1982 (5) TMI 166 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the assessment proceedings.
2. Exemption from sales tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941.
3. Applicability of the Supreme Court's decision in Binani Brothers (P.) Ltd. v. Union of India.
4. Whether the sales were in the course of import and thus exempt from taxation.
5. Maintainability of the writ petition under Article 226 of the Constitution of India.

Detailed Analysis:

1. Jurisdiction of the Assessment Proceedings:
The petitioner, Voltas Ltd., challenged the jurisdiction of the assessment proceedings initiated under the Bengal Finance (Sales Tax) Act, 1941, and the West Bengal Sales Tax Act, 1954. They contended that the assessments were initiated without jurisdiction and were not in accordance with the law. The court noted that if the assessments were found to be without jurisdiction, interference would be possible even though alternative remedies were available.

2. Exemption from Sales Tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941:
Voltas Ltd. claimed exemption from sales tax under Section 5(2)(a)(v) of the 1941 Act, arguing that the sales took place in the course of import within the meaning of Section 5 of the Central Sales Tax Act, 1956. The court examined the provisions of both the Central and State Acts, which exempt sales occurring in the course of import from sales tax.

3. Applicability of the Supreme Court's Decision in Binani Brothers (P.) Ltd. v. Union of India:
The Commercial Tax Officer disallowed Voltas Ltd.'s claim for exemption based on the Supreme Court's decision in Binani Brothers (P.) Ltd. v. Union of India. Voltas Ltd. argued that the facts of their case were distinguishable from Binani Brothers, as no import license was issued to them, and the licenses were issued directly in favor of the actual users/customers. The court found that the facts in Binani Brothers were not applicable to the present case.

4. Whether the Sales Were in the Course of Import and Thus Exempt from Taxation:
Voltas Ltd. contended that the sales were in the course of import and thus exempt from taxation. The court analyzed various precedents, including Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Kotak & Co., Bombay, and found that the sales by Voltas Ltd. occasioned the import of goods and were inextricably linked to the contracts with the customers. Therefore, the sales were in the course of import and exempt from taxation.

5. Maintainability of the Writ Petition under Article 226 of the Constitution of India:
The respondents argued that the writ petition was not maintainable due to the availability of alternative remedies and the pendency of appeals. The court held that in cases where the assessment is without jurisdiction or in violation of principles of natural justice, interference under Article 226 is possible. The court found that the assessments were without jurisdiction and thus entertained the writ petition.

Conclusion:
The court concluded that the assessments were without jurisdiction and that the sales by Voltas Ltd. were in the course of import, thus exempt from sales tax. The rule was made absolute, and the orders of assessment were quashed. The prayer for stay of operation of the order was refused.