1988 (10) TMI 269 - HC - VAT and Sales Tax

Summary

Issues:
Challenging assessment orders for sales tax under the Delhi Sales Tax Act, 1975 based on suspicion of tax evasion and improper assessment by the Assistant Sales Tax Officer.

Analysis:
The writ petitions challenged assessment orders for sales tax for the year 1983-84 under the Delhi Sales Tax Act, 1975, concerning M/s. Ganga Automobiles (P.) Ltd. and M/s. Competent Motors, selling agents of M/s. Maruti Udyog Limited. The Assistant Sales Tax Officer, Shri J.N. Gupta, conducted an administrative enquiry suspecting tax evasion without thoroughly examining each sale transaction. The officer concluded that sales were made in Delhi, leading to the imposition of sales tax. However, the Supreme Court precedent in Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes highlighted the necessity of scrutinizing individual transactions to determine tax liability accurately.

The Assistant Sales Tax Officer's failure to investigate each transaction properly and reliance on generalities rather than specific evidence led to an erroneous assessment. The officer's assumption of deliberate tax avoidance without substantial evidence, particularly against a reputed company like M/s. Maruti Udyog Limited, was unfounded. The petitioners clarified that sales were primarily conducted at Gurgaon, not Delhi, supported by documents detailing the sales process, payments, and delivery arrangements.

The High Court emphasized the need for a fresh examination of each transaction by the tax authority, considering the specific details provided by the petitioners and Maruti Udyog Limited. The Court directed a reevaluation based on individual transaction evidence to determine the correct situs of the sales for tax purposes. The impugned assessment orders and penalty proceedings were deemed null and void, requiring a rehearing by the tax authority to make accurate assessments.

Regarding the maintainability of the writ petitions due to the availability of alternative remedies under the Delhi Sales Tax Act, the Court rejected this objection. The prolonged pendency of the petitions and the legal deficiencies in the demand notice justified seeking extraordinary relief through writ petitions. Additionally, the involvement of the Assistant Sales Tax Officer in both administrative and quasi-judicial capacities raised concerns about the efficacy of pursuing statutory appeals, leading the Court to allow the writ petitions and remand the cases for fresh determination by the Assistant Sales Tax Officer.

In conclusion, the Court partially allowed the writ petitions, remanding the cases for reevaluation by the Assistant Sales Tax Officer in accordance with the law and specific observations made in the judgment. The security bond or bank guarantee furnished in each petition was discharged, and no costs were awarded.