1982 (3) TMI 235 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the department had the right to levy tax under the Bombay Sales Tax Act, 1959, on the opponent's sales of pig iron worth Rs. 27,66,908 as declared goods.
2. Whether the order of assessment passed by the assessing authority on the sales of the above goods by the opponent's vendor-M/s. Hindustan Steel Limited at the earlier stage was legally binding upon the department in the present case.

Detailed Analysis:

Issue 1: Levy of Tax under Bombay Sales Tax Act, 1959

The primary issue was whether the department had the right to levy tax under the Bombay Sales Tax Act, 1959, on the opponent's sales of pig iron worth Rs. 27,66,908 as declared goods. The respondent-assessee, a statutory corporation registered as a dealer under the Bombay Sales Tax Act, 1959, and the Central Sales Tax Act, 1956, contended that the sales in question were local sales and had already been taxed at 3% by the local branch of M/s. Hindustan Steel Limited. The department had accepted these sales as local sales at the earlier stage, and thus, no further tax could be levied under the Bombay Act on the subsequent sales by the respondent-assessee due to the provisions of sub-section (4) of section 9 of the Gujarat Sales Tax Act, 1969.

The Tribunal concluded that the subsequent sales of the same goods worth Rs. 27,66,908 were local sales and not inter-State purchases, as erroneously found by the Sales Tax Officer and the Assistant Commissioner of Sales Tax, Ahmedabad. The Tribunal set aside the orders of the Assistant Commissioner and the Sales Tax Officer, holding that the respondent-assessee could not be held liable for further taxation on these sales.

Issue 2: Binding Nature of the Earlier Assessment Order

The second issue was whether the order of assessment passed by the assessing authority on the sales of the above goods by the opponent's vendor-M/s. Hindustan Steel Limited at the earlier stage was legally binding upon the department while assessing the opponent in respect of the sale of the same goods at the subsequent stage. The respondent-assessee argued that since the local branch of M/s. Hindustan Steel Limited had already collected and paid the sales tax under the Bombay Act, the department could not levy further tax on the subsequent sales by the respondent-assessee.

The court noted that the department had accepted the sales as local sales at the earlier stage and had not taken any steps to correct this assessment within the period of limitation allowed by the Bombay Act. The court emphasized that the department's failure to correct the assessment order within the stipulated time resulted in the binding nature of the earlier assessment order.

Conclusion:

The court held that under sub-section (4) of section 9 of the Gujarat Sales Tax Act, 1969, no further tax could be levied on the subsequent sales of the declared goods by the respondent-assessee, as tax had already been levied at an earlier stage. The court found that the Tribunal's reasoning and conclusion in favor of the respondent-assessee were correct and provided statutory protection to the respondent-assessee regarding its taxation liability. Both questions were answered in favor of the respondent-assessee, and the State was directed to pay the costs of the reference to the respondent-assessee.