1972 (5) TMI 56 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notice under section 12(5) of the Orissa Sales Tax Act, 1947.
2. Prejudice caused to the assessee by the notice.
3. Tribunal's annulment of assessments for the quarters ending 30th June, 1960, to 30th September, 1963.
4. Tribunal's findings of fact and their binding nature on the High Court.

Issue-wise Detailed Analysis:

1. Validity of the notice under section 12(5) of the Orissa Sales Tax Act, 1947:

The court examined whether the notice issued to the assessee was mandatory and if any defects in the notice could invalidate the assessment proceedings. Section 12(5) of the Act requires the Commissioner to give a dealer a reasonable opportunity of being heard before assessing the tax. The court referred to several precedents, including *Chatturam v. Income-tax Commissioner, Bihar* and *Harmukh Rai Jairam Das v. State*, establishing that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice. The court concluded that the issue of a notice is not mandatory under section 12(5), and defects in the notice do not invalidate the proceedings unless prejudice is established.

2. Prejudice caused to the assessee by the notice:

The court analyzed whether the defects in the notice caused any prejudice to the assessee. It was noted that the assessee appeared in response to the notice and did not object to its validity initially. The court held that no prejudice was caused to the assessee due to the mistakes in the notice, as the assessee had a reasonable opportunity to be heard. The court emphasized that the proceedings would only be vitiated if prejudice was demonstrated, which was not the case here.

3. Tribunal's annulment of assessments for the quarters ending 30th June, 1960, to 30th September, 1963:

The Tribunal annulled the assessments on the grounds that there was no material to determine the assessee's turnover to fix his liability to pay tax. The Tribunal found that the notice under section 12(5) indicated liability from 1st April, 1963, and that there was nothing to show that the turnover for the period of 12 months prior to 31st March, 1963, exceeded Rs. 10,000. The court, however, found that the Tribunal had ignored various materials on record, such as purchase invoices, slips, and a pocket note-book, which indicated the extent of the assessee's business. The court concluded that the Tribunal's findings were erroneous and not based on a comprehensive review of the evidence.

4. Tribunal's findings of fact and their binding nature on the High Court:

The court discussed the binding nature of the Tribunal's findings of fact. It was noted that the Tribunal's findings are binding if there is some evidence to support them. However, if the Tribunal's conclusion is based on incomplete consideration of the evidence, it cannot be regarded as a binding finding of fact. The court found that the Tribunal had ignored essential evidence and material facts, leading to an erroneous conclusion. Therefore, the Tribunal's findings were not binding on the High Court.

Conclusion:

The court summarized its conclusions as follows:
(a) Notice under section 12(5) is not mandatory for initiating proceedings.
(b) Reasonable opportunity of being heard during the proceedings suffices.
(c) Notice in form VI under rule 22 is a method of providing reasonable opportunity, and errors in such notice only invalidate proceedings if prejudice is shown.
(d) No prejudice was caused to the assessee due to mistakes in the notice.
(e) The Tribunal's judgment was not in accordance with law due to its failure to consider material facts.

The references were accepted, and the question was answered in the negative, with each party bearing its own costs.

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