2009 (2) TMI 770 - HC - VAT and Sales Tax

Whether the assessing authority was justified in making an assessment in question solely on the basis of one circular dated August 11, 1993 issued by State (Mining Department) in relation to use of limestone in particular proportion (1-6) in manufacture of cement regardless of case of petitioner? Held that - The proper course in the light of facts emerging from the record of the case would be to direct the assessing officer to make assessment in question on the basis of material/documents/ account books relied on by the petitioner for the period in question independent of the circular dated August 11, 1993 and depending upon the final outcome of the cases pending in High Court in relation to circular dated August 11, 1993 and reopen the assessment made by taking recourse to the provisions of section 29 of the Commercial Tax Act. In fact, section 29 in such eventuality is attracted once the decision is rendered in relation to circular. Such course would not cause prejudice to any party and at the same time would safeguard the rights of the parties. It will be in accordance with the scheme of section 29 ibid also. We, therefore, allow these writs and while setting aside of the impugned orders, remand the case to assessing officer (R 2) for making fresh assessment.

Summary

Issues:
Challenge to revisionary order dated November 18, 2002 passed by Additional Commissioner, Commercial Tax, Indore in Revision No. 13/02/Ujjain/Entry Tax. Assessment order dated October 19, 2001 passed by the Assistant Commissioner, Commercial Tax (Assessing officer) in case No. 10/99. Application of circular dated August 11, 1993 issued by State (Mining Department) in relation to consumption of limestone in the manufacture of cement. Legality and propriety of the circular under challenge. Proper basis for assessment under sales tax laws and entry tax.

Analysis:

The petitioner, engaged in the business of manufacturing and selling cement, challenged the revisionary order dated November 18, 2002, and the assessment order dated October 19, 2001, related to payment of entry tax under various tax laws. The main contention was that the assessing officer erred in basing the assessment solely on a circular dated August 11, 1993, without considering its applicability to the petitioner's case. The petitioner argued that the circular should not be the sole basis for assessment, especially when its legality was under challenge in pending writ petitions.

The High Court found merit in the petitioner's argument and decided to allow the writ petitions in part. The crucial issue was whether the assessing authority was justified in making the assessment solely based on the circular dated August 11, 1993, without considering the specific circumstances of the petitioner's case. It was noted that the circular's legality was being challenged by various cement manufacturers in higher courts, and the assessing officer should have made the assessment based on the petitioner's material, independent of the circular.

The court directed the assessing officer to conduct a fresh assessment for the period in question, excluding the circular dated August 11, 1993, and considering the material provided by the petitioner. The assessing officer was instructed to complete the assessment within six months and to reopen the assessment if the decision on the circular's legality warranted it. The petitioner was allowed to challenge the assessment orders in revision, subject to depositing the determined tax amount.

In conclusion, the writ petitions were allowed in part, quashing the impugned assessment and revisionary orders. The court emphasized the need for a fair assessment based on the petitioner's material, separate from the disputed circular, to safeguard the rights of all parties involved.

This detailed analysis of the judgment highlights the key issues, arguments, and the court's decision, ensuring a comprehensive understanding of the legal proceedings and outcomes.