1981 (6) TMI 117 - HC - VAT and Sales Tax

Issues Involved:
1. Tax exemption on the sale of transmission rubber belting.
2. Jurisdiction and authority under Section 21(1) of the Punjab General Sales Tax Act, 1948.
3. Applicability of Section 11-A for reassessment.
4. Validity of suo motu action by the revisional authority.
5. Procedural fairness in the adjournment requests.

Issue-wise Detailed Analysis:

1. Tax exemption on the sale of transmission rubber belting:
The petitioner, Messrs. Asian Rubber and Plastic Industries, claimed tax exemption on the sale of transmission rubber belting under the Punjab General Sales Tax Act, 1948, and the Central Sales Tax Act, 1956. The Assessing Authority initially granted this exemption based on a judgment by the Punjab Sales Tax Tribunal in the case of Allied Rubber Industries, which stated that if canvas content exceeded 60% and additional excise duty was levied, the product was tax-exempt. However, an internal audit later pointed out that this exemption was wrongly granted, referencing the High Court's judgment in Laxmi Machinery Store v. State of Punjab [1977] 39 STC 87, which held that rubber belting is taxable.

2. Jurisdiction and authority under Section 21(1) of the Punjab General Sales Tax Act, 1948:
Respondent No. 2, exercising powers under Section 21(1) of the Act, issued notices to reopen the assessments for the years 1968-69, 1969-70, and 1970-71. The revisional authority had concurrent jurisdiction with the Assessing Authority over the Amritsar District. It was argued that the Assessing Authority and the revisional authority were officers of coordinate jurisdiction. However, the court clarified that the revisional powers were conferred on an Assistant Excise and Taxation Commissioner, who is a superior officer to the Excise and Taxation Officer.

3. Applicability of Section 11-A for reassessment:
The petitioner argued that the case fell within the ambit of Section 11-A of the Act, which allows reopening assessments within five years based on definite information. The court, however, held that Section 11-A was not applicable as the revisional authority did not rely on any new material not present before the Assessing Authority. The judgment in Laxmi Machinery Store's case was deemed to reflect the correct state of law, which applied retroactively to the time of the original assessments.

4. Validity of suo motu action by the revisional authority:
The petitioner contended that the revisional authority's action was not suo motu since it was based on information from the audit section. The court dismissed this argument, stating that the receipt of information from an outside source does not exclude the revisional authority's action from being considered suo motu. The revisional authority is entitled to correct any illegal or improper order brought to its notice.

5. Procedural fairness in the adjournment requests:
The petitioner sought multiple adjournments during the revisional proceedings, which were initially granted. However, when the petitioner requested a short adjournment on 12th November 1979 due to the unavailability of counsel, the request was denied, and the assessment for 1968-69 was finalized. The court found that the petitioner was given ample opportunity to present its case but failed to appear on several occasions, justifying the revisional authority's decision to proceed.

Conclusion:
The petition was dismissed with costs, and the revisional authority was directed to decide the pending revision expeditiously. The court upheld the revisional authority's power to reopen the assessments and found no merit in the petitioner's arguments regarding jurisdiction, applicability of Section 11-A, or the validity of suo motu action.

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