1994 (5) TMI 248 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Quashing of impugned notices dated June 4, 1988, and July 2, 1988.
2. Quashing of notice dated March 23, 1988.
3. Taxability of corrugated iron sheets made from plain iron sheets under the Assam Finance (Sales Tax) Act, 1956.
4. Jurisdiction and independence of the Superintendent of Taxes in deciding taxability.
5. Validity of directions and clarifications issued by the Deputy Commissioner of Taxes.

Detailed Analysis:

Issue 1: Quashing of Impugned Notices
The petitioner sought to quash the impugned notices dated June 4, 1988, and July 2, 1988, issued by the Superintendent of Taxes, which directed the petitioner to furnish purchase figures after corrugation for assessment purposes. The court held that these notices were issued based on directions from superior authorities, which is not permissible as the Superintendent of Taxes is a quasi-judicial authority and must act independently. Consequently, the notices were quashed.

Issue 2: Quashing of Notice Dated March 23, 1988
The petitioner also sought to quash the notice dated March 23, 1988, issued by the Deputy Commissioner of Taxes, which clarified that corrugated iron sheets made from plain iron sheets purchased locally after paying first point tax are taxable again at 4 percent. The court did not quash this notice, stating it was a departmental communication providing clarifications and was not directly actionable.

Issue 3: Taxability of Corrugated Iron Sheets
The core issue was whether corrugated iron sheets made from plain iron sheets, which had already been taxed, could be taxed again under the Assam Finance (Sales Tax) Act, 1956. The court referred to Section 14 of the Central Sales Tax Act, 1956, which lists "iron and steel" as declared goods of special importance in inter-State trade or commerce. The court concluded that plain and corrugated iron sheets fall under the same sub-item (vi) of item (iv) of Section 14, and thus, cannot be treated as separate commodities for taxation purposes. The court relied on the Supreme Court's judgment in Telangana Steel Industries v. State of Andhra Pradesh [1994] 93 STC 187, which held that once a declared good has been taxed, it cannot be taxed again in a different form unless it falls under a different sub-item.

Issue 4: Jurisdiction and Independence of the Superintendent of Taxes
The petitioner argued that the Superintendent of Taxes, being a quasi-judicial authority, should have independently decided the taxability of the item and not acted on the directions of superior authorities. The court agreed, citing multiple judgments, including Orient Paper Mills Ltd. v. Union of India, which established that quasi-judicial authorities must act independently and impartially. The court found that the Superintendent of Taxes had acted under the influence of directions from the Deputy Commissioner of Taxes, which was improper.

Issue 5: Validity of Directions and Clarifications Issued by the Deputy Commissioner of Taxes
The court examined whether the Deputy Commissioner of Taxes had overstepped his authority by issuing directions to the Superintendent of Taxes. It was found that the directions were indeed issued and influenced the Superintendent's decision-making process. The court held that such directions violated the principles of natural justice and the independence of quasi-judicial authorities.

Conclusion:
The writ petition was allowed with the following directions:
1. The impugned notices dated June 4, 1988, and July 2, 1988, issued by the Superintendent of Taxes were quashed.
2. The notice dated March 23, 1988, issued by the Deputy Commissioner of Taxes was not quashed as it was a departmental communication.
3. The authority cannot tax corrugated iron sheets made from plain iron sheets purchased locally after paying first point tax under the Assam Finance (Sales Tax) Act, 1956, at 4 percent again.
4. The court emphasized the need for quasi-judicial authorities to act independently and not under the influence of superior authorities.

The parties were directed to bear their own costs.