1989 (12) TMI 306 - SC - VAT and Sales Tax

Supreme Court limits judicial review in tax assessment appeals, clarifies appeal conditions

HB. Gandhi, Excise and Taxation Officer-cum-Assessing Authority, Karnal and Others Versus Gopi Nath & Sons and Others

The Supreme Court allowed the appeals, overturning the High Court's decision. It held that the High Court exceeded its jurisdiction by reassessing ... Whether supply of articles of food and drinks to a customer in a hotel constitute sale of goods invoking a transfer of the property in the goods to the customer? Held that:- Appeal allowed. Set aside the orders of the appellate authorities declining or confirming, as the case may be, the refusal of the benefit of an order under the said proviso and direct that the appeals filed by the respondents before the first appellate authority be now restored and proceeded with on the merits in accordance with law, subject to the condition that the respondent, in each of the appeals, deposits a sum of ₹ 5,000 towards the assessed tax and furnishes security in respect of the balance of the tax to the satisfaction of the said first appellate authority within two months from today. Issues:- Challenge to the order of assessment under the Haryana General Sales Tax Act, 1973, regarding the turnover of sales of articles of food by respondent-restaurants.- Discretion of appellate authority under section 39(5) to waive payment of tax as a precondition for appeal.- High Court's jurisdiction under article 226 of the Constitution to reassess the evidence and determine if transactions were sales or services.- Judicial review of the correctness of findings by High Court.- Legal validity of appellate authority's refusal to exempt respondents from depositing assessed tax for appeal.Analysis:1. The appeals were directed against the order of assessment under the Haryana General Sales Tax Act, 1973, regarding the turnover of sales of food by respondent-restaurants. The appellate authority had declined to waive the payment of tax as a precondition for appeal, leading to further challenges by the respondents.2. The respondents approached the High Court under article 226 of the Constitution, challenging not only the refusal to exempt them from tax payment but also the nature of the transactions assessed. The High Court reevaluated the evidence and held that the transactions were services, not sales, which raised questions about the High Court's jurisdiction to reassess evidence during appeal proceedings.3. The Supreme Court emphasized that judicial review is not an appeal from a decision but a review of the decision-making process. The High Court erred in reevaluating primary facts that were within the domain of the fact-finding authority under the statute. The correctness of findings, not the decision itself, was challenged, which exceeded the scope of judicial review.4. The Court allowed the appeals, setting aside the judgments of the Division Bench and the orders of the single judge in the High Court. The legality of the appellate authority's refusal to exempt respondents from depositing assessed tax was also raised. The Court determined conditions for granting relief under the proviso to section 39(5) and directed the appeals to be restored and proceeded with on the merits.5. Considering the circumstances and the lapse of time, the Court decided not to remit the matter to the High Court. Instead, it allowed the respondents to appeal by depositing a specified sum towards the assessed tax and providing security. The appeals were to be considered on their merits and disposed of accordingly.6. In conclusion, the appeals were allowed, and no costs were awarded. The Court addressed the issues of exemption from tax payment for appeal, the nature of transactions, and the scope of judicial review, providing clarity on the legal proceedings and conditions for appeal in tax assessment matters.