1992 (2) TMI 324 - HC - VAT and Sales Tax

Summary

Issues:
Assessment proceedings stayed by Sales Tax Officer, Reasons for stay of assessment proceedings, Jurisdiction of Sales Tax Officer to impose fine exceeding Rs. 7,500.

Assessment Proceedings Stayed by Sales Tax Officer:
The case involved assessment proceedings initiated by the Sales Tax Officer for three consecutive samvat years under the Gujarat Sales Tax Act, 1969 and the Central Sales Tax Act, 1956. The Sales Tax Officer, without completing the assessments, issued show cause notices for staying the proceedings up to a later date, citing reasons like "transfer of assessment proceedings" and the need to follow a court decision. The petitioners challenged these actions as illegal and ultra vires the Constitution of India, alleging discrepancies in the reasons given in the notices and the subsequent orders of stay. However, the Court found that the reasons mentioned in the notices and the orders were genuine, as they related to ongoing enquiries by the Sales Tax Officer to determine the true nature of the transactions conducted by the firm. The Court emphasized that such enquiries were necessary to ensure proper tax recovery and prevent tax evasion, justifying the stay of assessment proceedings.

Reasons for Stay of Assessment Proceedings:
The petitioners contended that the reasons given for staying the assessment proceedings were not genuine or in accordance with the Act. They argued that the variation in reasons between the notices and the orders indicated non-application of mind by the Sales Tax Officer. However, the Court held that the reasons provided, such as the need for further enquiry into the firm's transactions, were valid and sufficient to justify the stay of assessment proceedings. The Court emphasized that the Sales Tax Officer's duty was to investigate and determine the true nature of the transactions to prevent tax evasion, making the reasons genuine and in line with the Act's requirements.

Jurisdiction of Sales Tax Officer to Impose Fine Exceeding Rs. 7,500:
The Court addressed the issue of the Sales Tax Officer imposing a fine exceeding Rs. 7,500 on the firm in the assessment order for one of the samvat years. Relying on a previous decision, the Court found that the Sales Tax Officer had exceeded his jurisdiction by imposing a fine of Rs. 11,110.03 without following the proper procedure of serving a draft order of penalty and inviting objections. As a result, the Court quashed and set aside the portion of the assessment order imposing the excessive fine, declaring it illegal and allowing the authorities to pass a new order of fine in accordance with the law.

In conclusion, the petition was partly allowed by the Court, quashing the excessive fine imposed by the Sales Tax Officer and emphasizing the importance of following due process in imposing penalties.