, a previous decision of a Division Bench supported the validity of the notice issued by the Assistant Sales Tax Officer, even if the assessment was completed by the Sales Tax Officer.

Validity of Transfer of the Case:
The issue of the validity of the transfer of the case from the Assistant Sales Tax Officer to the Sales Tax Officer was not considered by the revising authority, and therefore, the High Court found that it did not arise from the order under review. The Court cited a Supreme Court decision to emphasize that a question referred under section 11(4) of the Act must be relevant to the order of the revising authority. Since the question did not arise from the revising authority's order, the High Court was not obligated to address it.

Applicability of Assessment under Section 21 versus Section 7(3):
Regarding the applicability of the assessment under section 21 versus section 7(3) of the U.P. Sales Tax Act, the revising authority had concluded that section 21 was not applicable when the assessee failed to file a return, and a best judgment assessment could be made under section 7(3). However, the High Court disagreed with this interpretation, citing a Full Bench decision that clarified turnover could escape assessment even when a return was not filed. The Full Bench held that both sections 21 and 7(3) could apply in such cases. As the assessment in this case was initiated under section 21, the High Court found that the assessment was valid under section 21 as per the Full Bench decision, making the consideration of justifying the assessment under section 7(3) academically irrelevant. Consequently, the High Court answered question No. (1) in favor of the department, while not providing answers to questions No. (2) and (3).

In conclusion, the High Court upheld the validity of the notice issued by the Assistant Sales Tax Officer under section 21, clarified the non-requirement to address the issue of transfer validity, and determined the assessment under section 21 to be valid based on the Full Bench decision, rendering the consideration of section 7(3) unnecessary in this context.