1977 (4) TMI 160 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Rejection of the turnover as per accounts and determination of turnover by the Assistant Commercial Tax Officer.
2. Assessment under Section 7 of the Madras General Sales Tax Act.
3. Deletion of Rule 15(4-B) of the Tamil Nadu General Sales Tax Rules.
4. Validity of the option exercised by the assessee for assessment under Section 7.
5. Interpretation of "reasonable time" for exercising the option under Section 7.
6. Applicability of Supreme Court decisions regarding the time-limit for exercising options under tax provisions.

Detailed Analysis:

1. Rejection of the turnover as per accounts and determination of turnover by the Assistant Commercial Tax Officer:
The Assistant Commercial Tax Officer identified certain defects in the assessee's accounts, leading to the rejection of the reported turnover. He determined the turnover to the best of his judgment at Rs. 56,398.92, adding 25% to the book turnover. The Appellate Assistant Commissioner upheld the rejection but reduced the addition to 12.5%, refixing the taxable turnover at Rs. 50,759.03. The assessee disputed the turnover of Rs. 5,639.89 and the corresponding tax of Rs. 922.58 before the Tribunal.

2. Assessment under Section 7 of the Madras General Sales Tax Act:
The assessee opted for assessment under Section 7 by letters dated 1st August 1972 and 4th September 1972. The assessing authority accordingly assessed the assessee under Section 7. However, on appeal, the Appellate Assistant Commissioner revoked this assessment and directed the assessment under Section 3(1) due to the deletion of Rule 15(4-B).

3. Deletion of Rule 15(4-B) of the Tamil Nadu General Sales Tax Rules:
Rule 15(4-B) allowed dealers to exercise the option for assessment under Section 7 at the time of submitting the annual return or before the final assessment. This rule was deleted by a notification dated 27th September 1971, published on 1st December 1971. The Tribunal held that the deletion of Rule 15(4-B) did not retrospectively affect the assessee's right to opt for Section 7 assessment.

4. Validity of the option exercised by the assessee for assessment under Section 7:
The Tribunal found that the assessee had exercised the option for assessment under Section 7 within a reasonable time. The Tribunal's decision was based on the fact that the option was exercised before the final assessment, which was considered a reasonable time frame.

5. Interpretation of "reasonable time" for exercising the option under Section 7:
The court examined the statutory provisions and concluded that Section 7 did not prescribe a specific time limit for exercising the option. The court referred to the Supreme Court's decision in Sales Tax Officer v. Abraham, which held that in the absence of a prescribed time limit, the option could be exercised within a reasonable time, defined as before the assessment was made. The court determined that the assessee's declarations were filed within this reasonable time.

6. Applicability of Supreme Court decisions regarding the time-limit for exercising options under tax provisions:
The court considered the Supreme Court's ruling in Sales Tax Officer v. Abraham, which established that the rule-making authority could not fix a time limit for exercising an option unless explicitly authorized by the statute. The court also reviewed earlier decisions of the Madras High Court, which required the option to be exercised by 1st May of the relevant year. However, these decisions were rendered before the Supreme Court's ruling and did not account for the deletion of Rule 15(4-B). The court concluded that the option could be exercised before the assessment, aligning with the Supreme Court's interpretation.

Conclusion:
The court upheld the Tribunal's decision, affirming that the assessee validly exercised the option for assessment under Section 7 within a reasonable time. The revision petition filed by the State was dismissed, and no order as to costs was made.