1978 (5) TMI 107 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of the Assistant Commissioner of Commercial Taxes to issue reassessment notices.
2. Constitutional validity of Section 26(1) of the Bengal Finance (Sales Tax) Act, 1941.
3. Validity of retrospective amendment to Rule 80(5)(ii) of the Bengal Sales Tax Rules, 1941.

Detailed Analysis:

1. Jurisdiction of the Assistant Commissioner of Commercial Taxes to Issue Reassessment Notices:
The appellant challenged the propriety and validity of two notices dated 7th November 1974 and 7th December 1974, issued by the Assistant Commissioner of Commercial Taxes, proposing to reopen and reassess the sales tax for specific periods. The appellant contended that there was an initial lack of jurisdiction on the part of respondent No. 2 to issue the impugned orders and that the conditions precedent to the issue of the same were not fulfilled. The learned single Judge found no want of jurisdiction and discharged the rule nisi, leading to this appeal.

The court examined whether the right to revise the assessment orders, which was barred under the unamended provision of Rule 80(5)(ii), could be revived under the amended rule. The court referred to Supreme Court decisions in S.S. Gadgil v. Lal & Co. and J.P. Jani v. Induprasad Devshanker Bhatt, which established that retrospective amendments do not revive rights that were already barred unless expressly stated. Consequently, the court held that the amended provision of Rule 80(5)(ii) does not confer any power to revise assessments that had become barred under the unamended rule. Therefore, the impugned notices were quashed.

2. Constitutional Validity of Section 26(1) of the Bengal Finance (Sales Tax) Act, 1941:
The appellant questioned the constitutional validity of Section 26(1) of the Act, which was substituted by Section 4(1) of the Bengal Sales Tax Ordinance, 1973, allowing the State Government to make rules with retrospective effect. The appellant argued that this provision amounted to excessive delegation of power and affected vested rights.

The court found no substance in this contention, stating that the legislature is competent to legislate retrospectively and affect vested rights through necessary enactments. The court also noted that no fundamental right of the appellant was involved, as evading tax is not a fundamental right. The provision was deemed neither illegal nor ultra vires the Constitution, and the contention was overruled.

3. Validity of Retrospective Amendment to Rule 80(5)(ii) of the Bengal Sales Tax Rules, 1941:
The appellant contested the validity of the amendment made to Rule 80(5)(ii) by a government notification dated 30th March 1974, which extended the period for revision of assessments from four years to six years with retrospective effect from 1st November 1971. The appellant argued that the State Government lacked the authority to make such retrospective amendments.

The court held that the rule-making authority could indeed make rules with retrospective effect if expressly empowered by the Act. Section 26(1) of the Act, as amended, explicitly conferred such power on the State Government. Therefore, the amendment to Rule 80(5)(ii) was valid, and the contention challenging the State Government's authority was rejected.

Conclusion:
The appeal was allowed, and the impugned notices dated 7th November 1974 and 7th December 1974 were quashed. The court issued an appropriate writ and made the rule nisi absolute, with no order for costs. There was a stay of operation of this order for six weeks from the date of the judgment.

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