1964 (11) TMI 82 - HC - VAT and Sales Tax

Court quashes tax notices due to improper transfer, stresses need for clear rules

Kishan Chand & Co. Versus SK. Jain

The court allowed all the petitions in the consolidated judgment for four writ petitions, quashing the impugned notices issued by the Chandigarh Assessing ... - Issues Involved:1. Jurisdiction of Assessing Authority2. Transfer of Pending Assessment Proceedings3. Compliance with Rules of Natural Justice4. Inconvenience and Harassment to the DealerIssue-Wise Detailed Analysis:1. Jurisdiction of Assessing Authority:The primary issue was whether the Assessing Authority, Chandigarh, had jurisdiction to issue notices for assessment proceedings initially commenced by the Assessing Authority, Amritsar. The court noted that the Assessing Authority under section 2(a) of the Punjab General Sales Tax Act means any person authorized by the State Government to make any assessment under the Act. The State Government, under section 3, can appoint persons to assist the Excise and Taxation Commissioner, who can exercise such powers as conferred by the Act. The court observed that the Chandigarh Assessing Authority was duly appointed and authorized to make assessments within the whole of Punjab, as per the notification dated 11th June, 1963.2. Transfer of Pending Assessment Proceedings:The court addressed whether pending assessment proceedings could be transferred from one Assessing Authority to another. It was argued that there is no express provision in the Act for transferring pending cases. However, the court held that the power to transfer must be inherent and implicit in the Excise and Taxation Commissioner, who has the final controlling authority under rule 69. The court emphasized that such a transfer should be based on a proper, precise, and lawful order considering both the exigencies of tax collection and the convenience of the assessee.3. Compliance with Rules of Natural Justice:The court examined whether the transfer of assessment proceedings without notice to the dealer violated the principles of natural justice. Drawing an analogy from the Supreme Court decisions in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Bidi Supply Co. v. Union of India, and Panna Lal Binjraj v. Union of India, the court observed that an arbitrary order of transfer without affording an opportunity to the dealer to show cause is liable to be struck down. The court stressed that the power of transfer should not be uncontrolled and must be exercised considering the convenience of the dealer and the necessity of tax collection.4. Inconvenience and Harassment to the Dealer:The court acknowledged the inconvenience and harassment that could result from transferring assessment proceedings to a place far from the dealer's place of business. It was noted that the statutory scheme generally contemplates assessment proceedings to be held at the dealer's place of business or at a place causing the least inconvenience to the dealer. However, the court also recognized that certain circumstances might necessitate assessment at a different location for efficiency and convenience. The court concluded that any transfer of assessment proceedings should be justified by a proper order considering these factors.Separate Judgments:The court delivered a consolidated judgment for all four writ petitions (Civil Writs Nos. 272, 273, 382, and 784 of 1964) as they raised common questions of law. The court allowed all the petitions, quashing the impugned notices issued by the Chandigarh Assessing Authority. It left open the possibility for the Commissioner to pass proper orders of transfer in accordance with the law and the observations made in the judgment. No order as to costs was made in any of the cases.Conclusion:The court concluded that while the Chandigarh Assessing Authority had jurisdiction, the transfer of pending assessment proceedings without a proper order was not permissible. The power to transfer must be exercised by the Excise and Taxation Commissioner with due consideration to the convenience of the dealer and the necessity of tax collection. The impugned notices were quashed, and the court suggested the need for precise rules regarding the transfer of pending assessments to ensure fairness and efficiency in tax administration.