Dealer status under sales tax law must be proved for the relevant year; later-year material and undisclosed enquiries cannot sustain assessment.

Sales tax liability requires proof that the assessee was a dealer during the relevant assessment year, and material from a later year cannot by itself establish dealer status for an earlier year. The authority had relied on transactions from 1964 for the 1961-62 assessment, without evidence linking business activity to the relevant year. The assessment also rested substantially on undisclosed ex parte enquiries made behind the assessee's back, denying a fair opportunity to rebut the material. On these facts, the assessment and appellate orders were quashed, though the revenue was left free to proceed afresh if otherwise permissible in law.

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Issues: (i) Whether the assessee could be treated as a "dealer" for the assessment year 1961-62 on the basis of material relating to a later period; (ii) Whether the assessment could stand when it was founded substantially on undisclosed ex parte enquiries made behind the assessee's back.

Issue (i): Whether the assessee could be treated as a "dealer" for the assessment year 1961-62 on the basis of material relating to a later period.

Analysis: Liability under the sales tax laws depended upon proof that the assessee was carrying on the business of buying or selling goods in the relevant assessment year. Each assessment year was a separate and self-contained unit, and the taxing authority had to establish the requisite dealer status on material relevant to that year alone. Transactions relied upon by the department were from 1964, whereas the assessment in question related to 1961-62. Material from a subsequent year could not, by itself, be used to infer dealer status for the earlier year in the absence of evidence connecting the assessee's business activity to that year.

Conclusion: The assessee could not be treated as a dealer for 1961-62 on the basis of later-year material.

Issue (ii): Whether the assessment could stand when it was founded substantially on undisclosed ex parte enquiries made behind the assessee's back.

Analysis: The assessment was also supported by information gathered in private enquiries which were not disclosed to the assessee and on which the assessee had no opportunity to offer any explanation or rebuttal. An order of assessment cannot rest on material collected behind the assessee's back without giving a fair opportunity to meet that material, particularly where the finding as to dealer status is jurisdictional in nature. Since the department had no other material for the relevant year, the assessment was not sustainable.

Conclusion: The assessment could not be sustained on the basis of undisclosed ex parte material.

Final Conclusion: The writ petition succeeded and the assessment and appellate orders were quashed, with the revenue left at liberty to proceed afresh if otherwise permissible in law.

Ratio Decidendi: Dealer status for sales tax liability must be proved on relevant material pertaining to the assessment year in question, and an assessment founded on irrelevant later-year material or undisclosed ex parte enquiries is invalid.

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