2002 (5) TMI 827 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notices for reopening the assessment (Annexure "B").
2. Validity of the order of reopening (Annexure "C").
3. Application of the Bengal Finance (Sales Tax) Act, 1941 ("1941 Act") and the Central Sales Tax Act, 1956 ("1956 Act").
4. Authority of the Deputy Commissioner to order reopening and the role of the Commercial Tax Officer.
5. Estoppel and waiver by the petitioner.

Detailed Analysis:

1. Validity of the Notices for Reopening (Annexure "B"):

The petitioner challenged the notices for reopening the assessment on the ground that they were issued under the 1941 Act without any reference to the 1956 Act, which governs inter-State sales. The petitioner argued that since the liability for inter-State sales accrues under the 1956 Act, the notices under the 1941 Act were invalid for reopening assessments related to inter-State sales.

The court examined the notices and found that they were issued under section 11E of the 1941 Act, which is applicable by virtue of rule 54AA of the 1941 Rules and rule 9 of the Central Sales Tax (West Bengal) Rules, 1958 ("1958 Rules"). The court held that the machinery for collection of tax under the 1956 Act is provided by the 1941 Act and the 1941 Rules. Therefore, non-mentioning of the 1956 Act in the notices does not render them invalid. The court concluded that the notices were valid and the proceedings for reopening could not be set aside on this ground.

2. Validity of the Order of Reopening (Annexure "C"):

The petitioner contended that the order of reopening dated October 23, 1998, did not refer to the 1956 Act and was issued without proper application of mind, particularly as there was no suppression of inter-State sales for the period 1989-90. The court noted that the order of reopening was issued under section 11E of the 1941 Act and rule 54AA of the 1941 Rules, which are applicable to both intra-State and inter-State sales. The court found that the order mentioned the break-up of inter-State and intra-State transactions and correctly indicated that there was no reopening of inter-State sales for 1989-90 due to nil suppression.

The court emphasized that an order must be read in the context in which it is passed, focusing on its substance rather than technicalities. The court held that the order was valid and could not be assailed on the grounds raised by the petitioner.

3. Application of the 1941 Act and the 1956 Act:

The petitioner argued that the assessment for inter-State sales could not be reopened under the 1941 Act. The court clarified that the 1956 Act governs the liability for inter-State sales, but the machinery for collection and assessment is provided by the 1941 Act and the 1941 Rules. The court held that reopening under section 11E of the 1941 Act and rule 54AA of the 1941 Rules is valid for both intra-State and inter-State sales.

4. Authority of the Deputy Commissioner and Role of the Commercial Tax Officer:

The petitioner contended that the Deputy Commissioner had not passed the order of reopening but had directed the Commercial Tax Officer to do so, making the reopening invalid. The court examined the order and found that the Deputy Commissioner had indeed decided to reopen the assessments and directed the Commercial Tax Officer to proceed with the assessment. The court held that the direction to reopen by the Deputy Commissioner was sufficient and valid, and the Commercial Tax Officer had no alternative but to comply.

5. Estoppel and Waiver by the Petitioner:

The respondents argued that the petitioner, having participated in the assessment proceedings without raising any objections, was estopped from challenging the reopening and assessment. The court noted that the petitioner had disclosed the suppressions during the proceedings and had not objected to the assessment at that time. The court held that the petitioner, by its conduct, had waived any objections and was now precluded from challenging the reopening on the principle of estoppel.

Conclusion:

The court concluded that the notices and the order of reopening were valid and that the petitioner had not suffered any prejudice due to the non-mentioning of the 1956 Act. The writ petition was dismissed, and it was open to the petitioner to challenge the assessment on merit in appeal. The court made no observations that would prejudice the petitioner in the appellate proceedings.

Order:

The writ petition was dismissed with no order as to costs. All parties were directed to act on a xerox signed copy of the operative part of the order on the usual undertaking.

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