1964 (4) TMI 95 - SC - VAT and Sales Tax

Whether the assessment of the sales tax in question is void and ultra vires? Whether the assessment of sales tax was properly and validly made on the 1st defendant firm? Held that - Appeal dismissed. Failure to see how the filing of a revision petition can constitute waiver of the illegality of the assessment order or proceedings to recover sums due on the basis of an assessment order passed not against the defendants but against another party. The subsequent revision petition to the Board of Revenue and its dismissal on July 23, 1949, stands on no better footing.

Summary

Issues:
1. Validity of the assessment order under the Madras General Sales Tax Act, 1939.
2. Proper assessment of sales tax on the defendant firm.

Detailed Analysis:
The case involved a suit filed by the State of Madras against six defendants for the recovery of a sum based on an assessment order under the Madras General Sales Tax Act, 1939. The defendants challenged the assessment order's legality, leading to two key issues framed by the court. The Additional Subordinate Judge decreed the suit initially, but the High Court reversed the decree, emphasizing the necessity of a notice under rule 17(5) of the Sales Tax Rules as a condition precedent to assessment. The High Court observed that the notice was addressed to a party not connected with the defendants, rendering the assessment bad in law.

The central point of contention was whether the assessment order was valid against any of the defendants. The assessment order mentioned a notice sent to a contractor, Hussain Bhai Lalji, not any of the defendants. Despite arguments by the appellant, the court concluded that the assessment was made against the contractor, not the defendants. The court highlighted a letter from the contractor's secretary clarifying the lack of purchases by the defendants, indicating a misidentification in the assessment process. Consequently, the court held that no valid assessment order was passed against any defendant, warranting the dismissal of the suit on this ground.

The appellant argued that the defendants had waived their objection by filing a revision petition against the assessment order. However, the court rejected this argument, emphasizing that filing a revision petition did not waive the illegality of the assessment order. The court also noted that subsequent petitions to higher authorities did not alter the fundamental issue of the assessment order's incorrect targeting. Ultimately, the court dismissed the appeal, with each party bearing their own costs, considering the unique circumstances of the case.