1984 (11) TMI 293 - HC - VAT and Sales Tax

Summary

Issues:
1. Correctness of upholding the order of forfeiture by the Sales Tax Tribunal.
2. Jurisdiction of the Sales Tax Officer to levy penalty after the earlier order of forfeiture was set aside.
3. Limitation period for passing an order of forfeiture.
4. Unreasonable delay in passing the order of forfeiture.
5. Description of the collected amounts in the bills.

Analysis:

Issue 1: Correctness of upholding the order of forfeiture by the Sales Tax Tribunal
The case involved a reference on a case stated by the Sales Tax Tribunal under the Bombay Sales Tax Act, 1959. The Tribunal had set aside the forfeiture order based on a procedural defect in the notice. The applicant contended that the amount collected was not as sales tax but as expenses. However, the Tribunal rejected this argument. The High Court upheld the Tribunal's decision, emphasizing that the earlier order was set aside due to procedural reasons, and the Sales Tax Officer had jurisdiction to issue a fresh notice, as established in a previous case.

Issue 2: Jurisdiction of the Sales Tax Officer
The applicant argued that the Sales Tax Officer exceeded jurisdiction by issuing a fresh order of forfeiture after the Tribunal set aside the initial order without remanding the matter. The Court rejected this argument, stating that the earlier order was set aside due to a procedural defect, which was rectified by the Sales Tax Officer in the fresh notice. The Court referred to a previous case where a similar situation was addressed, affirming the Sales Tax Officer's jurisdiction in issuing a new notice.

Issue 3: Limitation period for passing an order of forfeiture
The applicant contended that the order of forfeiture was barred by limitation, citing a provision related to reassessment time limits. The Court rejected this argument, stating that no specific limitation was provided for forfeiture orders. It clarified that forfeiture is distinct from reassessment, and the initiation and passing of a forfeiture order must occur within a reasonable time.

Issue 4: Unreasonable delay in passing the order of forfeiture
The applicant argued that the delay in issuing the fresh notice for forfeiture was unreasonable and prejudiced their case. The Court dismissed this argument, noting that the delay issue was not raised earlier and required factual investigation. It emphasized that delay-related contentions should be raised promptly to allow for a proper assessment of the circumstances.

Issue 5: Description of collected amounts in the bills
The applicant claimed that the amounts collected were described in the bills as reimbursement to manufacturers, not as sales tax. The Court disagreed, stating that the description in the bills clearly indicated the collection was for sales tax payable by the applicant on sales to customers. The Court found this contention unsustainable.

In conclusion, the Court answered the reference question in the affirmative, upholding the decision against the applicant and ordering them to pay the costs of the reference to the respondent dealer.