1999 (6) TMI 474 - AT - VAT and Sales Tax

Summary

Issues Involved:

1. Revision of assessment and rate of tax on flax fibre.
2. Violation of principles of natural justice.
3. Availability of statutory remedy and writ jurisdiction.

Issue-wise Detailed Analysis:

1. Revision of Assessment and Rate of Tax on Flax Fibre:

The petitioner challenged the revision of assessment by the respondent, which initially taxed flax fibre at 3% under the Second Schedule but later proposed an 8% tax rate under Part D, item 63 of the First Schedule. The assessing authority, relying on clarifications from the Commissioner of Commercial Taxes dated May 10, 1994, and June 11, 1998, revised the tax rate. The petitioner argued that flax fibre, derived from plants, should not be equated with viscose staple fibre, a chemically processed product. The Tribunal noted that the original assessment taxed flax fibre at 3% based on earlier clarifications, but subsequent clarifications reclassified it under a higher tax rate. The Tribunal upheld the revision, stating that the correct rate of tax must be determined based on the product's nature and market understanding.

2. Violation of Principles of Natural Justice:

The petitioner contended that the reassessment violated principles of natural justice as it relied on undisclosed clarifications and denied a personal hearing to demonstrate the product. The Tribunal found no violation, noting that the assessing authority's reference to the June 11, 1998, clarification was to confirm the original revision basis. The Tribunal emphasized that Section 16(1)(a) of the Act requires only a reasonable opportunity to show cause, not a personal hearing. The petitioner failed to present further evidence in time, and thus, the Tribunal concluded that the reassessment was conducted fairly.

3. Availability of Statutory Remedy and Writ Jurisdiction:

The respondent argued that the petitioner should not bypass statutory remedies and approach the Tribunal directly. The Tribunal agreed, referencing the Supreme Court's decision in State of Goa v. Leukoplast (India) Ltd., which emphasized the importance of exhausting statutory remedies before seeking judicial intervention. The Tribunal highlighted that determining the correct tax rate involves technical processes best addressed by statutory authorities. Consequently, the Tribunal dismissed the petition, advising the petitioner to pursue the statutory appeal process.

Conclusion:

The Tribunal dismissed the petition, upholding the reassessment at an 8% tax rate on flax fibre. It found no violation of natural justice and emphasized the necessity of exhausting statutory remedies. The petitioner was granted the right to file a statutory appeal, with time spent on the petition excluded from the appeal period.