1995 (4) TMI 262 - AT - VAT and Sales Tax

Issues Involved:
1. Validity of the impugned order dated June 24, 1992, demanding Rs. 50,52,183 on grounds of short levy.
2. Scope and applicability of Section 17 of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972.
3. Whether the impugned order frustrates pending appeals.
4. Whether Section 17 of the Act and Rule 23 of the Rules confer unguided and uncanalised power on the assessing authority.
5. Constitutional validity of Section 17 of the Act and Rule 23 of the Rules.

Detailed Analysis:

1. Validity of the Impugned Order:
The applicant challenged the impugned order dated June 24, 1992, which demanded Rs. 50,52,183 on grounds of short levy. The applicant argued that the Entry Tax Officer determined the saleable value of Horlicks under Rule 12(2) of the Rules and that the applicant had filed numerous appeals against such assessments. The applicant contended that the impugned order frustrated these pending appeals and was arbitrary, without any nexus between the value determined under Rule 12(2) and the value disclosed in the cost sheet. The respondents argued that the value disclosed by the applicant was based on the preceding financial year's cost and that the Entry Tax Officer correctly invoked Section 17 of the Act and Rule 23 of the Rules due to the higher actual saleable value found in the cost sheet.

2. Scope and Applicability of Section 17:
The applicant argued that the scope of Section 17 is narrow and limited to the grounds stated therein, and that the Entry Tax Officer wrongly invoked Section 17 and Rule 23 in the present case. The respondents contended that Section 17 authorizes the levy and collection of short-levied tax and is complementary to Section 6 of the Act. The Tribunal examined the relevant provisions and noted that the Entry Tax Officer's determination of saleable value was not based solely on the cost sheet but also on market surveys. The Tribunal found that the impugned order's claim of inadvertence was not justified, as the determination of saleable value was consciously made by the Entry Tax Officer on various dates.

3. Frustration of Pending Appeals:
The applicant argued that the impugned order frustrated the pending appeals by revising the assessments and demanded short-levied tax. The respondents contended that the issues in the pending appeals were distinct from the issues under Section 17, and that the applicant had the right to appeal against the order under Section 17. The Tribunal referred to the Supreme Court decision in Tel Utpadak Kendra v. Deputy Commissioner of Sales Tax and concluded that the impugned order did not frustrate the pending appeals, as the subject matter of the appeals and the impugned order were distinct.

4. Unguided and Uncanalised Power:
The applicant argued that Section 17 of the Act and Rule 23 of the Rules confer unguided and uncanalised power on the assessing authority without any time limit for reopening a case of short levy. The respondents contended that the provisions for appeal under Section 27 of the Act safeguard against arbitrariness and unreasonableness. The Tribunal found that the impugned order's ground of inadvertence for levying and collecting short-levied tax was not valid, as the determination of saleable value was not based solely on the cost sheet and the concept of giving retrospective effect to the determination of saleable value was foreign to the Act and the Rules.

5. Constitutional Validity:
The applicant challenged the constitutional validity of Section 17 of the Act and Rule 23 of the Rules, arguing that they conferred arbitrary power on the assessing authority and violated Articles 14, 19(1)(g), and 265 of the Constitution. The respondents contended that Rule 23 provides a complete adjudicatory process and that the provisions are not ultra vires the Constitution. The Tribunal noted that the impugned assessment order and the notice of demand had to be quashed and left the matter of constitutional validity without further examination.

Conclusion:
The application was allowed, and the impugned assessment order dated June 24, 1992, and the demand notice in form X dated June 24, 1992, demanding Rs. 50,52,183 were quashed. The Tribunal found that the impugned order was not justified on the grounds of inadvertence and that the determination of saleable value was not based solely on the cost sheet. The Tribunal also concluded that the impugned order did not frustrate the pending appeals and that the reopening of assessments on the ground of short levy was not properly taken.

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