Court Invalidates Tax Officers' Jurisdiction, Deems Assessments Unauthorized

Sri Balaji Rice Company Versus Commercial Tax Officer, No. I, Nellore

Sri Balaji Rice Company Versus Commercial Tax Officer, No. I, Nellore - [1984] 55 STC 292 (AP) Issues Involved:

1. Jurisdiction of the Assistant Commissioners (Intelligence) and Commercial Tax Officers (Intelligence) to assess dealers.
2. Arbitrary and discriminatory nature of the assessment powers conferred.
3. Retrospective effect of the conferment of assessment powers.
4. Applicability of assessment powers to cases of disclosed turnovers and claimed exemptions.

Summary:

Issue 1: Jurisdiction of the Assistant Commissioners (Intelligence) and Commercial Tax Officers (Intelligence) to assess dealers.

The petitioners argued that u/s 4 of the Andhra Pradesh General Sales Tax Act, the officers could only perform functions within assigned local limits and not throughout the entire State of Andhra Pradesh. The court agreed, stating that "local limits" must mean a limited area and not the whole state. Therefore, the notifications issued by the Commissioner allocating jurisdiction over the entire state to these officers were ultra vires and without jurisdiction.

Issue 2: Arbitrary and discriminatory nature of the assessment powers conferred.

The court found that the plurality of officers conferred with assessment powers without clear guidelines led to arbitrary and discriminatory practices. The lack of a clear appellate remedy for assessments made by the Assistant Commissioners (Intelligence) and Commercial Tax Officers (Intelligence) further exacerbated this issue. The court held that this was violative of the petitioners' rights under Article 14 of the Constitution.

Issue 3: Retrospective effect of the conferment of assessment powers.

The court held that the Government had no power u/s 2(1)(b) to authorize officers with retrospective effect. The notification G.O. No. 1059 dated 27th July 1982, which purported to confer powers retrospectively, was deemed ultra vires. Consequently, any assessments made by these officers before the notification date were illegal and without jurisdiction.

Issue 4: Applicability of assessment powers to cases of disclosed turnovers and claimed exemptions.

The court did not express a final opinion on whether the powers conferred could extend to cases where turnovers were disclosed, and exemptions were claimed but disallowed by the assessing authority. However, it noted that this issue would depend on the specific facts of each case.

Additional Points:

W.P. No. 5864 of 1982: The assessment order made by the Commercial Tax Officer, Intelligence-III, Hyderabad, on 5th March 1982, was deemed illegal as it was made before the conferment of powers by G.O. No. 434 dated 30th March 1982. The garnishee order passed on 6th October 1981 was also held illegal as there were no arrears of tax or penalty at that time.

W.P. No. 8739 of 1982: The show cause notice proposing a provisional assessment by the Assistant Commissioner, Intelligence, Kurnool, was deemed illegal as a final assessment had already been made by the local Commercial Tax Officer. The collection of compounding fees by the Assistant Commercial Tax Officer, Kurnool, was also held illegal as it was outside his territorial jurisdiction.

In conclusion, all the writ petitions were allowed with costs, and the impugned proceedings were quashed as illegal and without jurisdiction.