1972 (9) TMI 141 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the assessment order in respect of the disputed turnover.
2. Application of the doctrine of merger.
3. Entitlement of the assessee to claim a refund of sales tax paid on the admitted turnover.

Issue-wise Detailed Analysis:

1. Validity of the assessment order in respect of the disputed turnover:

The assessee, a dealer in paddy and rice, filed an annual return for the year 1958-59, disclosing a gross and net taxable turnover. The Assistant Commercial Tax Officer determined a higher net taxable turnover. The assessee appealed against the inclusion of certain disputed turnovers. The appellate authority and the Sales Tax Appellate Tribunal remanded the matter for fresh consideration of the disputed items. The revised assessment was passed beyond the statutory period of limitation. The appellate authority observed that the assessment for the disputed turnover was barred by time and should be canceled. The Tribunal held that the assessment on the undisputed turnover was valid, even if the disputed turnover assessment was barred by limitation. The High Court upheld this view, stating that the invalidity of the assessment order in respect of the disputed items does not invalidate the entire assessment, particularly the portion that was not appealed against and had become final.

2. Application of the doctrine of merger:

The assessee argued that the appellate order supersedes the original assessment order, and therefore, the entire assessment should be considered out of time. The court rejected this contention, explaining that the doctrine of merger depends on the scope of the appellate or revisional order and the statutory provisions. The court cited the Supreme Court's decision in *State of Madras v. Madurai Mills Co. Ltd.*, which clarified that the doctrine of merger is not universally applicable and depends on the nature of the appellate or revisional order. In this case, the appellate orders were confined to the disputed items, and the admitted turnover was not the subject of the appeals, thus the original assessment on the admitted turnover remained valid.

3. Entitlement of the assessee to claim a refund of sales tax paid on the admitted turnover:

The assessee claimed a refund of the tax paid on the admitted turnover, arguing that if the assessment in respect of the disputed turnover is barred by limitation, the entire assessment should be invalid, entitling them to a refund. The court disagreed, stating that the liability to pay sales tax arises at the point of sale or purchase, independent of the assessment proceedings. The court emphasized that the tax liability on the admitted turnover was validly assessed and had become final. Therefore, the assessee was not entitled to a refund of the tax paid on the admitted turnover. The court referenced the unreported decision in *G. Narsimhulu & Co. v. State of Andhra Pradesh*, where it was held that the appellate orders did not set aside the entire assessment order but only the disputed portions. The High Court affirmed that the right to claim a refund under section 33 of the Act is limited to excess tax paid provisionally, and the assessee cannot question the correctness of the final assessment on the admitted turnover.

Conclusion:

The High Court dismissed the revision case, holding that the assessment on the admitted turnover was valid and not barred by limitation. The court ruled that the assessee was not entitled to a refund of the tax paid on the admitted turnover, and the invalidity of the assessment order in respect of the disputed items did not affect the validity of the assessment on the admitted turnover. The court emphasized the distinction between the scope of recovery proceedings and the claim for a refund of sales tax under section 33 of the Act.

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