1988 (2) TMI 19 - HC - Income Tax

Summary

Issues:
Challenge to assessment orders for sales tax for multiple years based on the inclusion of rubber cess in the taxable turnover. Violation of principles of natural justice in the assessment process.

Analysis:
The petitioners, a public limited company engaged in manufacturing rubber products, challenged assessment orders for sales tax for various years, contending that the inclusion of rubber cess in the taxable turnover was unconstitutional and arbitrary. The petitioners argued that the rubber cess should not be part of the taxable turnover and that the assessment was done without providing a fair opportunity to prove the actual amount of rubber cess paid.

The Government Pleader argued that the assessment was done under a different section of the Act, and the inclusion of rubber cess in the turnover was justified. The court referred to a previous decision where it was held that rubber cess forms part of the purchase turnover. However, the court found the estimate of rubber cess to be arbitrary and a violation of natural justice due to the lack of opportunity for the assessee to provide details.

The court noted that the assessment orders were passed before the assessee had a chance to furnish details of the rubber cess paid, rendering the orders void for violating natural justice principles. The court emphasized that breach of natural justice is equivalent to a total lack of jurisdiction. Therefore, the availability of alternative remedies under the Act does not bar the court from issuing a writ of certiorari to quash the assessment orders.

Consequently, the court quashed the assessment orders related to rubber cess and directed the assessing authority to pass fresh orders within three months, allowing the assessee to prove the actual amount of rubber cess paid. The original petition was allowed, and no costs were awarded.

In conclusion, the judgment addressed the issues of challenging assessment orders based on the inclusion of rubber cess in the taxable turnover and highlighted the importance of adhering to the principles of natural justice in the assessment process. The court's decision to quash the orders and provide the assessee with an opportunity to prove the actual amount of rubber cess paid reflects a commitment to fairness and procedural integrity in tax assessments.