1990 (7) TMI 358 - AT - VAT and Sales Tax

Court clarifies mandatory declaration forms for tax deductions under Bengal Finance Act

The court held that the writ application was maintainable under article 226 due to inadequacy of alternative statutory remedy. It clarified that ... - Issues Involved:1. Maintainability of the writ application.2. Applicability of Supreme Court decisions.3. Requirement of declaration forms for deduction under section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941.4. Authority of appellate and revisional bodies to accept declaration forms.5. Jurisdiction of the Tribunal in allowing deductions based on best judgment.Issue-wise Detailed Analysis:1. Maintainability of the Writ Application:The writ application was challenged on the grounds that an alternative remedy was available under section 21 of the 1941 Act, and the applicants had initially pursued this remedy but later chose to file a writ under article 226. The court held that the remedy under article 226 is discretionary and can be pursued in exceptional cases where statutory remedies are inadequate. The court agreed with the applicants that the alternative remedy was not adequate since the question of law was already settled by the Supreme Court, making the reference remedy ineffective.2. Applicability of Supreme Court Decisions:The Tribunal below erred in distinguishing the Supreme Court decision in [1965] 16 STC 607 (SC) (Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer) on the grounds that it did not apply to best judgment assessments. The court held that the nature of the assessment (best judgment or otherwise) is irrelevant to the requirement of producing declaration forms for claiming deductions under section 5(2)(a)(ii). The Tribunal incorrectly relied on [1964] 15 STC 641 (SC) (State of Orissa v. M.A. Tulloch and Co. Ltd.), which was based on materially different provisions of the Orissa Sales Tax Act.3. Requirement of Declaration Forms:The principal question was whether a deduction under section 5(2)(a)(ii) of the 1941 Act is allowable without the production of declaration forms. The court reiterated the mandatory nature of producing declaration forms as stipulated in section 5(2)(a)(ii) and rule 27A of the Bengal Sales Tax Rules, 1941. The Supreme Court's decision in Kedarnath Jute Manufacturing Co. Ltd. established that without these forms, the claim for deduction cannot be allowed.4. Authority of Appellate and Revisional Bodies:The court addressed whether the Assistant Commissioner could accept declaration forms that were produced for the first time at the appeal stage. It was held that the Assistant Commissioner had no jurisdiction to entertain declaration forms at the appeal stage, as the mandatory requirement was to produce them at the initial assessment stage. The court emphasized that the provisions of the 1941 Act and the Rules clearly precluded any authority from accepting declarations post-assessment.5. Jurisdiction of the Tribunal in Allowing Deductions Based on Best Judgment:The Tribunal's decision to allow the deduction based on best judgment estimation was found to be erroneous. The court held that in the absence of declaration forms, the Tribunal had no jurisdiction to consider other materials or apply best judgment for allowing the claim under section 5(2)(a)(ii). The Tribunal's reliance on hypothetical considerations was not permitted by law.Conclusion:The application was allowed, and the order of the West Bengal Commercial Taxes Tribunal dated August 10, 1979, was quashed. The orders of the Commercial Tax Officer, as confirmed by the appellate and the first revisional authority, were restored. The court rejected the request to remit the matter back to the Commercial Tax Officer for reconsideration with the declaration forms, as there was no just reason for such a remand.