1978 (8) TMI 191 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability to Pay Sales Tax
2. Validity of Consolidated Assessment Order
3. Fresh Enquiry and Findings
4. Allegations of Vindictiveness and Mala Fides
5. Use of Undisclosed Information
6. Principles of Natural Justice

Detailed Analysis:

1. Liability to Pay Sales Tax
The petitioner, a sole proprietor of a clothing business, contested his liability to pay sales tax under the Bengal Finance (Sales Tax) Act, 1941, asserting that his turnover never exceeded Rs. 50,000. The Commercial Tax Officer, however, rejected the petitioner's books of account for the year 1371 B.S., alleging irregularities and unvouched purchases, and determined that the petitioner was liable to pay sales tax from 1st Baisakh, 1372 B.S. The court held that no proceeding under section 4(2) of the Act could be initiated for fixation of liability to tax, and the orders made by the Commercial Tax Officer were without jurisdiction.

2. Validity of Consolidated Assessment Order
The petitioner challenged the consolidated order of assessment for several years. The court found that each year is a separate unit for assessment under the Act, and a consolidated order of assessment for multiple years is not permissible. Even if such an assessment was made at the request of the petitioner's authorized representative, it would not render the order valid if it was not permissible under the law. The court quashed the consolidated assessment order dated 29th March, 1974.

3. Fresh Enquiry and Findings
The Assistant Commissioner of Commercial Taxes had set aside the initial order dated 19th January, 1973, and directed a fresh assessment. However, the Commercial Tax Officer did not make any fresh enquiry or come to new findings but relied on his previous order, which was set aside. The court held that the officer sought to circumvent the revisional order by shifting the onus on the petitioner to disprove the assumptions made in the previous order, which was not permissible.

4. Allegations of Vindictiveness and Mala Fides
The petitioner alleged that the orders were passed out of sheer vindictiveness and mala fides by the Commercial Tax Officer. The court noted that these allegations were not denied by the officer and thus should be taken as admitted. The facts indicated that the officer acted capriciously and in a high-handed manner, leading to the conclusion that the orders were passed with ill-will and vengeance.

5. Use of Undisclosed Information
The Commercial Tax Officer relied on undisclosed information purportedly received from a local source, which was not disclosed to the petitioner. The court held that using such undisclosed materials without giving the petitioner an opportunity to rebut the same was a violation of the principles of natural justice, rendering the orders null and void.

6. Principles of Natural Justice
The court emphasized that the Commercial Tax Officer was not justified in using materials and information against the petitioner without disclosing them and without giving the petitioner an opportunity to rebut. This was clearly in violation of the principles of natural justice. The court cited several precedents to support this view, including the decisions in Sri Surajmal Jain v. Commercial Tax Officer and Sudhir Ch. Mukherjee v. Additional Commissioner, Commercial Taxes, West Bengal.

Conclusion
The court quashed the orders dated 19th January, 1973, 1st March, 1974, and 29th March, 1974, along with the demand notice dated 29th March, 1974. The rule was made absolute, and since the respondents did not appear, there was no order as to costs.