1975 (4) TMI 96 - SC - VAT and Sales Tax

Whether under the circumstances of the case starting point of limitation for the department to prefer a revision against the original assessment order would start from the date of assessment order or would start according to the discretion of the assessing officer or the department from the time the assessing officer wishes to apprise the department about the passing of the assessment? Held that - Appeal allowed. Mere reference to the High Court of a question for opinion may not afford an adequate solution. Only legislative amendment may furnish an efficacious and speedy remedy. The present is a typical illustration of such a case. The difficulty in the interpetation of the unhappy language of this statute was felt in 1960 and even earlier. We are now in 1975. For fifteen long years the department has been fighting this tardy expensive and sterile litigation. Even after this long-drawn struggle culminating in judicial finale a doubt might persist as to whether the court has succeeded in divining the true legislative intent. It is therefore desirable that the legislature should amend the statute and make its intent clear. In any event to make the law workable it should make a statutory provision requiring the Sales Tax Officer to send forthwith a copy of every assessment order made by him to the Commissioner for information

Issues Involved:
1. Starting point of limitation for filing a revision application by the Commissioner under the U.P. Sales Tax Act, 1948.
2. Interpretation of "service" of the assessment order in the context of the U.P. Sales Tax Act, 1948.

Issue-wise Detailed Analysis:

1. Starting Point of Limitation for Filing a Revision Application by the Commissioner:
The core issue was whether the starting point of limitation for the department to prefer a revision against the original assessment order would start from the date of the assessment order or from the date the Commissioner was apprised of the assessment order.

The Allahabad High Court had differing opinions on this matter. Jagdish Sahai, J., held that the starting point of limitation would be the date on which the assessment order was passed by the Sales Tax Officer. He reasoned that the law presumes the Commissioner to be served on that date. Conversely, Beg, J., opined that the period of limitation would commence from the actual date on which the Commissioner was duly apprised of the contents of the assessment order, as mere passing of the order cannot be deemed as service upon the Commissioner. Verma, J., agreed with Jagdish Sahai, J., leading to the question being answered against the department.

The Supreme Court, however, interpreted Section 10(3-B) of the U.P. Sales Tax Act, 1948, differently. It concluded that the date of service of the order complained of on the revision-applicant (whether the Commissioner or the dealer) is the starting point of limitation. The Court emphasized that the term "service" implies formal communication of the order after it has been passed, so that the party to whom it is communicated can seek redress if aggrieved. The Court rejected the High Court's interpretation, which it viewed as judicial legislation introducing a different starting point of limitation for the Commissioner.

2. Interpretation of "Service" of the Assessment Order:
The Supreme Court examined the meaning of "service" within the context of the U.P. Sales Tax Act, 1948, and the Rules framed thereunder. The Court noted that "service" of an order of assessment means something subsequent and distinct from the mere making of the order. It implies formal communication of the order after it has been passed, so that the party to whom it is communicated can seek redress.

The Court referenced Rule 70(1), which provides that a copy of every order of the Assistant Commissioner (Judicial) or the Judge (Revisions) shall be delivered or sent by post to the person affected by the order and to the Commissioner. Although this rule does not apply to an original assessment order passed by the Sales Tax Officer, it illustrates that mere passing of an order does not operate as service or communication of its contents to the Commissioner.

The Court rejected the argument that the date of service of the order on the dealer should be the starting point of limitation for the Commissioner. The Court held that the phrase "the date of service of the order complained of" must be construed as "the date of service on the revision-applicant of the order complained of." This interpretation ensures parity between the assessee and the department in the matter of limitation.

The Court acknowledged the potential for abuse due to the lack of a statutory provision requiring the Sales Tax Officer to send a copy of every assessment order to the Commissioner. However, it emphasized that this omission is a matter for the legislature to address, not the court. The Court expressed hope that the legislature would amend the statute to make its intent clear and make the law workable by requiring the Sales Tax Officer to send a copy of every assessment order to the Commissioner.

Conclusion:
The Supreme Court allowed the appeal, set aside the judgment of the High Court, and answered the question in favor of the revenue. The Court held that the date of service of the order complained of on the revision-applicant is the starting point of limitation within the contemplation of Section 10(3-B) of the U.P. Sales Tax Act, 1948. The revision application filed by the Commissioner within one year of the communication of the assessment order to him was therefore within time. The Court also suggested that the legislature amend the statute to require the Sales Tax Officer to send a copy of every assessment order to the Commissioner.

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