Reassessment limitation and natural justice: injunction periods were excluded, and the tax assessment remained valid.

Statutory limitation for reassessment under the Bengal Finance (Sales Tax) Act was treated as suspended for the period during which High Court injunctions restrained the assessing authority, so that period had to be excluded from computation. A fresh assessment made within the extended time limit, following an earlier Tribunal order that allowed reassessment if permitted by law, was therefore valid; the original initiation notice also remained effective because it had not been expressly annulled. The assessment was further found free from breach of natural justice, bias, or absence of reasons, as the applicant had notice, an opportunity to be heard on limitation, and a recorded explanation of the relevant legal effect. The challenge failed.

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Issues: (i) Whether the reassessment and demand orders for the period ending 31 December 1986 were barred by limitation or otherwise without jurisdiction in view of the High Court injunctions and the Tribunal's earlier order. (ii) Whether the assessment was vitiated by denial of natural justice, bias, or failure to pass a reasoned order on limitation.

Issue (i): Whether the reassessment and demand orders for the period ending 31 December 1986 were barred by limitation or otherwise without jurisdiction in view of the High Court injunctions and the Tribunal's earlier order.

Analysis: The controlling question was whether the period during which the assessing authority was restrained by the High Court orders in the two connected matters had to be excluded while computing the statutory period for assessment under section 11(2a) and section 11(2b) of the Bengal Finance (Sales Tax) Act, 1941. The earlier Tribunal order setting aside the first assessment did not decide the limitation issue finally, but allowed a fresh assessment if permitted by law. The majority held that the High Court orders operated to restrain assessment in relation to the applicant, that the restrained period had to be excluded, and that the subsequent legislative amendment extending the outer limit to 31 December 1994 covered the fresh assessment made on 11 June 1993. The initiation notice was also held to remain effective, since it had not been annulled when the earlier assessment was set aside.

Conclusion: The assessment and demand orders were not barred by limitation and were not without jurisdiction.

Issue (ii): Whether the assessment was vitiated by denial of natural justice, bias, or failure to pass a reasoned order on limitation.

Analysis: The applicant was given notice to produce books of account and records and was heard on the limitation objection. The assessing authority recorded reasons on the effect of the injunction orders and the Tribunal's earlier order before completing the assessment. The majority found no personal bias, no legal bias amounting to malice in law, and no prejudgment. The refusal to produce records was treated as the applicant's own choice, not a denial of hearing by the authority.

Conclusion: The assessment was not vitiated by breach of natural justice, bias, or absence of reasons.

Final Conclusion: The challenge to the reassessment failed on both limitation and procedural grounds, so the impugned tax and interest orders were upheld in substance and the application was dismissed.

Ratio Decidendi: Where statutory limitation for assessment is suspended by operative court injunctions, the excluded period must be added to the normal time limit, and a fresh assessment made within the extended period pursuant to an order permitting reassessment if allowed by law is valid; mere setting aside of an earlier vague assessment does not extinguish the original initiation notice unless it is expressly annulled.

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