1996 (8) TMI 500 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction of Assessing Authority
2. Validity of assessment
3. Jurisdiction of best judgment assessment
4. Limitation period for assessment
5. Addition of turnover
6. Imposition of penalty without notice

Jurisdiction of Assessing Authority:
The assessee sought a direction for referring questions regarding the jurisdiction of the Assessing Authority under the Punjab General Sales Tax Act. The main contention was whether the Assessing Authority of Ward No. 21 could frame the assessment when the place of business of the assessee fell under the jurisdiction of Ward No. 22. The Tribunal was directed to refer this question for opinion.

Validity of Assessment:
The assessment was challenged on the grounds that the assessee dealt in tax-free items and therefore should not be liable for sales tax. The contention was that the assessment was without jurisdiction and the demand created was illegal. The Tribunal was directed to refer the question of whether sales tax was leviable on the tax-free items sold by the assessee.

Jurisdiction of Best Judgment Assessment:
The issue of whether the best judgment assessment framed was barred by the 5-year limitation period under section 11(5) of the Act was raised. The Tribunal was directed to refer this question for opinion to determine the validity of the assessment within the limitation period.

Limitation Period for Assessment:
The assessee argued that the assessment for the year 1981-82 was time-barred under section 11(5) of the Act. The contention was based on the period of limitation starting from March 31, 1982, and expiring on March 31, 1987 for the fourth quarter. The Tribunal was directed to refer this question for opinion.

Addition of Turnover:
The validity of adding a turnover of Rs. 6 lacs was questioned as baseless and arbitrary. The legal material to support this addition was challenged. However, this issue was not pressed during the hearing, and no specific direction was given by the Tribunal regarding this question.

Imposition of Penalty Without Notice:
The imposition of a penalty under section 10(7) without serving a notice was contested. The Tribunal was informed that this issue would not be pressed during the hearing, and no specific direction was given regarding this question.

In conclusion, the High Court directed the Sales Tax Tribunal to refer two specific questions of law to the Court for opinion, focusing on the limitation period for assessment and the levy of sales tax on tax-free items sold by the assessee during the assessment year. The application by the assessee was allowed, and the Tribunal was instructed to proceed accordingly.