1979 (11) TMI 238 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the assessment order dated 17th October, 1959.
2. Requirement of a pre-assessment notice.
3. Communication of the assessment order.
4. Limitation for completing assessment proceedings.
5. Jurisdiction of the Deputy Commissioner for revision.
6. Applicability of Supreme Court decisions on pending proceedings.
7. Authority of the Sales Tax Appellate Tribunal to scrutinize High Court orders.

Detailed Analysis:

1. Validity of the Assessment Order Dated 17th October, 1959:
The assessment order passed on 17th October, 1959, was deemed invalid by the High Court due to the lack of a pre-assessment notice and non-communication to the assessee. The High Court in K.O. Mohamed Sulaiman and Co. v. Deputy Commissioner of Commercial Taxes held that the assessment order was "non est" in law, meaning it had no legal standing.

2. Requirement of a Pre-assessment Notice:
The High Court emphasized that under rule 12 of the Madras General Sales Tax Rules, a pre-assessment notice was mandatory, even in cases of nil assessment. The absence of such a notice rendered the assessment order invalid.

3. Communication of the Assessment Order:
The High Court ruled that the assessment order must be communicated to the assessee. In the case at hand, the order dated 17th October, 1959, was not communicated until 24th July, 1963. The High Court maintained that mere communication of the order did not cure the defects pointed out in its earlier judgment.

4. Limitation for Completing Assessment Proceedings:
The Tribunal held that the assessment was time-barred as the statutory time-limit expired on 31st March, 1960. However, the High Court clarified that, based on the Supreme Court's decision in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur, assessment proceedings initiated within the statutory period could be completed without any time-limit. The High Court ruled that the proceedings were pending from the issuance of the notice on 26th June, 1956, and thus, the assessment was valid.

5. Jurisdiction of the Deputy Commissioner for Revision:
The High Court in its earlier judgment had quashed the revision proceedings initiated by the Deputy Commissioner as the original assessment order was non est and not communicated. However, the High Court later allowed the Deputy Commissioner to continue the assessment proceedings from the stage where it was found to be illegal.

6. Applicability of Supreme Court Decisions on Pending Proceedings:
The High Court relied on the Supreme Court's rulings in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur, and Sales Tax Officer, Special Circle, Ernakulam v. Sudarsanam Iyengar & Sons, which established that assessment proceedings pending within the statutory period could be completed without any time-limit. The High Court held that the assessment proceedings in the present case were pending and thus, not barred by limitation.

7. Authority of the Sales Tax Appellate Tribunal to Scrutinize High Court Orders:
The High Court criticized the Tribunal for not adhering to its earlier judgment, which declared the assessment proceedings as pending. The High Court emphasized that the Tribunal had no authority to scrutinize the correctness of its orders and should have complied with the ruling that the assessment proceedings were pending and valid.

Conclusion:
The High Court dismissed the revision petition, upheld the validity of the assessment proceedings, and allowed the Deputy Commissioner to continue the assessment from the stage where it was found to be illegal. The Tribunal's order canceling the assessment was overturned, and the High Court reiterated that the assessment was not barred by limitation. The revision was allowed with costs, and the Tribunal was directed to act in conformity with the High Court's ruling.

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