Voluntary acceptance of tax exemption and broad review power sustained reassessment despite later challenge to rule validity.

An assessment was upheld where the assessee had voluntarily accepted exemption at 30 per cent under rule 28, so the later challenge to the rule's validity did not invalidate the assessment on the facts. The statutory power of review under section 20(4) of the Bengal Finance (Sales Tax) Act, 1941 was construed broadly, allowing reopening after the Supreme Court in Mithan Lal altered the governing legal position. The reassessment for the first two quarters of 1955-56 was also held within the four-year limitation period, computed from the end of 1955-56. The writ petition was dismissed.

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Issues: (i) Whether the assessment could be invalidated on the ground that rule 28 was ultra vires, despite the assessee having voluntarily accepted exemption at the prescribed rate; (ii) whether section 20(4) of the Bengal Finance (Sales Tax) Act, 1941 empowered the Sales Tax Officer to review the earlier assessment after the Supreme Court decision in Mithan Lal; and (iii) whether the reassessment for the first two quarters of 1955-56 was barred by limitation under section 11(2a) of the Act.

Issue (i): Whether the assessment could be invalidated on the ground that rule 28 was ultra vires, despite the assessee having voluntarily accepted exemption at the prescribed rate.

Analysis: The assessment order recorded that the assessee-firm could not furnish details of labour and voluntarily offered to take exemption at 30 per cent under rule 28. In the absence of such details, the assessing authority could adopt a best judgment basis and lawfully accept that offer. On that footing, the validity of rule 28 did not control the legality of the impugned assessment in the facts of the case.

Conclusion: The challenge based on the alleged invalidity of rule 28 failed and was against the assessee.

Issue (ii): Whether section 20(4) of the Bengal Finance (Sales Tax) Act, 1941 empowered the Sales Tax Officer to review the earlier assessment after the Supreme Court decision in Mithan Lal.

Analysis: The word "review" was held not to carry a rigid technical meaning limiting the power only to the narrow grounds known to the Civil Procedure Code. The statutory setting indicated that wider review power was intended so that injustice could be corrected. Since the earlier assessment had proceeded on a legal position later reversed by the Supreme Court, there were legitimate grounds for review.

Conclusion: The review was held to be valid and the contention of the assessee was rejected.

Issue (iii): Whether the reassessment for the first two quarters of 1955-56 was barred by limitation under section 11(2a) of the Act.

Analysis: The limitation period of four years was to be computed from the end of the year in respect of which the assessment was made, even if the taxable period was a quarter. The impugned order dated 17 November 1959 was within four years from the end of 1955-56, which ended on 31 March 1956.

Conclusion: The reassessment was not barred by limitation and the contention failed.

Final Conclusion: The writ petition was dismissed because none of the three challenges to the reassessment succeeded.

Ratio Decidendi: Where an assessee voluntarily accepts a statutory exemption in the course of assessment, the assessment is not invalid merely because the underlying rule is later or separately alleged to be ultra vires; and the statutory power of review may be exercised broadly where a subsequent authoritative decision discloses the legal basis for reopening the earlier order.

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