1983 (5) TMI 217 - HC - VAT and Sales Tax

Summary

Issues:
1. Reassessment of turnover for the year 1980-81 based on alleged tax evasion by the selling dealer.
2. Validity of the notices issued by the Assessing Authority under section 31 of the Act.
3. Interpretation of the requirement for tax-paid declaration at the first stage of sale.
4. Applicability of precedent regarding liability to pay sales tax on goods purchased from unregistered dealers.

Analysis:
The judgment by SUKHDEV SINGH KANG, J. of the PUNJAB AND HARYANA HIGH COURT dealt with two Civil Writ Petitions (Nos. 1355 and 1774 of 1982) concerning common legal issues arising from similar facts. The primary contention raised by the petitioners was that the Assessing Authority sought to reopen assessment proceedings for the year 1980-81 without concrete evidence of tax evasion by the petitioner-firms. They also challenged the validity of the notices issued by the Assessing Authority under section 31 of the Haryana General Sales Tax Act. The court examined the assessment records of the selling dealer and found discrepancies indicating possible tax evasion, justifying the Assessing Authority's decision to issue notices for explanation.

Regarding the second contention, the court clarified that the notice dated 19th March, 1982, was an interim order and not a separate notice under section 31 of the Act. It provided the petitioner-firms with an opportunity to prove that they had paid tax on purchases made at the first stage. The court emphasized that challenging each step of reassessment through writ petitions was not appropriate, and any legal issues could be addressed through the appeal process against the final reassessment order.

In addressing the interpretation of the requirement for tax-paid declaration at the first stage of sale, the court distinguished the case law cited by the petitioners. The court highlighted that in the present case, the selling dealer had not paid tax, unlike the situation in the precedent where the manufacturer, a registered dealer, had already paid tax at the first stage. This distinction was crucial in determining the tax liability of the petitioner-firms for the purchases made from the selling dealer.

Ultimately, the court dismissed both writ petitions (Nos. 1355 and 1774 of 1982), finding no merit in the contentions raised by the petitioners. The judgment emphasized that if the Assessing Authority made a reassessment to the detriment of the petitioner-firms, they could challenge it through the appeal process, rather than challenging each step of the reassessment proceedings through writ petitions.