1977 (3) TMI 146 - HC - VAT and Sales Tax

Issues Involved:
1. Best judgment assessment in reassessment proceedings under section 15 of the Bombay Sales Tax Act, 1953.
2. Validity of the order dated 2nd January 1956 by the Additional Collector of Sales Tax (I), Bombay State, Bombay.
3. Jurisdiction of the Sales Tax Officer (III), Enforcement Branch, Bombay, to pass assessment/reassessment orders.
4. Initiation of proceedings under section 15 by the Sales Tax Officer (III), Enforcement Branch, Bombay.
5. Validity of the service of notice under sections 14 and 15 on Chhogalal Dave.

Detailed Analysis:

Issue 1: Best judgment assessment in reassessment proceedings under section 15 of the Bombay Sales Tax Act, 1953

The Tribunal was questioned whether an authority acting under section 15 could resort to best judgment assessment. Both parties agreed that the decision in Commissioner of Sales Tax v. P. Ambalal and Co. (1976) 38 S.T.C. 333 governed the case. According to that decision, best judgment assessment cannot be resorted to in reassessment proceedings under section 15, and thus, the question was answered in the negative in favor of the department.

Issue 2: Validity of the order dated 2nd January 1956 by the Additional Collector of Sales Tax (I), Bombay State, Bombay

The Tribunal held that the order dated 2nd January 1956, assigning the case to the Sales Tax Officer (III), Enforcement Branch, Bombay, was invalid as it was passed without giving reasons or an opportunity to the respondents to be heard. The Tribunal considered it a quasi-judicial order requiring reasons and an opportunity for hearing. However, the court found that this order was an administrative order for assignment under the notification dated 20th August 1955 and did not require reasons or a hearing. Furthermore, section 52 of the Bombay Sales Tax Act, 1953, validated such orders, making the argument of invalidity irrelevant.

Issue 3: Jurisdiction of the Sales Tax Officer (III), Enforcement Branch, Bombay, to pass assessment/reassessment orders

The Tribunal held that the Sales Tax Officer (III), Enforcement Branch, Bombay, lacked jurisdiction to pass the orders. However, the court found that section 52 of the Bombay Sales Tax Act, 1953, validated the jurisdiction conferred by the notification dated 20th August 1955, and the assignment of dealers to the Sales Tax Officers. The jurisdiction of the Sales Tax Officer (III), Enforcement Branch, Bombay, was thus validly conferred, and the orders were lawful.

Issue 4: Initiation of proceedings under section 15 by the Sales Tax Officer (III), Enforcement Branch, Bombay

The Tribunal held that the Sales Tax Officer (III), Enforcement Branch, Bombay, could not initiate reassessment proceedings under section 15 as the original assessment was done by the Sales Tax Officer, Licence Circle, III Division, Bombay. The court, however, found that the notification dated 20th August 1955 and the assignment order dated 2nd January 1956 conferred jurisdiction on the Sales Tax Officer (III), Enforcement Branch, Bombay, to initiate proceedings under section 15. Thus, the initiation of proceedings was valid.

Issue 5: Validity of the service of notice under sections 14 and 15 on Chhogalal Dave

The Tribunal held that the service of notice on Chhogalal Dave was not valid as he was not an agent of the respondents within the meaning of section 43 of the Bombay Sales Tax Act, 1953. The court agreed, stating that personal service should be upon the dealer or their appointed agent. The service on Chhogalal Dave was defective and invalid. Arguments about waiver of the notice were not considered as there were no facts or findings on record to support such a claim.

Conclusion:

The court answered the questions as follows:

1. Question No. (1) in the negative.
2. Question No. (2) in the negative.
3. Question No. (3) in the affirmative.
4. Question No. (4) in the negative.
5. Question No. (5) in the negative.

Each party was directed to bear its own costs due to the partial success of both sides and the subsequent validation of the jurisdiction defect by a Validating Act.

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