1972 (9) TMI 131 - HC - VAT and Sales Tax

Summary

Issues:
1. Exclusion of time spent in prosecuting remedy under section 30 for computing the period of limitation for filing an appeal.
2. Whether the delay in filing the appeal can be excused under section 5 of the Limitation Act.
3. Justification of turnover determined at Rs. 2,00,000 by the assessing authority.

Analysis:
The judgment by the High Court of Allahabad pertains to a case under the U.P. Sales Tax Act for assessment years 1966-67 and 1967-68. The assessee's assessment proceedings were conducted simultaneously for both years, with multiple adjournments. Eventually, the assessments were completed ex parte, setting the turnover at Rs. 2 lacs for each year. The assessee sought to set aside the ex parte orders under section 30 but did not file timely appeals against the assessment orders under section 9. Subsequently, the appeals were dismissed for being time-barred, leading to a reference on three questions of law.

Regarding the exclusion of time spent in pursuing the remedy under section 30 for computing the period of limitation for filing an appeal, the court clarified that both remedies are not mutually exclusive or consecutive. The period of limitation for both remedies is 30 days from the date of service of the assessment order. The court emphasized that an assessee cannot claim exclusion of time spent in pursuing one remedy for the other remedy's limitation period, as per the provisions of the Indian Limitation Act.

The court further addressed whether the delay in filing the appeal could be excused under section 5 of the Limitation Act due to mistaken legal advice. It was held that the time spent in prosecuting the application under section 30 could not be excluded under section 5. The court noted that the legal advice given to the assessee was not mistaken, as section 30 was applicable, and there was no advice against filing an appeal within the limitation period.

Regarding the justification of the turnover determined at Rs. 2,00,000 by the assessing authority, the court found that the assessments were best judgment assessments but needed to be based on some material, not sheer guesswork. The revising authority initially considered the assessments arbitrary but confirmed them based on the turnover of the preceding year. However, discrepancies in the turnover figures and the subsequent setting aside of the assessment for the preceding year led the court to conclude that the basis for confirming the assessments had become erroneous. The court ruled in favor of the assessee on this issue.

In conclusion, the court answered the questions of law as follows: Question No. (1) in favor of the assessee, Question No. (2) against the assessee, and Question No. (3) against the assessee. The reference was answered accordingly, with no order as to costs.