1993 (9) TMI 333 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order revising the assessment for the assessment year 1975-76.
2. Validity of the notices proposing to revise the assessment for the assessment year 1976-77.
3. Challenge to the provisions of section 10-13(3) of the U.P. Sales Tax Act, 1948.

Detailed Analysis:
1. The petitioners challenged the validity of an order revising the assessment for the assessment year 1975-76, passed by the Deputy Commissioner under section 21 of the U.P. Sales Tax Act. The Deputy Commissioner revised the assessment based on information indicating that the dealer had suppressed purchases, leading to an additional demand. The petitioners contended that the Deputy Commissioner exceeded his jurisdiction under section 10-B of the Act, inserted in 1979, by revising an order passed prior to its enactment. However, the Court held that the power of revision under section 10-B could be exercised within four years of the original order, rejecting the contention regarding the validity of the relevant clause. The Court emphasized that section 10-B's revisional jurisdiction is limited to examining the legality or propriety of an order, not for assessing escaped turnover.

2. For the assessment year 1976-77, the Deputy Commissioner issued notices proposing to revise the assessments based on information indicating escaped turnover. The petitioners argued that section 10-B could not be used to bring escaped turnover to tax, as it was meant for examining order legality or propriety. The Court noted that the information prompting revision was not available when the original assessments were made, and section 21's limitation had expired. It clarified that section 10-B cannot substitute section 21 and must be limited to assessing order legality based on the record at the time of the original order.

3. The petitioners further challenged the validity of section 10-13(3) of the Act, but during the hearing, the focus shifted to the validity of the order passed under section 10-B and the notices issued. The Court highlighted that the revisional powers under section 10-B are not meant for assessing escaped turnover but for examining order legality. It cited precedents from income tax laws to emphasize that the "record" for revision refers to the record at the time of the original order. The Court concluded that using section 10-B as a substitute for section 21, after the limitation period, was improper, and substantial justice could not justify an order imposing financial liability without jurisdiction.

In conclusion, the Court allowed the writ petition, quashing the order revising the assessment for 1975-76 and the notices for 1976-77, emphasizing the limited scope of section 10-B for revisional purposes and the importance of adhering to statutory limitations and jurisdictional boundaries.