1986 (9) TMI 394 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Jurisdiction of the Assistant Commercial Taxes Officer (A.C.T.O.) to issue notices under Section 17(3) of the Rajasthan Sales Tax Act.
2. Levy of penalty under Section 7AA of the Act.
3. Levy of interest under Section 11B of the Act.
4. Applicability of Section 11B as it existed during the relevant assessment years.

Detailed Analysis

1. Jurisdiction of the A.C.T.O. to Issue Notices under Section 17(3)
The petitioner challenged the jurisdiction of the A.C.T.O. to issue notices under Section 17(3) of the Rajasthan Sales Tax Act. The petitioner argued that no mistake apparent on the face of the record existed to justify the issuance of these notices. The court found that the notices did not specify any grounds that prompted the A.C.T.O. to rectify the orders, thereby indicating a lack of jurisdiction. The court concluded that without showing a mistake apparent on the face of the record, the assessment orders could not be revised.

2. Levy of Penalty under Section 7AA
The petitioner was initially not charged any penalty under Section 7AA in the assessment orders dated 21st October, 1983. The court noted that the levy of penalty is a discretionary matter. The A.C.T.O. had exercised this discretion by not imposing any penalty, and no mistake apparent on the face of the record was shown to exist that would justify revising this decision. Therefore, the court held that the A.C.T.O. had no authority to issue notices for the levy of penalty.

3. Levy of Interest under Section 11B
The respondents contended that the levy of interest under Section 11B is automatic and mandatory, and the A.C.T.O. had no discretion to exempt the dealer from the payment of interest. However, the court found that Section 11B, as it existed during the relevant assessment years (1972-73 to 1976-77), was not an automatic charging section. The court noted that the revised Section 11B, which came into force on 7th April, 1979, is a charging section, but it is prospective in operation and does not apply to the assessment years in question. Therefore, the court held that the levy of interest was not automatic under the old Section 11B, and the A.C.T.O.'s discretion in not levying interest could not be rectified without showing a mistake apparent on the face of the record.

4. Applicability of Section 11B as it Existed During the Relevant Assessment Years
The court emphasized that the assessment orders for the years 1972-73 to 1976-77 would be governed by Section 11B as it existed at that time. The old Section 11B required specific conditions to be met for the levy of interest, and it was not automatic. The court found that the respondents had not demonstrated that the conditions for the levy of interest were met, nor had they shown any mistake apparent on the face of the record. Therefore, the court concluded that the A.C.T.O. had no authority to issue notices for the levy of interest under the old Section 11B.

Conclusion
The court accepted the writ petition, restraining the respondents from imposing any penalty or interest upon the petitioner under Sections 7AA and 11B of the Act in pursuance of the notices dated 28th July, 1985. The notices were quashed, and each party was left to bear its own costs. The writ petition was allowed.