1988 (5) TMI 351 - SC - VAT and Sales Tax

Supreme Court rejects double assessment, upholds finality of first order under Sales Tax Act

The Supreme Court dismissed the appeal, ruling against the State on the legality of making a second assessment on the same turnover under the Mysore Sales ... SALES TAX — POINT OF TAXATION — FIRST SALE IN STATE — ANOTHER DEALER ALREADY ASSESSED ON SAME TURNOVER - REASSESSMENT — NOTICE — WHETHER PERMISSIBLE ON CHANGE OF OPINION — POINT NOT DECIDED BY SUPREME COURT Issues:1. Reassessment based on change of opinion by the Commercial Tax Officer.2. Legality of making a second assessment on the same turnover.Analysis:The Supreme Court heard an appeal against the Karnataka High Court's order in a revision petition under the Mysore Sales Tax Act, 1957. The respondent-assessee disclosed a gross turnover and taxable turnover for a specific year, claiming exemption from sales tax on a portion of the turnover. The Commercial Tax Officer initially accepted the return but later reopened the assessment, alleging that a part of the turnover had escaped assessment. The Deputy Commissioner of Commercial Taxes dismissed the assessee's appeal, leading to further appeal to the Tribunal. The Tribunal, in the majority view, ruled in favor of the assessee, setting aside the additional demand raised by the Commercial Tax Officer. The Tribunal emphasized that once an assessment order is passed under the Act, it stands unless set aside, and it is legally impermissible to pass two assessment orders on the same turnover. The High Court disposed of the State's revision against the Tribunal's order, relying on a previous decision.The primary issues before the Supreme Court were twofold. Firstly, whether the Commercial Tax Officer could reassess based on a change of opinion. Secondly, whether a second assessment on the same turnover could be made, considering that the turnover had already been assessed under the Mysore Act by treating three depots as dealers. The Court decided to address the second issue first, as resolving it would obviate the need to delve into the first issue. The State's counsel acknowledged that the three sale depots had been registered as dealers and assessed on the same turnover during the relevant year, with tax already collected. Given that the sale of safety matches is subject to first point tax, and tax had already been collected from the depot holders, the Court found no justification for raising a second set of tax on the same turnover. Consequently, the Court ruled against the State on the second issue, dismissing the appeal. The Court refrained from discussing the sustainability of the notice in law, leaving that aspect open for future examination in a suitable case.In conclusion, the Supreme Court dismissed the appeal, directing each party to bear its own costs. The judgment clarifies the legal constraints on reassessment and the prohibition against making a second assessment on the same turnover, particularly when tax has already been collected. The Court's decision underscores the importance of adhering to statutory provisions and avoiding duplicative tax assessments on the same transaction.