1993 (2) TMI 297 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Applicability of the time-limit prescribed under section 42 of the Gujarat Sales Tax Act, 1969, in cases where section 46A is applicable.
2. Validity of the final order of assessment passed by the Sales Tax Officer in contravention of section 46A of the Gujarat Sales Tax Act, 1969.
3. Justification for the applicant's claim for refunds of the amount of tax remitted.

Issue-wise Detailed Analysis:

Issue 1: Applicability of the time-limit prescribed under section 42 of the Gujarat Sales Tax Act, 1969, in cases where section 46A is applicable.

The court did not find it necessary to answer this question due to its broad wording and because the primary focus was on the second question. Mr. Pathak, representing the applicant, also conceded that it was not necessary to address this question given the circumstances.

Issue 2: Validity of the final order of assessment passed by the Sales Tax Officer in contravention of section 46A of the Gujarat Sales Tax Act, 1969.

The applicant argued that the assessment orders passed without issuing a draft order as required under section 46A(1) were "null and void ab initio." The court examined section 41 and section 46A of the Act. Under section 41, the sales tax authority can assess the tax due from a registered dealer. Section 46A mandates that if the additional tax liability exceeds Rs. 25,000, a draft order must be served to the dealer, inviting objections. If objections are raised within 30 days, the proceedings must be transferred to the appellate authority. If no objections are raised, the authority can finalize the assessment.

The court concluded that the Sales Tax Officer had initial jurisdiction to assess the dealer but failed to comply with the procedural requirement of issuing a draft order under section 46A. This failure rendered the assessment order "irregular and illegal" but not "null and void ab initio." The appellate authority was correct in remanding the matter for fresh assessment following the prescribed procedure.

Issue 3: Justification for the applicant's claim for refunds of the amount of tax remitted.

Given the court's conclusion on the second issue, the applicant was not justified in claiming refunds of the tax amount remitted. The court held that the assessment order, although irregular, was not void, and thus, the applicant could not claim a refund.

Conclusion:

The court held that the final order of assessment passed by the Sales Tax Officer, although in contravention of section 46A, was not void ab initio but merely an irregular order. Consequently, the applicant was not justified in claiming a refund of the tax amount remitted. The reference was answered in favor of the Revenue, with no order as to costs.