2000 (9) TMI 1032 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of respondent No. 3 to initiate revision proceedings.
2. Legality of interest levied on the assessed tax.
3. Objection to the maintainability of the writ petition due to the availability of an alternative remedy.
4. Validity of the revision notice issued under section 40(1) of the Haryana General Sales Tax Act, 1973.

Issue-wise Detailed Analysis:

1. Jurisdiction of respondent No. 3 to initiate revision proceedings:
The petitioner challenged the jurisdiction of respondent No. 3 to initiate proceedings for revision of the assessment order based solely on an audit note. The court examined Section 40(1) and (2) of the Haryana General Sales Tax Act, 1973, which allows the Commissioner or a delegated officer to call for the record of any case for satisfying himself as to the legality or propriety of any proceedings or order. The court found that respondent No. 3 had independently applied his mind to the relevant record and provided cogent reasons for issuing the notice under section 40(1), indicating that the decision was not solely based on the audit note. Hence, the jurisdictional challenge was dismissed.

2. Legality of interest levied on the assessed tax:
The petitioner argued that the levy of interest on the assessed tax was contrary to the law laid down by the Supreme Court in J.K. Synthetics Ltd. v. Commercial Taxes Officer and other relevant cases. The court agreed, stating that the levy of interest for the period prior to May 7, 1998, the date on which the tax was levied, was illegal. The court cited the Constitution Bench judgment in J.K. Synthetics Ltd.'s case, which held that interest could not be levied on unpaid tax for the period before the final assessment. The court distinguished the case from Calcutta Jute Manufacturing Co.'s case, where the taxpayer had delayed tax payment due to a stay order. Therefore, the interest levied for the period before May 7, 1998, was declared illegal.

3. Objection to the maintainability of the writ petition due to the availability of an alternative remedy:
The respondents objected to the maintainability of the writ petition, arguing that the petitioner had not availed the alternative remedy of reference under section 42 of the Act. The court did not explicitly address this objection in the detailed analysis, suggesting that it proceeded to examine the merits of the case regardless of the availability of an alternative remedy.

4. Validity of the revision notice issued under section 40(1) of the Haryana General Sales Tax Act, 1973:
The court scrutinized whether the notice issued by respondent No. 3 was vitiated by non-application of mind or any other legal infirmity. It was found that respondent No. 3 had examined the returns and records independently and concluded that the rice procured from paddy purchased outside Haryana had been sold within the state, contrary to the dealer's claim. This independent examination and reasoning validated the notice issued under section 40(1). The court distinguished the case from Sha M. Hastimal and Co.'s case, where the revision was initiated solely based on an audit note without independent application of mind.

Conclusion:
The court partly allowed the writ petition, declaring the levy of interest for the period prior to May 7, 1998, as illegal. However, it confirmed the concurrent findings of respondent Nos. 2 and 3 regarding the petitioner's liability to pay tax on consignment sales. The respondents were directed to recover the tax amount after excluding the element of purchase tax and were allowed to charge interest from May 7, 1998, onwards.

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