1985 (7) TMI 342 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to order under section 16 of the Tamil Nadu General Sales Tax Act, 1959; Jurisdiction of assessing authority to reopen assessment based on subsequent judgments; Interpretation of Second Schedule entries on hides and skins; Validity of revised assessment order; Inclusion of opening stocks in assessment; Scope of section 16(1)(b) in tax assessment.

Analysis:
The appeal challenged an order under section 16 of the Tamil Nadu General Sales Tax Act, 1959, related to the assessment year 1973-74. The appellant, a dealer in hides and skins, contested the assessment based on subsequent judgments affecting the tax treatment of raw and dressed hides and skins. The original assessment was revisited due to a notice issued by the respondent following a Supreme Court judgment. The appellant argued against the reopening of the assessment, citing errors in the revised turnover calculation and the inclusion of opening stocks in the assessment.

The Court examined the relevant entries in the Second Schedule to the Act concerning hides and skins, particularly items 7(a) and 7(b), which determined the point of levy and the rate of tax for raw and dressed hides and skins. The Revenue's tax treatment was influenced by a Division Bench judgment, which mandated taxing the sales turnover of dressed hides and skins if raw hides and skins were processed and sold during the assessment year. Subsequently, a Supreme Court decision altered the tax treatment, leading to the reassessment of the appellant's turnover.

The jurisdiction of the assessing authority to reopen the assessment based on subsequent judgments was upheld by the Court. The appellant's arguments, relying on prior judgments, were countered by the Court's interpretation of the tax treatment of hides and skins under the Act. The Court emphasized that the assessing officer was within his rights to reassess the turnover in accordance with the Supreme Court's judgment, overriding previous decisions cited by the appellant.

Regarding the inclusion of opening stocks in the assessment and other factual aspects challenged by the appellant, the Court remanded the matter for further consideration. The assessing officer was directed to address the issues raised by the appellant and pass orders in line with the law. The Court set aside the previous orders and allowed the appeal, remitting the case for a limited purpose without costs.

In conclusion, the Court upheld the jurisdiction of the assessing authority to reassess the appellant's turnover based on subsequent judgments, clarified the tax treatment of hides and skins under the Act, and remanded the case for further assessment in light of the observations made in the judgment.