2001 (5) TMI 933 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Deputy Excise and Taxation Commissioner to initiate proceedings under Section 40 of the Haryana General Sales Tax Act, 1973.
2. Time-barred notice for the assessment year 1985-86.
3. Error of law in the orders passed by the Deputy Excise and Taxation Commissioner and the Tribunal.
4. Consideration of the nature of operations undertaken by the petitioner in the assessment of hiring and service charges.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Deputy Excise and Taxation Commissioner:
The petitioner contended that the proceedings initiated under Section 40 of the Haryana General Sales Tax Act, 1973, were ultra vires because the notices did not indicate any illegality or impropriety in the original assessment orders. The court analyzed Sections 31 and 40 of the Act, which deal with reassessment and revision, respectively. Section 31 allows the Assessing Authority to reassess tax within three years if it discovers under-assessment or escaped assessment. Section 40 empowers the Commissioner to revise orders to ensure legality or propriety within five years. The court concluded that the Legislature intended to confer different powers on different authorities, and the power of reassessment under Section 31 could not be exercised by the Revisional Authority under Section 40. Therefore, the notices issued by the Deputy Excise and Taxation Commissioner were ultra vires, and the impugned orders were liable to be quashed.

2. Time-barred Notice for the Assessment Year 1985-86:
The petitioner argued that the notice for the assessment year 1985-86 was time-barred. The court did not specifically address this issue separately, as it found the entire proceedings under Section 40 to be ultra vires. Therefore, the time-barred nature of the notice became irrelevant to the final decision.

3. Error of Law in the Orders Passed:
The petitioner claimed that the orders passed by the Deputy Excise and Taxation Commissioner and the Tribunal were vitiated by errors of law. The court agreed, stating that the Revisional Authority had issued notices mechanically without indicating any specific illegality or impropriety in the original assessment orders. The court referenced several precedents, including K.M. Cheria Abdulla & Co. and Hari Chand Rattan Chand & Co., to support its conclusion that the Revisional Authority could not deal with cases of escaped assessment under the guise of ensuring legality or propriety.

4. Consideration of the Nature of Operations:
The petitioner argued that the peculiar nature of its operations, where tractors and machinery were provided with drivers and staff without transferring property in goods, was not considered by the authorities. The court did not delve into this issue in detail, as it had already determined that the proceedings under Section 40 were ultra vires. However, it implicitly acknowledged that the nature of operations was a relevant factor that should have been considered in the original assessment.

Conclusion:
The court held that the orders passed by the Deputy Excise and Taxation Commissioner under Section 40 were ultra vires and liable to be quashed. Consequently, the appellate order by the Tribunal was also quashed. The court directed the respondents to refund any amount deposited by the petitioner in compliance with the impugned orders. The writ petition was allowed, and the impugned orders were declared illegal and quashed.