1981 (2) TMI 205 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notice and order of revision under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941.
2. Application of limitation period to the exercise of revisional power under section 20(3).
3. Distinction between the revisional power under section 20(3) and reassessment power under section 11A.
4. Legitimacy of the Commissioner's action in revising the assessment order.

Issue-wise Detailed Analysis:

1. Validity of the Notice and Order of Revision under Section 20(3):
The appeal challenges the quashing of the notice dated 4th October, 1962, and the resulting order of revision dated 8th March, 1963, under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941. The original assessment for the year 1957-58 was passed on 4th November, 1959, allowing deductions for sales to the Army Departments under section 5(2)(a)(v) of the local Act. The Assistant Commissioner later held these transactions as local sales, quashing the assessment under the Central Sales Tax Act. The Commissioner, in his revision order, included these transactions in the taxable turnover under the local Act, leading to the respondent's writ petition.

2. Application of Limitation Period to the Exercise of Revisional Power under Section 20(3):
The learned single Judge held that the revisional power under section 20(3) should be exercised within four years after the end of the assessment year, based on the precedent in Union of India v. Gurbaksh Singh. However, this view was overruled by the Supreme Court in S.B. Gurbaksh Singh v. Union of India, which stated that no time-limit is prescribed for revisional power, though it must be exercised within a reasonable time. The notice issued on 4th October, 1962, was deemed within a reasonable time, and the finding of the learned single Judge regarding the bar of limitation was set aside.

3. Distinction Between the Revisional Power under Section 20(3) and Reassessment Power under Section 11A:
Section 11A deals with reassessment in case of escaped or under-assessed turnover, requiring notice within three years following the close of the assessment year. The learned Judge's reliance on this section was misplaced as the revisional power under section 20(3) is distinct and separate. The revisional power is not subject to the same limitations as section 11A. The Commissioner's action was not based on any new information but on the existing records, distinguishing it from reassessment under section 11A.

4. Legitimacy of the Commissioner's Action in Revising the Assessment Order:
The Commissioner revised the assessment order because the appellate authority's decision created an anomalous situation where the transactions were not taxed under either the local or Central Act. The Commissioner agreed with the appellate authority that the transactions were local sales and, therefore, revised the original assessment order to include these transactions under the local Act. This action was within the Commissioner's revisional power under section 20(3) and did not constitute an escaped or under-assessed turnover as per section 11A. The court concluded that the Commissioner's revision was valid and necessary to correct the erroneous original assessment.

Conclusion:
The appeal was allowed, the order of the learned single Judge was set aside, and the writ petition was dismissed. The revisional order under section 20(3) was upheld as valid, and no costs were awarded.

Judgment:
Appeal allowed.

← Previous Next →