1984 (4) TMI 270 - HC - VAT and Sales Tax

Summary

Issues:
Reassessment orders for the periods 1960-61, 1961-62, and 1962-63 under the Bihar Sales Tax Act, 1959.

Analysis:
The judgment pertains to three taxation cases concerning reassessment orders for the periods 1960-61, 1961-62, and 1962-63 under the Bihar Sales Tax Act, 1959. The Commercial Tax Tribunal, Bihar, Patna, referred questions to the High Court for opinion. The first question was whether a specific memo constituted a valid notice under section 18(1) of the Act. The second question was about the legality and validity of the assessment order based on the memo. The judgment addressed these common questions in all three cases.

The assessee, M/s. Usha Sales (Pvt.) Ltd., was initially assessed for tax for the relevant periods. Subsequently, reassessment was initiated as the assessing officer believed that certain turnover had escaped assessment. The dealer responded to a notice and was reassessed for the said periods. The dealer then appealed these reassessment orders, along with other orders, before the Deputy Commissioner (Appeals), and all appeals were dismissed with modifications.

The dealer further filed revisional applications before the Tribunal, raising grievances regarding depreciation percentage and the validity of the reassessment based on the notice. The Tribunal upheld the validity of the notice, dismissing the revisional applications. The Tribunal's decision was based on the suspicion raised during scrutiny that certain sales had escaped assessment in earlier years.

The dealer contended that the assessing officer lacked jurisdiction due to the invalid notice. The High Court analyzed the statutory provisions under section 18(1) of the Act and section 147 of the Income-tax Act, 1961, highlighting the similarity in language and requirements. The Court emphasized that the notice for reassessment is not a mere procedural formality but a substantive requirement. It held that the assessing officer lacked jurisdiction as the memo issued was based on suspicion, not reasonable grounds, as mandated by the law.

The Court rejected the argument of waiver by the dealer, stating that lack of objection did not confer jurisdiction on the assessing authority. It emphasized that absence of prerequisites for the notice rendered the proceedings invalid. The judgment concluded by answering the referred questions in favor of the dealer, highlighting the mandatory nature of section 18(1) as a substantive right, and emphasizing the importance of jurisdiction in reassessment proceedings.