Court Invalidates Sales Tax Assessment due to Lack of Jurisdiction

The court concluded that the petitioner company, lacking a place of business or agent in Uttar Pradesh, does not meet the definition of a dealer under the U.P. Sales Tax Act. It held that the Sales Tax Officer lacked jurisdiction to assess the petitioner, rendering the assessment order invalid. Despite not availing the appeal remedy, the court allowed the petition under Article 226 due to the tax being sought without legal authority. The court issued a writ of certiorari quashing the assessment order and a writ of mandamus restraining enforcement, along with awarding costs to the petitioner.

---

---

Issues Involved:
1. Whether the petitioner company is a dealer as defined under section 2(c) of the U.P. Sales Tax Act, 1948.
2. Whether the Sales Tax Officer had the jurisdiction to assess the petitioner company.
3. Whether the petitioner had the right to file a petition under Article 226 of the Constitution despite not availing the remedy of appeal provided by section 9 of the Act.

Issue-wise Detailed Analysis:

1. Definition of 'Dealer':
The petitioner contended that it is not a dealer as defined in section 2(c) of the U.P. Sales Tax Act, 1948. The definition of a dealer includes any person or association carrying on the business of buying or selling and supplying goods in the United Provinces. The court analyzed whether the petitioner company, which has no place of business or agent in Uttar Pradesh, could be considered a dealer. It was noted that the transactions carried out by the petitioner were sales within the State; however, the physical presence of the petitioner or its agent in U.P. for carrying out the business of sale is necessary to be classified as a dealer. The court concluded that the petitioner company, having neither a place of business nor an agent in U.P., does not fall within the definition of a dealer under the Act.

2. Jurisdiction of the Sales Tax Officer:
The petitioner argued that the Sales Tax Officer did not have the power to make the assessment as per clauses (c) and (d) of rule 6 of the Rules framed under the U.P. Sales Tax Act, 1948. Clause (c) requires a declaration by the dealer of the Sales Tax Officer having jurisdiction, and clause (d) allows the Commissioner to determine the assessing authority in case of doubt. The court found that no such declaration was made by the petitioner, nor was any determination made by the Commissioner. Consequently, the Sales Tax Officer of Banaras lacked the authority to assess the petitioner company. Thus, the assessment order dated 16th March, 1952, was without jurisdiction and the tax sought to be realized was without the authority of law.

3. Right to File Petition under Article 226:
A preliminary objection was raised that the petitioner had no right to file this petition under Article 226 since it did not avail itself of the remedy of appeal provided by section 9 of the Act. The petitioner explained that it received the reply from the Sales Tax Officer too late to file an appeal. The court held that the delay in the reply from the Sales Tax Officer did not justify the failure to file an appeal. However, it agreed with the petitioner's counsel that the availability of an alternative remedy is not applicable in cases where the tax is sought to be realized without the authority of law, as per the Supreme Court's decision in Himmatlal Harilal Mehta v. State of Madhya Pradesh. The threat to realize the tax was a sufficient infringement of the petitioner's fundamental right under Article 19(1)(g) of the Constitution, entitling the petitioner to relief under Article 226.

Conclusion:
The court allowed the petition, issuing a writ of certiorari quashing the assessment order dated 16th March, 1952, and the order of the Collector of Banaras initiating certificate proceedings. A writ of mandamus was issued restraining the respondents from enforcing the assessment order and directing them to withdraw the certificate proceedings. Consolidated costs of Rs. 300 were awarded to the petitioner against respondents 1, 2, and 3.

---