1971 (8) TMI 197 - HC - VAT and Sales Tax

Validity of tax demand notice upheld, assessing authority's jurisdiction affirmed, merger principle clarified, revenue's collection authority confirmed. Writ petition dismissed.

K. Ambujammal Versus Deputy Commercial Tax Officer, Kothavalchavadi Division, Madras-1 and Another

K. Ambujammal Versus Deputy Commercial Tax Officer, Kothavalchavadi Division, Madras-1 and Another - [1972] 29 STC 368 (Mad) Issues:1. Validity of the notice of demand issued for tax liability.2. Jurisdiction of the assessing authority to rectify the original assessment order.3. Merger of the original assessment order with the appellate order.4. Authority of the revenue to collect the tax amount.Analysis:1. Validity of the Notice of Demand:The petitioner challenged the notice of demand issued by the revenue for the tax liability. The petitioner's counsel argued that the notice was unsustainable as it was based on the order of rectification made during the pendency of an appeal. On the other hand, the revenue contended that the rectification was done before the appeal was disposed of, and the petitioner had failed in her attempts to challenge the order's legality. The court examined the arguments and held that the order of rectification had become final and effective in the eye of the law. The court dismissed the petitioner's contention and ruled that the revenue was authorized to collect the tax amount as per the challenged notice of demand.2. Jurisdiction of Assessing Authority to Rectify:The assessing authority had rectified the original assessment order under section 55 of the Act, which resulted in an enhancement of the tax liability. The petitioner had filed an appeal against this rectification order, but it was dismissed as not maintainable. Subsequently, a revision petition was also dismissed on the ground of inordinate delay. The court observed that the assessing authority had the power to rectify errors apparent on the face of the record, and in this case, the order of rectification had become final. Despite the petitioner's attempts to challenge the rectification order, the court held that the authority to rectify the original order was validly exercised.3. Merger of Original Assessment Order with Appellate Order:The petitioner argued that the original assessment order had merged with the appellate order, and therefore, the assessing authority had no jurisdiction to rectify the original order. The court referred to previous decisions and established that if an assessment order merges with an appellate order, the assessing authority loses jurisdiction to interfere with the order. However, in this case, the rectification was done before the appeal was disposed of, and the order had become final. The court held that the principle of merger did not apply in this instance, and the rectification order was enforceable.4. Authority of Revenue to Collect Tax Amount:The revenue took action to recover the tax amount due from the petitioner based on the rectification order, despite the dismissal of the appeal against the original assessment order. The court noted that the rectification order had become final and effective, and the revenue was within its authority to collect the tax amount as per the challenged notice of demand. The court emphasized that the petitioner, having unsuccessfully challenged the rectification order, could not now dispute the enforceability of the order. Consequently, the court dismissed the writ petition, ruling in favor of the revenue's authority to collect the tax amount.In conclusion, the court upheld the validity of the notice of demand, affirmed the jurisdiction of the assessing authority to rectify the original assessment order, clarified the non-applicability of the merger principle in this case, and confirmed the revenue's authority to collect the tax amount based on the final rectification order. The writ petition was dismissed, and no costs were awarded.