2000 (9) TMI 1037 - AT - VAT and Sales Tax

Summary

Issues:
Challenge to reopening of deemed assessments under section 11E of the Bengal Finance (Sales Tax) Act, 1941 for four financial years.

Detailed Analysis:

1. The company, engaged in manufacturing tea processing machines, challenged the reopening of deemed assessments for four financial years ending on March 31, 1989, 1990, 1991, and 1992 under section 11E of the 1941 Act. The company contended that the reopening was based on the non-payment of taxes on sales of REP licenses during the said period. The Tribunal initially set aside the reopening order due to lack of hearing opportunity but later declared the assessments reopened for fresh assessment, leading to the applicant's challenge before the West Bengal Taxation Tribunal.

2. The applicant's counsel raised several arguments challenging the validity of the notice. Firstly, he argued that the notice period was less than 15 days, contrary to Rule 54AA of the Bengal Sales Tax Rules of 1941. Secondly, he contended that the fresh assessment orders passed after the previous reopening were still valid, preventing further action under section 11E(2). Thirdly, he argued that the non-mention of REP licenses in the returns did not constitute concealment under section 11E(2) as the legal status of REP licenses as "goods" was not known at the time of filing the returns.

3. The State Representative for the respondents countered these arguments by justifying the shorter notice period based on the limitation bar and the need for timely action. He emphasized that the assessments under section 11(1) were quashed, rendering subsequent actions valid. He also argued that the legal position on REP licenses was clarified by the Supreme Court, making the sales taxable from the enactment of the 1941 Act, regardless of the dealer's knowledge or intention.

4. The Tribunal considered both sides' submissions and upheld the validity of the notice under section 11E(2), given the exceptional circumstances of the case, including the limitation bar and the previous Tribunal order. The Tribunal rejected the applicant's reliance on the Calcutta High Court judgment, distinguishing the present case's facts and affirming the retrospective applicability of the Supreme Court decision on REP licenses. Consequently, the application challenging the reopening of assessments was dismissed, with no costs awarded.

5. Both members of the Tribunal concurred with the judgment, and the applicant's request to stay the operation of the order was rejected, leading to the dismissal of the application challenging the reopening of deemed assessments under the Bengal Finance (Sales Tax) Act, 1941.