1991 (1) TMI 416 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of extension of time granted by Additional Commissioner under the Rajasthan Sales Tax Act, 1954.
2. Requirement of notice and opportunity of hearing before granting extension.
3. Need for recording reasons for extending the assessment period.
4. Impact of lack of opportunity and reasons on the validity of assessment proceedings.

Detailed Analysis:
The judgment by the Rajasthan High Court dealt with the validity of an extension of time granted by the Additional Commissioner under the Rajasthan Sales Tax Act, 1954. The case involved M/s. Hindustan Zinc Limited, Udaipur, a registered dealer engaged in the manufacture and sale of zinc, acids, and manure. The assessing authority sought an extension of time for completing the assessment proceedings beyond the statutory deadline. The Additional Commissioner granted the extension without providing any notice or opportunity of hearing to the assessee and without recording any reasons for the extension.

The main issue before the court was whether the extension granted by the Additional Commissioner was valid despite the lack of notice, opportunity of hearing, and reasons for the extension. The court referred to relevant provisions of the Act, emphasizing the mandatory requirement for reasons to be recorded in writing for granting such extensions. The court highlighted that the absence of an opportunity of hearing and reasons for the extension invalidated the order, citing precedents such as Ajantha Industries v. Central Board of Direct Taxes and C.I.T., West Bengal v. Oriental Rubber Works, where the Supreme Court emphasized the importance of recording reasons in statutory orders.

The court emphasized that the assessee was entitled to an opportunity of hearing before the extension was granted and that reasons must be provided to support any order extending the assessment period. It was noted that assessments cannot be given a new lease of life by extension without affording the assessee a fair hearing. The court also rejected the argument that the issue was not raised earlier, stating that the lack of opportunity and reasons affected the validity of the assessment proceedings, regardless of when the issue was raised.

In conclusion, the court dismissed the revisions and upheld that all proceedings conducted without providing an opportunity of hearing and recording reasons are invalid. The judgment reaffirmed the importance of procedural fairness and adherence to statutory requirements in assessment proceedings under the Rajasthan Sales Tax Act, 1954.