2004 (8) TMI 662 - HC - VAT and Sales Tax

Summary

Issues:
Challenging assessment orders under Rajasthan Sales Tax Act and Central Sales Tax Act, liability determination against the appellant, alternative remedy of appeal, connection of the appellant with the business of M/s. Satpal & Co., assessment proceedings, survey report findings, lack of material to connect appellant as a partner, lack of application of mind by assessing officer.

Analysis:
The judgment involves two appeals arising from writ petitions challenging assessment orders under the Rajasthan Sales Tax Act, 1994, and the Central Sales Tax Act, 1956. The appellant contested being held liable for a substantial demand without sufficient basis connecting them to the business of M/s. Satpal & Co. The single judge dismissed the writ petitions, citing the need to pursue an alternative appeal remedy. The appellant argued that the demand was based on surmises and conjectures, making the alternative remedy inadequate. The High Court found the alternative remedy should not bar the appellant from seeking direct relief against the assessment order concerning their liability. The appellant, a unit of a state cooperative society, denied being a partner of M/s. Satpal & Co., a registered dealer.

The assessment order implicated the appellant as a partner based on transactions involving oil purchases, but lacked concrete evidence of their involvement in the business. The survey report identified individuals possibly conducting business for M/s. Satpal & Co., but did not implicate the appellant. The court noted the lack of material connecting the appellant as a partner, emphasizing the assessing officer's failure to apply due diligence. The judgment highlighted the improbability of a state undertaking engaging in tax evasion machinations, questioning the liability attribution to the appellant.

Consequently, the High Court allowed the appeals, setting aside the judgment under appeal and quashing the assessment orders and demand notices against the appellant. The orders were declared ineffective against the appellant, without expressing an opinion on liability for other individuals associated with M/s. Satpal & Co. The judgment emphasized the lack of evidence linking the appellant to the business, leading to the annulment of the liability determination and demand against them.