1980 (1) TMI 178 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of sales tax for the period ending December 1965.
2. Seizure of books of account by Commercial Tax Officer.
3. Notices issued to partners under the Bengal Finance (Sales Tax) Act.
4. Legality of notice issued by Additional Commissioner of Commercial Taxes.
5. Challenge to the notice in the High Court.

Analysis:
1. The petitioner, a partnership firm registered under the Indian Partnership Act, was assessed to sales tax for the period ending December 1965. The Commercial Tax Officer estimated the gross turnover to be Rs. 3,00,000, rejecting the petitioner's return showing Rs. 2,08,071.75. The petitioner appealed and obtained relief from the Assistant Commissioner of Commercial Taxes.

2. The Commercial Tax Officer-cum-Investigating Officer seized six books of account from the petitioner under the Bengal Finance (Sales Tax) Act, suspecting tax evasion. The partners were examined, and subsequent notices were issued directing the partners to produce relevant records of their personal business.

3. The partners replied to the notices, stating that the firm's books were already in custody. The partners contended that the firm's income disclosures predated the relevant assessment period and were accepted by the Commissioner of Income-tax under section 68 of the Finance Act, 1965.

4. The Additional Commissioner of Commercial Taxes issued a notice proposing to revise the assessment based on the partners' disclosed income. The petitioner challenged the notice, arguing that the disclosure did not constitute valid material for sales tax reassessment and that the notice was illegal and without jurisdiction.

5. The High Court held in favor of the petitioner, citing a Supreme Court decision emphasizing the necessity of establishing that undisclosed income arose from transactions liable to sales tax. The Court found the sales tax authority lacked sufficient material to justify reassessment based solely on the partners' income disclosures. The impugned notice was deemed invalid, and the seized books were ordered to be returned.

This detailed analysis covers the assessment of sales tax, seizure of books, notices issued, challenges to the notice, and the High Court's decision, providing a comprehensive overview of the legal judgment.