1991 (7) TMI 353 - HC - VAT and Sales Tax

Court upholds Commercial Taxes Officer's jurisdiction, validates tax rules, and penalties under State Act

The court dismissed the writ petitions, upholding the jurisdiction of the Commercial Taxes Officer, Anti-evasion, and validating the provisions of ... - Issues Involved:1. Jurisdiction of the Commercial Taxes Officer, Anti-evasion.2. Validity of sub-section (4-A) of section 10 of the Rajasthan Sales Tax Act and rule 30-A of the Rajasthan Sales Tax Rules.3. Arbitrariness and principles of natural justice in the decision of the Additional Commissioner.4. Applicability of penalty provisions under the State Act.Issue-wise Detailed Analysis:1. Jurisdiction of the Commercial Taxes Officer, Anti-evasion:The petitioners contended that the orders were without jurisdiction due to the plurality of assessing authorities and the notification conferring jurisdiction on the Commercial Taxes Officer, Anti-evasion, Headquarters-II. The court examined the notification dated July 3, 1986, as amended, and concluded that the Anti-evasion Officers acquire jurisdiction when evasion of tax or concealment of liability is detected. The court held that the notification was not beyond the powers conferred on the Commissioner, Commercial Taxes, under rule 3 or 4 of the Rules. The court also referenced section 12-B of the State Act, which limits the ability to challenge territorial jurisdiction after 30 days from the receipt of any summons or notice. The court found no merit in the argument that there was a plurality of assessing authorities, stating that only the officer who detects the evasion will have jurisdiction to the exclusion of others.2. Validity of sub-section (4-A) of section 10 of the Rajasthan Sales Tax Act and rule 30-A of the Rajasthan Sales Tax Rules:The petitioners challenged the vires of sub-section (4-A) of section 10 and rule 30-A, arguing that they were arbitrary and could be applied in an arbitrary manner. The court analyzed the provisions and concluded that they were introduced to facilitate the functioning of the department and to enable the assessing authority to arrive at a real sale price. The court emphasized that these provisions contain guidelines for best judgment assessment and are intended to make the machinery of tax computation workable. The court referenced the Supreme Court's judgment in McDowell and Company Ltd. v. Commercial Tax Officer, which discouraged tax avoidance through colorable measures. The court held that the provisions of sub-section (4-A) of section 10 and rule 30-A were valid and not arbitrary or unreasonable.3. Arbitrariness and principles of natural justice in the decision of the Additional Commissioner:The petitioners argued that the decision of the Additional Commissioner was arbitrary and against the principles of natural justice. The court found no substance in this argument, stating that the Commercial Taxes Officer, Anti-evasion, having detected evasion, did not act with bias. The court referenced the case of Khurjawala Buckles Manufacturing Co. v. Commissioner of Sales Tax, which distinguished between official and personal bias. The court concluded that there was no official bias merely because the officer detected evasion and subsequently made the assessment order.4. Applicability of penalty provisions under the State Act:The petitioners contended that the penalty provisions of the State Act could not be invoked in the facts and circumstances of the case. The court declined to go into the question of whether the penalty awarded was invalid, stating that it is a matter to be examined by the hierarchy of authorities under the State Act. The court emphasized that any assessment order made by the Commercial Taxes Officer, Anti-evasion, is subject to appeal and revision under sections 13 and 14 of the State Act.Conclusion:The court dismissed the writ petitions, finding no merit in the arguments presented by the petitioners. The court upheld the jurisdiction of the Commercial Taxes Officer, Anti-evasion, and validated the provisions of sub-section (4-A) of section 10 and rule 30-A of the Rajasthan Sales Tax Rules. The court also found no arbitrariness or violation of principles of natural justice in the decision of the Additional Commissioner. The penalty provisions under the State Act were also upheld, with the court deferring the examination of their application to the appropriate appellate and revisional authorities.