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of <h1>Invalid Assessment Order & Demand Notice Quashed Due to Defective Notification</h1> <h3>Firm Bangali Mal Satish Chandra Jain Versus The Sales Tax Officer, Agra</h3> The Court found the assessment order and demand notice invalid due to the underlying notification being invalid. Despite arguments for retrospective ... - Issues Involved:1. Validity of the assessment order dated 21st September, 1957.2. Validity of the notification No. ST/905-X, dated 31st March, 1956.3. Retrospective validation of the notification by the U.P. Sales Tax (Amendment) Act, 1957.4. Competence of the State Legislature to impose the sales tax.Issue-wise Detailed Analysis:1. Validity of the assessment order dated 21st September, 1957:The petitioner challenged the validity of the assessment order dated 21st September, 1957, under the U.P. Sales Tax Act, 1948, and the demand notice issued on 22nd September, 1957. The Court concluded that the assessment order and the demand notice were invalid due to the invalidity of the underlying notification No. ST/905-X, dated 31st March, 1956.2. Validity of the notification No. ST/905-X, dated 31st March, 1956:The notification in question was issued under section 3A of the U.P. Sales Tax Act, 1948, as amended by the U.P. Sales Tax (Amendment) Ordinance, 1956. The Court held the notification invalid in Adarsh Bhandar v. The Sales Tax Officer [1957] 8 S.T.C. 666, on the ground that the amendment of sub-section (2) of section 3A took effect only from 1st April, 1956, and the Governor had no power to issue the notification on the preceding day under the unamended sub-section.3. Retrospective validation of the notification by the U.P. Sales Tax (Amendment) Act, 1957:The respondents argued that the U.P. Sales Tax (Amendment) Act, 1957, retrospectively validated the notification. However, the Court noted that the 1957 Act did not contain any provision explicitly validating the impugned notification. The Court emphasized that the possession of power must be distinguished from its exercise. The notification issued under the old section 3A(2) could not be converted into one issued under the new section 3A(2) by the retrospective conferment of power. Therefore, the notification remained invalid despite the retrospective effect of the 1957 Act.4. Competence of the State Legislature to impose the sales tax:Mr. Pathak, representing the petitioner, argued that a sales tax must be borne by the consumer, and if a tax imposed on a dealer lacks this feature, it is not a tax on the sale of goods within the meaning of Item 54 of List II of the Seventh Schedule to the Constitution and is beyond the competence of the State Legislature. The Court referred to its earlier decision in Adarsh Bhandar's case, where it held that this contention was not well-founded. The Court reiterated that the tax imposed on the dealer, even if ultimately borne by the consumer, qualifies as a sales tax within the legislative competence of the State.Conclusion:The Court concluded that the impugned notification continued to be invalid and allowed the petition, directing the issuance of a writ in the nature of certiorari quashing the assessment order dated 21st September, 1957, and the demand notice issued on 22nd September, 1957. The petitioner was entitled to costs assessed at Rs. 500.Petition allowed.
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