2002 (7) TMI 779 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the return furnished without payment of turnover tax for deemed assessment under section 11E(1) of the Bengal Finance (Sales Tax) Act, 1941.
2. Legality of reopening the deemed assessment on the ground of non-payment of turnover tax under section 11E(2) of the Act, 1941.
3. Validity of the assessment held under section 11(1) of the Act, 1941.
4. Condonation of delay in filing the application challenging the reopening order.

Issue-wise Detailed Analysis:

1. Validity of the return furnished without payment of turnover tax for deemed assessment under section 11E(1) of the Bengal Finance (Sales Tax) Act, 1941:

Section 10(3) of the Act, 1941 mandates that a registered dealer must pay the full amount of tax due before filing the return and furnish a receipted challan showing payment. However, sub-section (4) of section 10 allows for the payment of any additional tax found due before the next return's due date. Rule 54A of the Bengal Sales Tax Rules, 1941 also allows for the deemed assessment under section 11E(1) to be completed even if the exact tax amount was not paid at the time of filing the return. Therefore, the return cannot be deemed invalid solely due to non-payment of turnover tax at the time of filing. The court held that the return was valid and the assessment completed under section 11E(1) was lawful.

2. Legality of reopening the deemed assessment on the ground of non-payment of turnover tax under section 11E(2) of the Act, 1941:

Section 11E(2) stipulates that reopening a deemed assessment can only occur if the Commissioner is satisfied that the dealer has concealed sales or furnished incorrect statements. The Deputy Commissioner reopened the assessment solely on the ground of non-payment of turnover tax, which does not satisfy the conditions laid out in section 11E(2). The court found this reopening to be illegal and without jurisdiction as it was not based on concealment or incorrect statements.

3. Validity of the assessment held under section 11(1) of the Act, 1941:

The reassessment under section 11(1) was conducted following the illegal reopening order. The court held that since the reopening was not compliant with section 11E(2), the subsequent reassessment and appellate orders were also invalid. The initial order of reopening did not merge with the reassessment or appellate orders, meaning the reopening order remained a separate and independent order.

4. Condonation of delay in filing the application challenging the reopening order:

The petitioner argued that the limitation period for challenging the reopening order did not start until the final assessment and appellate orders were passed. The court considered the doctrine of merger, which states that an inferior order merges with a superior order upon appeal. However, the court found that the reopening order did not merge with the reassessment or appellate orders as they were distinct and separate. Despite this, the court allowed the condonation of delay, recognizing the petitioner's participation in subsequent proceedings and the legal advice received. Consequently, the court set aside the reopening order and all subsequent orders.

Conclusion:

The court concluded that the reopening of the deemed assessment was illegal and without jurisdiction. As a result, all subsequent reassessment and appellate orders based on the illegal reopening were also invalid. The application for condonation of delay was allowed, and the writ petition was granted, setting aside all impugned orders.

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