1995 (2) TMI 408 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the constitutionality of the third proviso to rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules, 1957.
2. Interpretation of the substitution of "financial year" for "year" in the third proviso.
3. Justification for the requirement of separate declarations and certificates for goods delivered in different financial years.
4. Validity of reassessment under section 19(1) of the State Act based on under-assessment due to incorrect submission of "C" forms.

Analysis:

1. The petitioner, a partnership-firm engaged in the manufacture and sale of agarbatti, challenged the constitutionality of the third proviso to rule 12(1) of the Central Sales Tax Rules. The proviso required separate declarations for goods delivered in different financial years. The petitioner argued that this provision exceeded the rule-making power of the Central Government and was arbitrary.

2. The substitution of "financial year" for "year" in the third proviso was examined. The petitioner followed the calendar year as the accounting year, obtaining "C" forms based on this period. However, after the substitution, separate declarations were required for goods delivered in different financial years, leading to a conflict. The court analyzed the legislative intent behind the amendment and found the requirement for separate declarations reasonable and related to the exemption limit provided by the law.

3. The court determined that the requirement for separate declarations and certificates for goods delivered in different financial years was not arbitrary or unreasonable. It fell within the scope of "particulars to be contained" in the declaration or certificate, ensuring compliance with tax provisions and aiding the assessing authority in verification.

4. Regarding reassessment under section 19(1) of the State Act, the court held that if there was a clear breach of rules or pro forma requirements that escaped notice initially, reassessment could be justified. In this case, incorrect submission of "C" forms led to under-assessment, qualifying for reassessment under the law. The court rejected the argument that reassessment was an attempt to review the earlier order, emphasizing the broad scope of section 19(1) to cover instances of under-assessment.

5. The court dismissed the petition, upholding the validity of the third proviso and the reassessment notice issued by the tax authority. The petitioner was required to comply with the separate declaration requirements for goods delivered in different financial years, and reassessment based on under-assessment due to incorrect submission of "C" forms was deemed justified under the law.