1970 (3) TMI 153 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether a rectification order assessing the assessee to tax on an escaped turnover can be passed under section 22 of the U.P. Sales Tax Act when direct assessment of the said 'escaped turnover' has become time-barred under section 21(2) of the U.P. Sales Tax Act?

Analysis:
The judgment pertains to a case where the Sales Tax Officer initially accepted the assessee's plea that it acted as a purchasing agent, thereby not liable to sales tax. However, upon discovering that the assessee also made sales on behalf of non-resident dealers, the Sales Tax Officer sought to rectify the assessment order under section 22 of the U.P. Sales Tax Act. The question raised was whether such rectification could be done when the direct assessment of the 'escaped turnover' was time-barred under section 21(2) of the Act. The court examined the provisions of section 22, emphasizing that rectification can be made within three years from the date of the original order and is not bound by the limitation period for direct assessments under section 21(2). The court distinguished between an order of assessment and a rectification order, stating that not all orders resulting in tax enhancement are assessments. Citing relevant case law, the court held that an order under section 22 is distinct and has its own limitation period, not governed by section 21(2).

Moreover, the court addressed the argument that the case should have been dealt with under section 21 for escaped turnover assessment. However, as this specific question was not referred to the court, it refrained from expressing an opinion on it. The court highlighted that the revising authority's refusal to refer the question prevented a comprehensive analysis of the applicability of section 21 to the case. Ultimately, the court answered the referred question in the affirmative, in favor of the department, emphasizing the distinct nature of rectification orders under section 22 and the separate limitation period provided for such orders. The court awarded costs to the Commissioner of Sales Tax and assessed the counsel's fee accordingly.

In conclusion, the judgment clarifies the scope and limitations of rectification orders under section 22 of the U.P. Sales Tax Act, emphasizing their distinct nature from direct assessment orders under section 21(2) and the applicability of separate limitation periods for each type of order.