1980 (8) TMI 186 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Acceptance of additional evidence by the assessing authority to rectify defects in C forms.
2. Legality of the Commissioner of Sales Tax accepting additional evidence to rectify defects in C forms.

Detailed Analysis:

Issue 1: Acceptance of Additional Evidence by the Assessing Authority
The primary question was whether the assessing authority's acceptance of additional evidence to rectify the defect of non-mention of the number and date of the registration certificate of the purchasing dealers was proper and justified or erroneous and prejudicial to the interests of the revenue. The facts revealed that the assessee, engaged in the business of purchase and sale of foreign liquors, was initially assessed to sales tax for the period from 1st April 1962 to 31st March 1963. The assessing officer had rejected certain C forms due to missing details. The Appellate Assistant Commissioner (A.A.C.) of Sales Tax set aside the assessment order, remanding the case for fresh assessment after giving the assessee an opportunity to rectify the mistakes. Upon remand, the assessee provided letters from purchasing dealers with the necessary details, which the assessing officer accepted, thereby assessing the tax at a concessional rate.

The Commissioner of Sales Tax revised this assessment, rejecting the C forms and assessing tax at the full rate, arguing that the assessing authority lacked the power to call for fresh evidence or entertain corroborative evidence. The Board of Revenue, however, allowed the assessee's appeal, leading to the reference of the legal question to the High Court.

Issue 2: Legality of the Commissioner of Sales Tax Accepting Additional Evidence
The second issue questioned whether it was legally permissible for the Commissioner of Sales Tax to accept additional evidence to rectify defects in the C forms. The High Court noted conflicting views in previous judgments. In Commissioner of Sales Tax, M.P. v. Bombay Textile Stores, Ujjain, it was held that no further evidence could be considered to rectify defects in C forms. Conversely, other judgments, such as Commissioner of Sales Tax, M.P. v. Dayaram Balchand, held that evidence could be given to rectify omissions in C forms.

Resolution of Conflict and Judgment:
The High Court recognized an apparent conflict between the Division Bench decisions and referred the matter to a larger Bench. The larger Bench addressed whether the assessing authority was required to give an opportunity to the assessee to rectify defects in the C forms before rejecting them. The Court concluded that the assessing authority must provide such an opportunity, as rejecting the declarations without it would be arbitrary and contrary to the principles of natural justice. The Court distinguished the case from Kedarnath Jute Mfg. Co. Ltd. v. Commercial Tax Officer, noting that the latter did not address the issue of rectifying defects in declarations.

The Court held that the principles of natural justice necessitate giving the assessee an opportunity to cure defects in the C forms. The decision in Commissioner of Sales Tax, M.P. v. Bombay Textile Stores, Ujjain, was overruled to the extent it conflicted with this view.

Final Judgment:
The High Court answered the reframed question affirmatively, stating that the assessing authority was required to give the assessee an opportunity to cure defects in the C forms before rejecting them. The judgment favored the assessee, and the parties were directed to bear their own costs.

Reference Answered Accordingly.