1989 (6) TMI 267 - AT - VAT and Sales Tax

Issues Involved:
1. Legality of the consolidated assessment for a four-year period.
2. Validity of the Commercial Taxes Tribunal's order remanding the case for fresh assessment.
3. Jurisdiction and competence of the Commercial Tax Officer in making the initial assessment.
4. Validity of the subsequent assessments made after the remand.
5. Enforceability of the certificate based on the initial assessment.

Detailed Analysis:

1. Legality of the Consolidated Assessment for a Four-Year Period:
The applicants challenged the initial consolidated assessment for a four-year period, arguing that there is no provision in the Bengal Finance (Sales Tax) Act, 1941 (BFST Act, 1941) for such an assessment. The Commercial Tax Officer had assessed a gross turnover of Rs. 6,20,000 and a tax liability of Rs. 36,279.19 for the consolidated period. The West Bengal Commercial Taxes Tribunal found this consolidated assessment to be "bad in law" and remanded the case for fresh assessment according to law.

2. Validity of the Commercial Taxes Tribunal's Order Remanding the Case for Fresh Assessment:
The Tribunal's order dated 3rd March, 1982, directed fresh assessments for separate periods. The applicants argued that this remand order could not revalidate the initial invalid assessment and thereby save limitation. However, it was contended by the respondents that the Tribunal was competent to remand the matter for fresh assessment and that the period of limitation does not apply to orders passed on remand from the Tribunal, as supported by the Supreme Court's decision in Commissioner of Income-tax v. National Taj Traders.

3. Jurisdiction and Competence of the Commercial Tax Officer in Making the Initial Assessment:
The applicants argued that the initial order by the Commercial Tax Officer was made without jurisdiction and was void ab initio. They relied on precedents which held that assessments under the Act must be annual and cannot be consolidated for several years. However, the respondents contended that the initial order was at most an irregular order but not one made without jurisdiction. The Supreme Court's decisions in Central Potteries Ltd. v. State of Maharashtra and Kamala Mills Ltd. v. State of Bombay supported the view that an order made by an authority with jurisdiction over the matter, even if irregular, is not a nullity.

4. Validity of the Subsequent Assessments Made After the Remand:
The subsequent assessments were challenged on the grounds that they were based on no materials and were arbitrary. The Commercial Tax Officer made separate assessments for the relevant years, which were essentially best judgment assessments under section 11(2) of the BFST Act, 1941. The assessments took into account suppressed purchases and the dealer's failure to produce books of accounts. The Tribunal found that the assessments were not arbitrary or capricious and had a reasonable nexus with the facts discovered. The Supreme Court's decision in Commissioner of Sales Tax v. H.M. Esufali supported the view that some guesswork is inevitable in estimating escaped turnover, provided it is rational and not arbitrary.

5. Enforceability of the Certificate Based on the Initial Assessment:
The applicants also challenged the Certificate Case No. 111ST/77-78 for the consolidated sum of Rs. 37,389.19. The respondents conceded that they were not interested in pursuing this certificate. The Tribunal found that the initial assessment by clubbing together four years was irregular but not void, and the subsequent assessments made on remand were enforceable.

Conclusion:
The Tribunal dismissed the writ application, finding no substance in the applicants' contentions. The Tribunal upheld the validity of the subsequent assessments made after the remand and found that the initial consolidated assessment, though irregular, did not render the subsequent proceedings void. The application RN-222(T) of 1989 was dismissed on contest without any order as to costs.

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