1996 (7) TMI 559 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the notices for initiating provisional assessment.
2. Interpretation and binding nature of the Commissioner's Circular dated 27-2-93.
3. Applicability of the Notification No. 1093 dated 27-7-1991.
4. Jurisdiction and quasi-judicial functions of the assessing and appellate authorities.
5. Alternative remedies and the role of the High Court under Article 226 of the Constitution of India.

Detailed Analysis:

1. Validity of the Notices for Initiating Provisional Assessment:
The petitioners challenged the notices for initiating provisional assessment. The court noted that the petitions were disposed of finally at the stage of admission due to the exchange of affidavits and common questions raised. The petitioners argued that the notices were based on the Commissioner's Circular, which they claimed was interpreted incorrectly by the respondents, thereby frustrating the objective of the Notification No. 1093 dated 27-7-1991.

2. Interpretation and Binding Nature of the Commissioner's Circular dated 27-2-93:
The petitioners contended that the Commissioner's Circular misinterpreted the Notification, impacting their eligibility for tax exemption on turnover exceeding the base production. They argued that the circular was contrary to the interpretation of the Industries Department, which supported their claim for exemption. The respondents, however, argued that the circular was merely a guideline and not binding on the assessing authority or appellate authorities, which are quasi-judicial bodies.

3. Applicability of the Notification No. 1093 dated 27-7-1991:
The Notification aimed to promote industrial development by granting tax exemptions to new units undertaking expansion. The petitioners claimed exemptions based on their turnover exceeding the base production as stipulated in the Notification. They argued that the Commissioner's Circular diluted this benefit by imposing tax on stock carried forward to the next assessment year until the base production turnover was reached.

4. Jurisdiction and Quasi-Judicial Functions of the Assessing and Appellate Authorities:
The court examined the jurisdiction and quasi-judicial functions of the assessing and appellate authorities. It was highlighted that while the Commissioner's Circular could regulate procedural aspects, it could not encroach upon the substantive rights of the subjects. The court referred to various precedents, including the case of M/s. Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh, which emphasized that assessing and appellate authorities should decide matters dispassionately, free from administrative instructions.

5. Alternative Remedies and the Role of the High Court under Article 226 of the Constitution of India:
The respondents argued that the petitioners had alternative remedies, including appeals before the specialized authorities dealing with fiscal statutes. The court agreed, noting that the exhaustive procedure laid down in the Act for filing returns, assessment, and appeals should be followed. The court emphasized that the existence of power under Article 226 does not necessitate its exercise, especially when specialized authorities are better suited to scrutinize such matters in depth.

Conclusion:
The court dismissed the writ petitions, stating that the petitioners could raise all relevant points before the concerned authorities in accordance with the law. The interim stay order dated 30-8-94 was vacated. The judgment underscored that the Commissioner's Circular, while binding on the administrative side, does not curtail the quasi-judicial functions of the assessing authorities, who must decide cases in accordance with the law.