1997 (12) TMI 602 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to notices issued by Sales Tax Officer for assessment periods 1982-83 to 1988-89 on the ground of being time-barred.

Analysis:
The petitioner, a steel tube manufacturer, challenged notices issued by the Sales Tax Officer for assessment periods 1982-83 to 1988-89, claiming the assessments were time-barred as no assessment orders were passed within the prescribed time. The petitioner argued that under section 42 of the Gujarat Sales Tax Act, assessment orders had to be passed within two years from the end of the year in which the last return was filed, unless proceedings were stayed. The petitioner contended that the stay orders issued lacked proper reasoning and were based on assumed consent without issuing show cause notices as required by rule 37-A. The Supreme Court precedent in FAG Precision Bearings v. Sales Tax Officer emphasized that the power to stay proceedings must be exercised in extraordinary circumstances and not merely due to pending proceedings. The Court noted that the stay orders in this case did not provide valid reasons as per rule 37-A, and thus could not extend the limitation period for assessments.

The Court found that the stay orders issued for the assessment years 1982-83 to 1988-89 were invalid as they lacked proper reasoning and did not comply with the requirements of rule 37-A. The Court emphasized that the mere pendency of assessment proceedings is not a sufficient reason for granting a stay. As no valid stay orders were in place, the assessments for the mentioned periods were deemed time-barred. Consequently, the Court set aside the stay orders and the notices issued by the Sales Tax Officer for the assessment periods 1982-83 to 1987-88. The Court clarified that the respondent-authority could take lawful actions as permissible under the law following the judgment.