1989 (12) TMI 338 - AT - VAT and Sales Tax

Summary

Issues:
Challenge to legality and validity of tax assessment, penalty, and interest under Bengal Finance (Sales Tax) Act, 1941 and Central Sales Tax Act, 1956 for specific years; Proceedings for recovery of assessed demands.

Analysis:
The applicant contested the assessments under the Bengal Finance (Sales Tax) Act, 1941, and the Central Sales Tax Act, 1956, for the years ending June 30, 1980, 1982, and 1983, alleging violation of natural justice, absence of evidence for ex parte assessments, and improper application of interest provisions. The applicant's plea for adjournment due to illness was rejected, leading to ex parte assessments. The respondent argued that assessments were made following due process, with multiple adjournments granted, and the applicant failing to avail opportunities to present his case. Ex parte assessments were justified due to the applicant's non-participation. The respondent asserted that the applicant's conduct indicated an attempt to evade tax payment.

The applicant raised concerns regarding the demand for interest, claiming lack of notice for interest charges, rendering the certificate proceedings for interest recovery invalid. The legal representative for the applicant argued financial constraints prevented the pursuit of appeals against assessment orders, emphasizing the inability to arrange funds for tax payment. The representative acknowledged the applicability of interest provisions from October 1, 1983, even for earlier periods.

Regarding interest demands, the applicant's representative contended that non-compliance with rule 49E(2) of the Bengal Sales Tax Rules, 1941, invalidated the certificate proceedings. The absence of mandatory notice in form VII-L before initiating recovery proceedings was highlighted, rendering the interest recovery actions unsustainable. The Tribunal agreed that the lack of notice under rule 49E(2) necessitated the setting aside of certificate proceedings for all three years.

The Tribunal allowed the applicant an opportunity to file appeals against assessments for the years ending June 30, 1982, and 1983, upon payment of admitted tax, penalty, and interest. Restoration of appeals for the year ending June 30, 1980, was also permitted on payment of dues. The Tribunal set aside the certificate cases pending before the Certificate Officer, emphasizing the need for compliance with legal procedures. The judgment focused on rectifying procedural irregularities and providing the applicant with the chance to address the tax assessments through proper channels within specified timelines.