1991 (3) TMI 337 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the exercise of revisional jurisdiction by the Assistant Commissioner of Sales Tax to levy purchase tax under section 16(1) of the Gujarat Sales Tax Act, 1969.
2. Correctness of the levy of purchase tax on 30% of the purchases of hexine oil under section 16(1)(a) of the Gujarat Sales Tax Act, 1969.
3. Legality of the imposition of penalty under section 45(1)(b) of the Gujarat Sales Tax Act, 1969 by the Assistant Commissioner in suo motu revision.

Detailed Analysis:

Issue 1: Legality of the Exercise of Revisional Jurisdiction

The primary issue was whether the Assistant Commissioner of Sales Tax was justified in invoking revisional jurisdiction under section 67 of the Gujarat Sales Tax Act, 1969, to levy purchase tax. The applicant had purchased hexine oil against certificates in form 19 and form "C" and used it for both manufacturing its own de-oiled cakes and for job-work for third parties. The Sales Tax Officer initially failed to levy purchase tax on these purchases. The Assistant Commissioner, upon review, found this omission and exercised his revisional powers to levy the tax. The court held that the revisional authority has broad powers to correct any errors or omissions in the orders of subordinate authorities. The Assistant Commissioner was justified in invoking his revisional jurisdiction, as the Sales Tax Officer had failed to levy purchase tax despite clear evidence of liability. Thus, the Tribunal was correct in holding that the exercise of revisional jurisdiction was valid.

Issue 2: Correctness of the Levy of Purchase Tax on 30% of Purchases

The second issue involved the correctness of the levy of purchase tax on 30% of the purchases of hexine oil. The applicant had mixed hexine oil purchased against form 19 with that purchased against form "C" and stored it in a single tank. The Assistant Commissioner and the Tribunal found that the applicant used part of this mixed oil for job-work for third parties, which was a breach of the certificate's terms. The Assistant Commissioner adopted a rough and ready formula, estimating that 30% of the hexine oil was used for third-party job-work, based on the proportion of total production. The court upheld this method, finding no documentary evidence to support the applicant's claim that the oil was used solely for its own manufacturing. Thus, the levy of purchase tax on 30% of the purchases was deemed correct and valid.

Issue 3: Legality of the Imposition of Penalty

The third issue was whether the Assistant Commissioner could impose a penalty under section 45(1)(b) in suo motu revision. The applicant argued that the Assistant Commissioner exceeded his jurisdiction, as the Sales Tax Officer had not imposed any penalty. However, the court found that the Sales Tax Officer had issued a show-cause notice for penalty, indicating an awareness of the need for penalty proceedings. The court distinguished between assessment and penalty proceedings, noting that penalty proceedings are independent and distinct. The court held that if the original authority had initiated penalty proceedings, the revisional authority could impose a penalty if the original authority failed to do so. Since the Sales Tax Officer had initiated penalty proceedings, the Assistant Commissioner was within his rights to impose the penalty in revisional jurisdiction. Therefore, the Tribunal was correct in upholding the penalty imposed by the Assistant Commissioner.

Conclusion:
All three questions were answered in the affirmative, in favor of the State and against the applicant. The Assistant Commissioner was justified in exercising revisional jurisdiction to levy purchase tax and impose a penalty, and the Tribunal correctly upheld these actions. The reference was answered accordingly.