1996 (1) TMI 392 - HC - VAT and Sales Tax

Summary

Issues:
Whether the Commissioner can exercise suo motu powers of revision under section 21 of the Punjab General Sales Tax Act based on an application filed by an assessee.

Analysis:
The case involved a hotel registered under the Punjab General Sales Tax Act, which received guests and provided various amenities, including meals. The Assessing Authority charged sales tax by bifurcating the contract amount for boarding and lodging to tax the portion representing the sale of food. The assessee contended that the contract was indivisible, and the Assessing Authority's tax assessment was incorrect. After a landmark judgment in 1972, the assessee sought revision of assessment orders for multiple years, but the Commissioner dismissed the application filed by the assessee, stating that the Commissioner could not act on an application made by the assessee under section 21 of the Act.

The High Court analyzed section 21 of the Act, which empowers the Commissioner to call for records of proceedings to ensure legality and propriety. The Court emphasized that the Commissioner can act "of his own motion" upon receiving information about any illegality or impropriety, whether from the department, an assessee, or any other source. The purpose of this power is to ensure proper administration of the Act, preventing tax evasion or imposition of undue taxes. The Court clarified that although the Commissioner can initiate action based on information from an assessee, it does not confer a statutory right on the assessee to file a revision petition. The Court cited precedents supporting the Commissioner's discretion to act on information received from any party.

In response to the question referred by the Tribunal, the High Court ruled that both the assessee and the department can bring relevant information to the Commissioner's attention. If the Commissioner deems the information warrants action under section 21, he may proceed independently to review the legality or propriety of subordinate authorities' orders or proceedings. The Court also noted that its decision on the referred question would apply to all connected cases, as directed by the Tribunal. Consequently, the High Court answered the reference question and disposed of the related case, emphasizing that there would be no order as to costs.