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1978 (7) TMI 225 - HC - VAT and Sales Tax
Issues: Determination of liability to pay tax under the Bengal Finance (Sales Tax) Act, 1941 based on the classification of the petitioner as a manufacturer or dealer, and the correct application of sections 4 and 11(2) of the Act.
Analysis: The petitioner, a proprietor of an optical business, challenged an order by the Assistant Commissioner of Commercial Taxes and the Additional Commissioner of Commercial Taxes regarding his liability to pay tax under the Bengal Finance (Sales Tax) Act, 1941. The petitioner contended that he is not a manufacturer but a dealer, and his turnover should exceed Rs. 50,000 to be liable for tax under section 4(5)(c) of the Act. The Commercial Tax Officer classified the petitioner as a manufacturing dealer, imposing tax liability from 1st January, 1967, based on a turnover exceeding Rs. 10,000. The Assistant Commissioner and Additional Commissioner upheld this classification, leading to the petitioner's appeal (para. 1-2). The petitioner argued that the determination of his liability under section 4(2) of the Act should have followed an assessment under section 11(2) and that the orders were without jurisdiction. Citing a precedent, the petitioner's advocate contended that statutory powers should be exercised as prescribed by the law. The petitioner was found not to be a manufacturer as defined by the Act, as the assembly of spectacles frames and glasses did not result in a new article. The court held that the petitioner's liability to pay tax should be based on a gross turnover exceeding Rs. 50,000, and assessment under section 11(2) should precede the determination of tax liability (para. 3-4). The court set aside the order of the Additional Commissioner, making the petitioner liable under section 4(2) of the Act from 1st January, 1967, and ruled in favor of the petitioner, emphasizing that he is not a manufacturer and should be taxed based on a turnover exceeding Rs. 50,000. The petitioner's petition was allowed, and no costs were awarded (para. 5).
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