2004 (2) TMI 655 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the notice issued under section 21(1) of the Punjab General Sales Tax Act, 1948.
2. Jurisdiction of the revisional authority to initiate proceedings under section 21(1) of the State Act after the remedy under section 11-A had become time-barred.
3. Interpretation of section 21(1) of the State Act in light of changed legal positions and judgments.

Detailed Analysis:

1. Legality of the Notice Issued Under Section 21(1) of the Punjab General Sales Tax Act, 1948:
The petitioner challenged the notice dated February 17, 1984, issued by the Assistant Excise and Taxation Commissioner (Inspection), Jullundur, for taking suo motu action under section 21(1) of the Punjab General Sales Tax Act, 1948. The petitioner argued that the revisional authority lacked jurisdiction to initiate proceedings under section 21(1) simply because the legal position had changed. The petitioner also contended that the remedy available to the department under section 11-A of the State Act had become time-barred, and thus, it was not open to the revisional authority to exercise power under section 21(1).

2. Jurisdiction of the Revisional Authority to Initiate Proceedings Under Section 21(1) of the State Act After the Remedy Under Section 11-A Had Become Time-Barred:
The petitioner relied on the judgment in State of Haryana v. Free Wheels (India) Ltd. [1997] 107 STC 332 (P&H), arguing that the suo motu power vested in the revisional authority under section 21(1) cannot be exercised after the remedy under section 11-A had become time-barred. The petitioner also argued that the order passed by the Tribunal in Brij Cycle Works (Appeal No. 18 of 1971 decided on January 8, 1973) could not be the basis for suo motu revision of the assessment.

The respondent, represented by Ms. Rita Kohli, argued that the jurisdiction of the revisional authority under section 21(1) is not subject to the period of limitation prescribed in section 11-A and that the power can be exercised in view of the changed legal position. She pointed out that the judgment of the Tribunal in Brij Cycle Works v. State of Punjab (Appeal No. 118 of 1971 decided on January 8, 1973) was approved by this Court in Laxmi Machinery Store v. State of Punjab [1977] 39 STC 87, and therefore, the revisional authority did not exceed its jurisdiction under section 21(1).

3. Interpretation of Section 21(1) of the State Act in Light of Changed Legal Positions and Judgments:
The court considered various judgments to interpret section 21(1) of the State Act. It was noted that section 21(1) allows the Commissioner to call for the record of any proceedings pending before or disposed of by any subordinate authority to satisfy himself as to the legality or propriety of such proceedings or orders made therein.

In Laxmi Machinery Store v. State of Punjab [1977] 39 STC 87, it was held that rubber transmission belting is not covered by entry 30-B or 30-C of Schedule B to the State Act. This view was later upheld in Asian Rubber and Plastic Industries v. State of Punjab [1982] 50 STC 383 (P&H) and Luthra Rubber Industries v. State of Punjab [1985] 59 STC 198 (P&H), where it was established that section 21(1) gives plenary powers of revision to the Commissioner without any prescribed period of limitation.

The court also referred to the judgment in State of A.P. v. Lalitha Oil Mills [1978] 42 STC 169, where it was held that the Deputy Commissioner could revise an assessment based on the correct law as it stood at the time of exercising revisional authority, even if the law had changed after the original assessment.

Conclusion:
The court concluded that the impugned notice was not ultra vires to section 21(1) of the State Act. However, due to conflicting views in the judgments of Luthra Rubber Industries v. State of Punjab [1985] 59 STC 198 (P&H) and State of Haryana v. Free Wheels (India) Ltd. [1997] 107 STC 332 (P&H), the court directed that the case be placed before a larger Bench to resolve the question of law regarding the exercise of power under section 21(1) when the judgment on which the order of assessment is based is overruled or set aside by a superior court.

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