1998 (5) TMI 388 - AT - VAT and Sales Tax

Issues Involved:
1. Constitutionality of Section 11E of the Bengal Finance (Sales Tax) Act, 1941 under Articles 14 and 19(1)(g) of the Constitution of India.
2. Reopening of deemed assessments under Section 11E(1) based on non-collection of declaration forms for concessional tax claims.
3. Validity of Rule 54A in relation to Section 11E.
4. Imposition of penalties under Section 11E(3) and Rule 54A.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 11E:
The applicant challenged Section 11E as violative of Articles 14 and 19(1)(g) of the Constitution. The argument was that Section 11E creates unreasonable discrimination between dealers governed by it and those who are not. The Tribunal held that Section 11E makes a valid classification between dealers who file returns deemed correct and complete and those who do not. This classification has a rational nexus with the objective of the Act, which is to expedite the disposal of pending assessment cases and relieve honest dealers from prolonged assessment proceedings. Therefore, Section 11E does not contravene Article 14. The contention that dealers governed by Section 11E are deprived of post-assessment opportunities to furnish declaration forms was found to be without substance. The Tribunal concluded that the classification is constitutionally valid and does not violate Article 14.

2. Reopening of Deemed Assessments:
The applicant argued that deemed assessments under Section 11E(1) cannot be reopened merely due to non-collection of declaration forms for concessional tax claims. The Tribunal explained that Section 11E(2) allows reopening if a dealer has concealed sales or furnished incorrect particulars of sales resulting in reduced tax liability. The Tribunal found that non-collection of declaration forms results in incorrect particulars of sales, thus attracting Section 11E(2)(b). The Tribunal held that the applicant was required to be prepared to furnish declaration forms at the time of deemed assessment and by December 31, 1995, as per the proviso to Section 11E(3) and Rule 54A. Consequently, the reopening of assessments was justified under Section 11E(2).

3. Validity of Rule 54A:
Although the applicant initially challenged Rule 54A as ultra vires Section 11E, this point was not pressed during the hearing. Therefore, the Tribunal did not address this issue in detail.

4. Imposition of Penalties:
The applicant contended that the mandatory high rate of penalty under Section 11E(3) for non-compliance with Rule 54A is contrary to the principles laid down in Hindustan Steel Ltd. v. State of Orissa and Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax. The Tribunal noted that this contention concerns specific cases where penalties are imposed contrary to the Supreme Court's decisions. If such penalties are challenged, the courts will decide the issue based on the facts and circumstances of each case.

Conclusion:
The Tribunal upheld the validity of the notices for reopening deemed assessments, the orders passed for reopening, the pre-assessment notices, and the assessment orders made by the Commercial Tax Officer. The applicant was granted liberty to prefer appeals against the assessment orders within two weeks or within the prescribed period of limitation. The application was dismissed with no order for costs.

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