1976 (10) TMI 136 - HC - VAT and Sales Tax

Issues Involved:
1. Competence of the Additional Judge (Revisions), Sales Tax, to record a finding on the association of persons.
2. Material on record to hold the applicant-firm and the firm at Sirsaganj as an association of persons.
3. Liability of the two firms as 'dealers' under the U.P. Sales Tax Act.
4. Reversal of the Assistant Commissioner (Judicial)'s finding without a revision filed by the State.

Detailed Analysis:

Issue 1: Competence of the Additional Judge (Revisions), Sales Tax
The first issue concerns the competence of the Additional Judge (Revisions), Sales Tax, to record a finding that the two firms constituted an "association of persons." The court held that once the records of a case are called for, the revising authority can examine the legality and propriety of an order of the appellate authority and the assessing authority and pass such order as it thinks fit. This power can be exercised whether or not the revision petitioner or the respondent has canvassed the findings of the authorities below. The court noted that under the amended section 10 of the U.P. Sales Tax Act, the revising authority has no suo motu power of revision. However, since the order of the appellate authority was made before the amendment, the revising authority could still exercise suo motu powers. The court concluded that the Additional Judge (Revisions) was competent to hold that the two firms constituted an association of persons even though that question was not raised by the assessee in revision.

Issue 2: Material on Record for Association of Persons
The second issue pertains to whether there was any material on record to hold that the applicant-firm and the firm at Sirsaganj constituted an "association of persons." The court observed that the two firms had made joint applications for registration as dealers and had submitted common returns of turnover. These circumstances were considered relevant material for determining whether there was any joint business venture of these two firms so as to constitute an association of persons. The court held that there was material on record to support the finding that the two firms constituted an association of persons.

Issue 3: Liability as 'Dealers'
The third issue questions whether the two firms were 'dealers' within the meaning of section 2, sub-clause (14), read with the definition of 'person' under the General Clauses Act, and were liable to joint assessment. The court referred to the definition of "dealer" under the U.P. Sales Tax Act and the General Clauses Act, noting that an "association of persons" may have as its members companies, firms, or associations. The court found no legal impediment to treating the two firms as constituting an "association of persons" and held that they were liable to be assessed jointly as a dealer.

Issue 4: Reversal of the Assistant Commissioner (Judicial)'s Finding
The fourth issue involves whether the Additional Judge (Revisions), Sales Tax, could reverse the finding of the Assistant Commissioner (Judicial) that the two firms were separate firms when no revision had been filed against that part of the finding by the State. The court held that once a matter comes up before the revisional authority, it is entitled to consider the legality or propriety of any finding by the assessing authority or the appellate authority. The revisional authority can substitute its own finding for that of the authorities below, and its power is not restricted to merely affirming or setting aside the order under revision. The court concluded that the Additional Judge (Revisions) could reverse the finding of the Assistant Commissioner (Judicial) and hold that the two firms constituted an association of persons.

Conclusion:
The court answered all the questions in favor of the revenue and against the assessee. The Additional Judge (Revisions), Sales Tax, was competent to hold that the two firms constituted an association of persons, there was material on record to support this finding, the two firms were liable to be assessed jointly as a dealer, and the finding of the Assistant Commissioner (Judicial) could be reversed even though the revenue had not filed any revision against it. The reference was answered accordingly, with no order as to costs.

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