1998 (11) TMI 624 - HC - VAT and Sales Tax

Issues Involved:
1. Maintainability of the writ petitions without exhausting the statutory remedy.
2. Jurisdictional error in the reassessment proceedings.
3. Validity of the reassessment order under Section 18(1) of the Bihar Sales Tax Act.
4. Determination of production and turnover in the reassessment.
5. Levy of Central Sales Tax on sales through stockyards.
6. Imposition of interest on the tax amount during the stay period.

Issue-wise Detailed Analysis:

1. Maintainability of the writ petitions without exhausting the statutory remedy:
The court initially granted a stay on the recovery of the assessed tax without the petitioner exhausting the statutory remedy of appeal, which required depositing 20% of the assessed tax. The respondent-State of Bihar raised a preliminary objection regarding the maintainability of the petitions on this ground. The court acknowledged that though the petitions were kept pending for 18 years, it would not be proper to dismiss them on the ground of non-exhaustion of alternative remedy at this stage.

2. Jurisdictional error in the reassessment proceedings:
The petitioner argued that the reassessment order was "without jurisdiction" as the method adopted for determining production was contrary to Section 18(1) of the Act. The court clarified that "jurisdiction" means the authority to decide, which is vested by statutory powers. An error in law or fact does not make an order without jurisdiction unless the authority lacks statutory powers. The court concluded that the reassessment authority had jurisdiction under the Act, and thus, the order was not without jurisdiction.

3. Validity of the reassessment order under Section 18(1) of the Bihar Sales Tax Act:
The petitioner contended that the reassessment was based on a mere change of opinion and was impermissible. The court referred to various precedents, including Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali, which allowed reassessment based on reasonable estimates of suppressed turnover. The court found that the reassessment authority had relevant materials and figures to support the reassessment, making it valid under Section 18(1) of the Act.

4. Determination of production and turnover in the reassessment:
The reassessment was based on discrepancies in the production and sales records, including non-accountal of alloy steel ball-bearing rings and steel production. The court noted that the reassessment authority examined the company's records and found significant gaps in production and sales, leading to a best judgment assessment. The court upheld the reassessment, finding it was based on substantial evidence and not merely on assumptions or presumptions.

5. Levy of Central Sales Tax on sales through stockyards:
The petitioner challenged the levy of Central Sales Tax on the grounds that inter-State sales were not proved. The court referred to the definition of inter-State sales, which includes sales that occasion the movement of goods from one State to another. The court found that the sales through stockyards were inter-State sales as they involved movement of goods pursuant to the contract of sale, justifying the levy of Central Sales Tax.

6. Imposition of interest on the tax amount during the stay period:
The respondent-State sought interest on the tax amount for the period the recovery was stayed. The court ruled that interest could not be charged for the period during which the stay order was operative, as the amount was not legally payable during that time. However, interest at 18% per annum was to be charged from the date of the demand notice to the date of the stay order and from the date of the judgment onwards until payment.

Conclusion:
The court dismissed the petitions, finding no merit in the challenges against the reassessment order and upholding the imposition of Central Sales Tax and the method of determining production and turnover. Interest was imposed on the tax amount for specific periods, excluding the duration of the stay order.

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