1980 (7) TMI 247 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of assessment proceedings under section 15(2) of the Karnataka Sales Tax Act for a dissolved firm under the Central Sales Tax Act.
2. Applicability of the limitation period under section 70 of the Indian Penal Code for the recovery of tax due under the Central Act.

Issue-wise Detailed Analysis:

1. Validity of Assessment Proceedings:
The petitioner, a partner of a dissolved firm, challenged the validity of assessment proceedings taken under section 15(2) of the Karnataka Sales Tax Act (State Act) for assessing sales tax payable by the dissolved firm under the Central Sales Tax Act (Central Act). The firm was dissolved on July 1, 1963, and the assessment order was made on March 19, 1967. Initially, the appellate authority set aside the assessment due to the absence of a provision for assessing dissolved firms. However, subsequent amendments to the State Act by Act No. 9 of 1964 and Act No. 9 of 1970, which introduced section 15(2) with retrospective effect, validated such assessments. Additionally, the Central Act was amended by Act No. 28 of 1969, which also validated assessments against dissolved firms. The court held that these amendments applied to the assessments made under the Central Act, making the assessment order of March 19, 1967, valid.

2. Applicability of Limitation Period under Section 70, IPC:
The petitioner argued that the limitation period of six years prescribed under section 70 of the Indian Penal Code (IPC) for the recovery of fines should apply to the recovery of tax due under the Central Act, as per section 13(3)(b) of the State Act. Section 13(3)(b) allows a Magistrate to recover tax as if it were a fine. The court rejected this argument, stating that the limitation period under section 70 of the IPC does not apply because the amount to be recovered is tax, not a fine. The court clarified that section 13(3)(b) merely prescribes the procedure for recovery, not the nature of the amount being recovered. The court also noted that section 25 of the Karnataka General Clauses Act, which applies sections 63 to 70 of the IPC to fines imposed under any enactment, does not apply here as the amount is tax, not a fine. The court further dismissed reliance on the decision in Mohanlal Premchand v. Commercial Tax Officer, Bagalkot, due to subsequent amendments to section 13(3)(b) of the State Act by Act No. 7 of 1972, which introduced a non obstante clause.

Conclusion:
The court dismissed the revision petition, holding that the assessment order of March 19, 1967, was valid due to the retrospective amendments to the State and Central Acts. The court also held that the limitation period under section 70 of the IPC does not apply to the recovery of tax under section 13(3)(b) of the State Act. The revision petition was dismissed with no costs.