1985 (3) TMI 244 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Jurisdiction of the Sales Tax Officer, Flying Squad, Mandsaur.
2. Reassessment of the petitioner's tax liability.
3. Delegation of powers under the M.P. General Sales Tax Act, 1958.
4. Validity of the impugned order and principles of natural justice.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Sales Tax Officer, Flying Squad, Mandsaur:

The petitioner argued that only the Sales Tax Officer, Circle I, Mandsaur, had the authority to determine the tax liability, not the Sales Tax Officer, Flying Squad, Mandsaur. The court noted that the primary role of the flying squad under section 29-D of the M.P. General Sales Tax Act is to investigate suspected tax evasion. The flying squad officers can only exercise powers delegated by the Commissioner. The court emphasized that the jurisdiction of the Sales Tax Officer, Flying Squad, was limited to investigation unless explicitly appointed or delegated powers to act as a Sales Tax Officer for a particular circle.

2. Reassessment of the petitioner's tax liability:

The petitioner contended that their tax liability had already been determined by the Sales Tax Officer, Circle I, Mandsaur, on 10th November 1982, and could not be reassessed by the Sales Tax Officer, Flying Squad. The court agreed, stating that once the liability was determined by the appropriate authority, it could not be reopened by another officer unless there was a specific delegation of authority. The reassessment by the Sales Tax Officer, Flying Squad, was deemed without jurisdiction.

3. Delegation of powers under the M.P. General Sales Tax Act, 1958:

The respondents argued that the delegation of powers to the Assistant Sales Tax Officer was valid as per the delegation order dated 25th August 1976. However, the court found that the delegation was only to the Assistant Sales Tax Officer with the previous approval of the Sales Tax Officer, and not to the Sales Tax Officer. The subsequent amendment on 23rd April 1984, which delegated powers to the Sales Tax Officer, indicated that at the relevant time, the Sales Tax Officer, Flying Squad, did not have the necessary jurisdiction to determine the tax liability.

4. Validity of the impugned order and principles of natural justice:

The petitioner claimed that the impugned order (annexure H) was not a speaking order, lacked reasons, and violated principles of natural justice as the hearing was conducted by the Assistant Sales Tax Officer, Flying Squad, but the order was passed by the Sales Tax Officer, Flying Squad. The court noted that the government advocate could not controvert this fact, thus acknowledging the procedural irregularity. The court held that the impugned order was invalid on these grounds as well.

Conclusion:

The court concluded that the Sales Tax Officer, Flying Squad, Mandsaur, and the Assistant Sales Tax Officer, Flying Squad, Mandsaur, did not have the jurisdiction to determine the tax liability of the petitioner. The impugned orders (annexure H and annexure I) were quashed and set aside. The petition was allowed with no order as to costs, and the security deposit was ordered to be returned to the petitioner.