1957 (11) TMI 16 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of rule 23(5) under the Mysore Sales Tax Act, 1948.
2. Compliance with assessment orders post-dissolution of partnership.
3. Validity of assessment order covering more than four quarters.
4. Inclusion of turnover from export sales in assessment.

Detailed Analysis:

1. Validity of rule 23(5):
The State of Mysore appealed against the acquittal of unlicensed dealers in hides and skins under section 20(b) of the Mysore Sales Tax Act, 1948, due to the contention that rule 23(5) was ultra vires. The learned Magistrate held that the rule conflicted with section 5(vi) of the Act, which stipulates taxation at a single prescribed point. The High Court disagreed, stating that the rule did not violate section 5(vi) as the benefit of taxation at a single point is subject to prescribed conditions. The Court emphasized the inter-relation between sections 3, 5, and 7, concluding that rule 23(5) was intra vires, contrary to the Magistrate's ruling.

2. Compliance with assessment orders post-dissolution of partnership:
The argument that assessment orders post-dissolution of a partnership were invalid was dismissed by the Court. Rule 37 mandates reporting dissolution to the assessing authority within 30 days, which was not done in this case. The Court held that failure to comply with rule 37 precluded the party from challenging the assessment's validity. The Court found no substance in the contention regarding the dissolution of the partnership.

3. Validity of assessment order covering more than four quarters:
The Court rejected the argument that an assessment order covering more than four quarters was invalid. Each quarter's turnover was assessed separately, and no provision was shown to render such an assessment unlawful. The Court noted that any grievance regarding the assessment should have been raised before the appropriate authorities under the Sales Tax Act and Rules.

4. Inclusion of turnover from export sales in assessment:
The contention that turnover from export sales was unlawfully included in the assessment was refuted by the Court. As the turnovers were from periods before March 31, 1951, they were lawful under the Sales Tax Continuance Order, 1950. The Court found this argument to be without merit.

In conclusion, the Court allowed the appeals, set aside the acquittals, and imposed fines on the accused in each case. The Court specified the tax amounts due from the accused in each case under section 20 of the Mysore Sales Tax Act, 1948. The judgment upheld the validity of rule 23(5) and dismissed the arguments against the assessment orders, thereby ruling in favor of the State of Mysore.