1984 (9) TMI 265 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to jurisdiction of Sales Tax Officer to pass assessment orders

Analysis:
The petitioner, a registered partnership firm of Delhi, challenged the jurisdiction of the Sales Tax Officer at Bombay to pass three assessment orders. The petitioner contended that it never sold any goods in Bombay or Maharashtra, disputing the jurisdiction of the authorities to initiate assessment proceedings against them. The Sales Tax Officer issued notices directing the petitioner to show cause regarding tax payable for certain years, to which the petitioner replied stating that the proceedings were not warranted in law. The Sales Tax Officer proceeded with the assessment, holding that the petitioner failed to furnish required information and that the onus of proving no sales in Maharashtra was on the petitioner. The Sales Tax Officer relied on a Madras High Court decision to support the presumption that goods were sold in Maharashtra. The petitioner's objection to jurisdiction was disallowed in all assessment orders.

The definition of a "dealer" under the Bombay Sales Tax Act was crucial in determining jurisdiction. The Act defines a dealer as a person carrying on the business of buying or selling goods in the State. The jurisdiction of sales tax authorities to initiate proceedings is provided under section 35 of the Act, allowing reassessment of turnover based on certain conditions. In this case, the notices were issued under section 35, indicating the Commissioner's belief that the turnover needed reassessment. The belief must be based on relevant and material reasons, not arbitrary or irrational. The Sales Tax Officer presumed goods were sold in Bombay due to lack of produced books of account, despite the petitioner's assertion that goods were only in transhipment at Bombay and received at Delhi. The respondents failed to provide evidence that goods were sold in Maharashtra or that the petitioner met the definition of a "dealer" under the Act.

The reliance on a decision of the Madras High Court was deemed misconceived, as the facts of that case differed significantly. In the present case, there was no evidence to support the presumption that goods were sold in Maharashtra. The Court had jurisdiction to entertain the petition as the petitioner received notices and assessment orders at Delhi, where the Sales Tax Officer at Bombay had no jurisdiction to proceed. Consequently, the Court quashed the assessment orders, allowing the petition without costs.