1995 (4) TMI 260 - AT - VAT and Sales Tax

Tribunal Upholds Tax Officer's Jurisdiction & Best Judgment Assessment, Extends Limitation

Tea Brokers (P) Limited Versus Commercial Tax Officer, Assessment Wing-I, Group B and Others

Tea Brokers (P) Limited Versus Commercial Tax Officer, Assessment Wing-I, Group B and Others - [1996] 102 STC 186 (WBTT) Issues Involved:1. Jurisdiction of the Commercial Tax Officer to make the assessment.2. Limitation period for making the assessment.3. Applicability of the High Court's injunction orders.4. Compliance with principles of natural justice.5. Validity of the best judgment assessment.Detailed Analysis:1. Jurisdiction of the Commercial Tax Officer to Make the Assessment:The applicant contended that the respondent No. 1 had no jurisdiction to reject the written objections and proceed with the best judgment assessment on June 11, 1993. The respondent No. 1 was alleged to have misconstrued the High Court's injunction orders and acted outside his jurisdiction. The Tribunal found that the respondent No. 1 did have jurisdiction as the injunction orders from the High Court did not explicitly restrain the assessment for the disputed period. The Tribunal concluded that the Commercial Tax Officer did not misread or misconstrue the jurisdictional facts.2. Limitation Period for Making the Assessment:The core issue was whether the assessment dated June 11, 1993, was barred by limitation. The Tribunal noted that the normal period for completing the assessment was four years from the end of the year in question, i.e., by December 31, 1990. However, the respondents argued that the period of limitation was extended due to the High Court's injunction orders. The Tribunal examined the provisions of section 11(2a) and section 11(2b) of the Bengal Finance (Sales Tax) Act, 1941, and concluded that the assessment was within the extended period of limitation due to the exclusion of the period covered by the injunctions.3. Applicability of the High Court's Injunction Orders:The applicant argued that the High Court's injunction orders in the cases of M/s. Clipper Tea and M/s. Hindusthan Sheet Metal did not apply to the disputed period. The Tribunal found that the injunction orders did apply to the applicant's assessment period, thereby extending the limitation period. The Tribunal held that the period during which the injunctions were in force should be excluded in computing the time limited for making the assessment.4. Compliance with Principles of Natural Justice:The applicant claimed that the assessment was vitiated by a denial of natural justice, as the respondent No. 1 did not allow sufficient time for the production of books and records. The Tribunal found that reasonable opportunity was provided to the applicant to produce the relevant documents. The Tribunal noted that the applicant's representative refused to produce the books of accounts on June 10, 1993, and thus, there was no violation of natural justice.5. Validity of the Best Judgment Assessment:The applicant contended that the best judgment assessment was arbitrary and lacked a reasonable nexus with the facts. The Tribunal found that the assessment was based on the revised sales statements filed by the applicant and an additional sum for the sale proceeds of a motor car. The Tribunal concluded that the assessment was factually correct and justified.Separate Judgments by the Judges:- Chairman (S.P. Das Ghosh): Concluded that the assessment dated June 11, 1993, was not barred by limitation, was within jurisdiction, and complied with principles of natural justice. The application was dismissed.- Judicial Member (L.N. Ray): Agreed with the Chairman's conclusion but added that the Tribunal's order dated March 5, 1993, constituted an 'order of any court,' thus extending the limitation period.- Technical Member (P.R. Balasubramanian) (Dissenting): Held that the assessment orders dated December 14, 1992, and June 11, 1993, were barred by limitation and without jurisdiction. The application should be allowed, and the orders quashed.Final Order:In view of the majority opinion, the application was dismissed without any order for costs. The interim order was vacated, and the operation of the judgment was stayed for 12 weeks to allow for an appeal.