1983 (12) TMI 271 - HC - VAT and Sales Tax

Summary

Issues:
Validity of assessment for the years 1966-67 and 1967-68 under the Central Sales Tax Act, consideration of quarterly returns filed under rule 21, applicability of time limitation under section 12-A of the State Act, inclusion of packing charges in taxable turnover, and examination of exemption under section 10 of the Central Act.

Analysis:

The judgment concerns the validity of assessments made under the Central Sales Tax Act for the years 1966-67 and 1967-68. The petitioner, a company manufacturing and selling cement, had submitted quarterly returns under rule 21 of the Karnataka Sales Tax Rules, which required dealers with annual turnovers exceeding Rs. 40,000 to file such returns. The company did not file annual returns, and assessments were made under both State and Central Acts by the Assistant Commercial Tax Officer. The company challenged the assessments under the Central Act, arguing that the quarterly returns filed under rule 21 could not be considered post its repeal and that the assessments were time-barred under section 12-A of the State Act. The High Court had previously upheld the assessments under the State Act in S.T.R.P. Nos. 17 and 18 of 1979.

The Court rejected the company's contention that the quarterly returns could not form the basis for assessment after the repeal of rule 21. It noted that the quarterly returns, filed under rule 21, were acceptable for assessment under the State Act, and therefore, could also be considered for assessment under the Central Act. The Court emphasized that the power to assess was derived from section 12 of the State Act, which allowed the assessing authority to assess dealers based on accepted returns or to use best judgment if returns were deemed incorrect or incomplete.

The Court further addressed the argument that the quarterly returns were filed only for advance tax purposes under section 12-B, stating that the form of the returns did not preclude their use for assessment under the Central Act. The Court highlighted the similarity in procedures for assessments under both Acts and emphasized the legislative intent behind the rules, urging against excessive technicalities.

Regarding the inclusion of packing charges in the taxable turnover, the Court disagreed with the Tribunal's decision and directed the assessing authority to examine whether the company had collected tax on packing charges. The Court highlighted the need to consider the exemption under section 10 of the Central Act, which required the dealer to prove that no tax was collected on the relevant turnover.

In conclusion, the Court partially allowed the revision petitions, setting aside the assessments related to packing charges and instructing a re-examination by the assessing authority. The Court dismissed the company's contentions regarding time limitation and upheld the validity of using quarterly returns for assessment purposes under the Central Act.