1980 (8) TMI 191 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability to pay tax under the West Bengal Sales Tax Act, 1954.
2. Definition and classification of turmeric and pepper under the Act.
3. Limitation period for assessment.
4. Jurisdiction and validity of the notice issued u/s 9(3) of the West Bengal Sales Tax Act, 1954.
5. Estoppel and previous assessments.

Summary:

1. Liability to Pay Tax:
The petitioners, M/s. Rasoi Products and Dilip Kumar Basu, argued that they are not liable to pay tax under the West Bengal Sales Tax Act, 1954, as they purchased turmeric and pepper locally within West Bengal, where taxes were already paid. They claimed that powdering these commodities does not change their statutory or commercial identity, and thus, they should not be taxed again.

2. Definition and Classification:
Turmeric and pepper, including their powdered forms, are notified commodities under the West Bengal Sales Tax Act, 1954. The petitioners contended that powdering these commodities does not constitute manufacturing or processing, and hence, they should not be classified as different commodities for tax purposes.

3. Limitation Period:
The petitioners argued that the notice for assessment beyond three years is barred by the law of limitation. They cited that the relevant period of limitation was introduced only on 1st September 1975, and prior to that, no period was prescribed, making the notice for the last twelve years invalid.

4. Jurisdiction and Validity of Notice:
The court found that the Commercial Tax Officer did not have sufficient materials to issue the notice u/s 9(3) of the West Bengal Sales Tax Act, 1954. The issuance of the notice was deemed invalid as the provisions of section 9(3) were not satisfied.

5. Estoppel and Previous Assessments:
The petitioners had been regularly assessed and exempted from tax on these commodities in previous years. The court held that the respondents could not reopen assessments after 12 years based on the same materials that were previously accepted. The court emphasized that the petitioners do not become dealers, manufacturers, or processors under section 2(b) of the West Bengal Sales Tax Act, 1954, by merely powdering the turmeric and pepper.

Conclusion:
The court ruled in favor of the petitioners, making the rule absolute, and declared that the notice of assessment was not warranted by law. The respondents were estopped from reassessing the petitioners for the same commodities after 12 years, as it would amount to a miscarriage of justice.