1990 (12) TMI 335 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Assessing Authority to issue the impugned notice.
2. Merger of the assessment order in the appellate order.
3. Validity of the notice under Section 22 of the U.P. Sales Tax Act.

Detailed Analysis:

1. Jurisdiction of the Assessing Authority to issue the impugned notice:

The petitioner challenged the validity of the notice issued by the Assistant Commissioner (Assessment), Sales Tax, Ghaziabad, on the grounds that the Assessing Authority lacked jurisdiction. The petitioner argued that the assessment order had merged in the appellate order passed by the Deputy Commissioner (Appeals), Sales Tax, thus stripping the Assessing Authority of the power to issue the notice.

The court agreed with the petitioner, stating that the impugned notice was liable to be quashed purely on the question of jurisdiction. The court emphasized that once the assessment order merges with the appellate order, the original order ceases to exist, and the Assessing Authority loses the power to reopen the assessment under Section 22 of the U.P. Sales Tax Act.

2. Merger of the assessment order in the appellate order:

The court extensively discussed the doctrine of merger, citing authoritative pronouncements and statutory provisions. The court referred to the case of J. K. Synthetics Ltd. v. the Addl. Commissioner of Income Tax, where it was held that the entire subject-matter of the assessment order falls within the jurisdiction of the Appellate Assistant Commissioner. The court observed that the appellate powers are as wide and extensive as those of the Assessing Officer, and the entire assessment order merges in the appellate order, irrespective of the points urged by the parties or decided by the appellate authority.

The court further cited the Supreme Court's decision in Commissioner of Income Tax v. Shapoorji Pallonji Mistry, which held that the Appellate Assistant Commissioner has the power to revise every process leading to the ultimate computation or assessment. The court concluded that the entire assessment order merges in the appellate order, and it is the appellate order that becomes operative and enforceable.

3. Validity of the notice under Section 22 of the U.P. Sales Tax Act:

The court held that once the assessment order merges in the appellate order, the Assessing Authority does not have the power to reopen the assessment under Section 22. The court emphasized that the original order of assessment ceases to exist, and its identity merges with the appellate order. Consequently, the impugned notice issued by the Assessing Authority was deemed to be without jurisdiction.

The court also addressed some single judge decisions that expressed a contrary view on the issue of merger. The court noted that these decisions were inconsistent with the Division Bench's ruling in J. K. Synthetics and thus could not be considered as laying down the correct law.

Conclusion:

The court concluded that the order of assessment had merged in the appellate order, rendering the impugned notice issued by the Assessing Authority under Section 22 of the U.P. Sales Tax Act wholly without jurisdiction. The court quashed the notice and allowed the writ petition.

For the reasons stated above, the court pronounced the operative part of the order on November 15, 1990, allowing the writ petition and quashing the impugned notice dated September 19, 1990.