1972 (1) TMI 95 - HC - VAT and Sales Tax

Issues Involved:
1. Competency of the assessing authority to consolidate demands for several quarters in one assessment proceeding under the Bengal Finance (Sales Tax) Act, 1941.
2. Maintainability of the appeal from a single judge's decision under Article 226 of the Constitution to the Division Bench of the High Court.
3. Interpretation of the Bengal Finance (Sales Tax) Act, 1941, regarding the period of assessment and the nature of the tax.

Issue-wise Detailed Analysis:

1. Competency of the Assessing Authority to Consolidate Demands:
The learned Judge found that a consolidated assessment order in respect of several return periods is ultra vires and, accordingly, all subsequent proceedings for demand and recovery by the Government founded on such ultra vires assessment orders are invalid. The sole question determined was whether it is competent for the assessing authority under the Bengal Finance (Sales Tax) Act, 1941, to consolidate the demands for several quarters in one assessment proceeding. The learned Judge concluded that the jurisdiction of the assessing authority to assess is separate as regards each period or unit of assessment and that if an order of assessment is made consolidating several units together, such order would be ultra vires the statutory provisions and hence invalid.

The appellant contended that the learned Judge misunderstood and misinterpreted the provisions of the Bengal Finance (Sales Tax) Act, 1941, and the Bengal Sales Tax Rules, arguing that the tax under the Act could be quarterly, half-yearly, or any period within the year and not necessarily annual. However, the court found that the tax is annual and the assessment is annual, though returns may be quarterly or half-yearly. The Act's provisions, such as sections 4, 5, 7, and 8, and the Bengal Sales Tax Rules, particularly rules 17, 19, 21, 24, 30, 32, 34, and 35, support the view that the tax and assessment are annual.

2. Maintainability of the Appeal:
A point argued on behalf of the respondent was that the appeal is not maintainable in the first instance. It was contended that the right of appeal is a constitutional or statutory right, and the Constitution of India does not provide for an appeal from the decision of a single Judge of the High Court to the Division Bench of the High Court. The argument was based on the assertion that clause 15 of the Letters Patent is abrogated post-Constitution.

The court rejected this argument, stating that under Article 225 of the Constitution, the jurisdiction and powers of the High Court remain the same as immediately before the commencement of the Constitution. The rules of the High Court, particularly rule 43, provide for appeals from final orders in the jurisdiction of Article 226 in the same manner as appeals from original orders. Article 372(1) of the Constitution ensures the continuation of laws in force before the Constitution until altered or repealed. The court cited several authorities, including a Special Bench decision in Chairman, Budge Budge Municipality v. Manghru Mial and decisions from the Madras and Allahabad High Courts, supporting the view that an appeal is maintainable from a single judge's decision under Article 226.

3. Interpretation of the Bengal Finance (Sales Tax) Act, 1941:
The court examined the provisions of the Bengal Finance (Sales Tax) Act, 1941, and concluded that the tax is annual and the assessment is annual, though returns may be required quarterly or half-yearly. Section 4 of the Act shows the incidence of taxation based on the gross turnover during the year immediately preceding the commencement of the Act. Sections 5, 7, and 8 further support the annual nature of the tax and assessment. The Bengal Sales Tax Rules also emphasize annual taxable turnover and annual returns, with specific provisions for quarterly returns not implying quarterly assessments.

The court referred to several decisions, including those of the Supreme Court and other High Courts, which support the view that the tax is annual, and the assessment should be annual. The court concluded that the learned Judge's interpretation was correct, and the consolidated assessment order was ultra vires.

Conclusion:
The court set aside the order of the learned Judge, allowed the appeals, and discharged the rules. The appeals were found to be maintainable, and the interpretation of the Bengal Finance (Sales Tax) Act, 1941, was affirmed to support annual tax and assessment, invalidating the consolidated assessment order. There was no order as to costs.

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