1982 (12) TMI 173 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Sales Tax Officer, Enforcement Branch, to reassess the assessee.
2. Validity of the reassessment order without a prior transfer order under Section 70 of the Bombay Sales Tax Act, 1959.
3. Interpretation of Section 7 of the Bombay Sales Tax (Amendment and Validating Provisions) Act, 1970.

Detailed Analysis:

1. Jurisdiction of the Sales Tax Officer, Enforcement Branch, to Reassess the Assessee:
The primary issue is whether the Sales Tax Officer, Enforcement Branch, had the jurisdiction to reassess the assessee for the period from 1st April, 1962, to 31st March, 1963. The Tribunal concluded that the reassessment order was passed without jurisdiction because there was no transfer order under Section 70 of the Bombay Sales Tax Act, 1959, transferring the proceedings from the Sales Tax Officer, E(III) Ward, to the Sales Tax Officer, Enforcement Branch, before the reassessment order was issued on 26th December, 1968.

2. Validity of the Reassessment Order Without a Prior Transfer Order Under Section 70 of the Bombay Sales Tax Act, 1959:
Section 70 of the Bombay Sales Tax Act, 1959, as it existed before its amendment in 1971, required the Commissioner to give due notice to the parties and pass an order of transfer in writing. The reassessment order dated 26th December, 1968, was issued without such a transfer order. The Deputy Commissioner of Sales Tax only passed the transfer order on 29th November, 1971, which was after the reassessment proceedings had already been completed. The Tribunal held that a transfer order passed after the reassessment proceedings could not give retrospective jurisdiction to the Sales Tax Officer, Enforcement Branch, to reassess.

3. Interpretation of Section 7 of the Bombay Sales Tax (Amendment and Validating Provisions) Act, 1970:
Section 7 of the Amending and Validating Act aims to validate proceedings commenced, continued, or completed by officers without a formal transfer of proceedings. However, the court emphasized that this validation applies only if the transfer would have been valid under the amended Section 70. The amended Section 70 allows transfers without a hearing if the officers are in the same city, locality, or place. The court clarified that even under the amended Section 70, an order of transfer in writing is required. Therefore, in the absence of any transfer order, the reassessment proceedings conducted by the Sales Tax Officer, Enforcement Branch, cannot be validated.

The court rejected the department's argument that the phrase "without the proceedings being transferred to him" in Section 7(1) of the Amending and Validating Act refers to cases where no transfer orders were passed. The court held that these words refer to proceedings where transfer orders existed but did not comply with the unamended Section 70. The court also dismissed the relevance of the Statement of Objects and Reasons for interpreting Section 7, emphasizing that it cannot be used to determine the substantive provisions of the statute.

The court further noted that the transfer order dated 29th November, 1971, did not reference the reassessment proceedings completed by the Sales Tax Officer, Enforcement Branch, on 26th December, 1968. It merely transferred proceedings from the Sales Tax Officer, E Ward, to the Sales Tax Officer, Enforcement Branch, without affecting the already completed reassessment.

Conclusion:
The court concluded that the reassessment order passed by the Sales Tax Officer, Enforcement Branch, was without jurisdiction due to the absence of a valid transfer order under Section 70 of the Bombay Sales Tax Act, 1959. The court answered the referred question in the affirmative, in favor of the assessee, and against the department. The applicant was ordered to pay the respondent's costs of the reference.