2003 (4) TMI 549 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of show cause notices P/6 and P/7 and communication P/10.
2. Limitation period for initiating proceedings under section 29(1) of the Madhya Pradesh Commercial Tax Act, 1994.
3. Jurisdiction and authority to reopen assessments.
4. Applicability of trade discount as a permissible deduction.
5. Appropriateness of writ petition intervention at the stage of show cause notice.

Detailed Analysis:

1. Validity of Show Cause Notices and Communication:
The petitioner challenged the show cause notices P/6 and P/7 issued in December 2001 and communication P/10 dated February 2, 2002, which proposed to initiate proceedings under section 28/29 of the Madhya Pradesh Commercial Tax Act, 1994. The petitioner was required to submit objections within 10 days. The notices and communication were based on the decision in Bajaj Sevashram, which had attained finality. The court found that the initiation of proceedings was justified as the decision in Bajaj Sevashram provided a valid basis for the proposed action.

2. Limitation Period for Initiating Proceedings:
The petitioner argued that the limitation period for reopening assessments under section 29(1) is three years from the date of any adverse decision that has become final. They contended that since the Vandana Sales Corporation decision was known to the assessing officer in 1995, the department should have invoked section 29(1) within three years from December 1995. The court noted that the limitation period was still valid as the decision in Bajaj Sevashram was made on August 22, 2000, and thus, the initiation of reassessment was within the permissible period under section 29(1).

3. Jurisdiction and Authority to Reopen Assessments:
The petitioner claimed that the proposed reassessment was without jurisdiction and authority of law, especially since the appeal against the assessment for 1996-97 was pending. The court emphasized that the pendency of an appeal does not bar the reopening of an assessment under section 29(1). The court also referenced the Supreme Court's stance that questions of fact should be resolved by the statutory authority, not through a writ petition.

4. Applicability of Trade Discount as a Permissible Deduction:
The petitioner argued that trade discounts reduced from the sale price should be considered permissible deductions and not part of the sale price. The court acknowledged the petitioner's reliance on the Dharamchand Sikarchand case but indicated that the assessing officer had rightly disallowed the discount claims based on prevailing legal precedents, including decisions in Aluminium Industries Ltd. and India Pistons Limited.

5. Appropriateness of Writ Petition Intervention:
The court underscored that no final order had been passed and that the show cause notices were merely the beginning of the matter. It cited several precedents, including Union of India v. Bajaj Tempo Limited and Union of India v. Polar Marmo Agglomerates Ltd., to assert that the High Court should not interfere at the show cause notice stage. The court reiterated that statutory remedies should be exhausted first, and questions of fact should be adjudicated by the relevant statutory authorities.

Conclusion:
The court concluded that since no final order had been passed and the petitioner could raise all questions before the statutory authority, there was no ground for interference at this stage. Therefore, the writ petitions were dismissed, emphasizing the principle that writ jurisdiction should not be used to circumvent statutory procedures.

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