1979 (4) TMI 139 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of section 9(2) of the Central Sales Tax Act regarding seeking opinion of the Commissioner on the rate of tax under the Act.

Analysis:
The appeal involved a crucial point regarding whether an assessee can request the Commissioner's opinion on the appropriate tax rate under the Central Sales Tax Act. The key issue revolved around interpreting section 9(2) of the Central Act, which empowers the state authorities to assess and collect taxes under the Act. The contention arose when the Commissioner of Sales Tax refused to entertain the assessee's query on tax rates under the Central Act, citing that only questions under the U.P. Sales Tax Act could be referred and answered under section 35. The crux of the matter lay in determining the scope of the term "reference" in section 9(2) and whether it encompassed inquiries related to the Central Sales Tax Act.

The court analyzed the wide-ranging language of section 9(2) of the Central Sales Tax Act, emphasizing that the intent was to utilize the machinery provided by the State Act for assessments under the Central Act. While the provision did not explicitly specify the type of reference contemplated, the court noted that if the proceedings under section 35 bore the essential characteristics of a reference, they should align with the overarching objective of conducting assessments in accordance with state laws. It was highlighted that proceedings under section 35 initiated with an application by the assessee seeking the Commissioner's opinion, akin to a reference process. The court drew a distinction between proceedings under section 35 and those under section 11 of the Act, noting that both aimed to declare the law on a point, with the effect being given later by the revising authority.

Ultimately, the court held that a proceeding under section 35 functioned as a reference made by the assessee to the Commissioner for opinion on specified questions, as outlined in section 35(2) of the Act. Consequently, the Commissioner of Sales Tax was deemed competent to decide on the application's merits, and his refusal to entertain it based on the Central Sales Tax Act's liability was deemed erroneous. As a result, the appeal was allowed in favor of the assessee, with costs assessed at Rs. 200.

In conclusion, the judgment delved into the interpretation of statutory provisions, particularly section 9(2) of the Central Sales Tax Act, to ascertain the scope of seeking the Commissioner's opinion on tax rates under the Act. It underscored the importance of aligning assessment proceedings with state laws and upheld the assessee's right to solicit the Commissioner's opinion on tax matters, thereby setting a precedent for similar cases involving reference requests under tax legislation.