Sales tax exemption and forfeiture provisions require transaction-wise scrutiny; general assessment on entire turnover was unsustainable.

A Gauhati HC article notes that writ petitions were entertained despite alternative remedies because they had remained pending for years. It records that eligible industrial units under the relevant 1991 industrial policy and scheme were held entitled to sales tax exemption during the currency of the scheme. The Court further held that alleged unauthorised collection of tax, if any, had to be pursued under the specific forfeiture or penal provisions and not by treating the entire turnover as taxable without transaction-wise scrutiny. Omnibus assessment orders based on general assumptions, without specific findings on individual transactions or proper consideration of the dealer's defence, were therefore unsustainable, and the impugned assessment and demand notices were quashed.

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Issues: (i) Whether the writ petitions were liable to be rejected on the ground of availability of alternative remedies; (ii) whether the petitioner was entitled to sales tax exemption under the relevant industrial policy and scheme; (iii) whether the impugned assessment and demand could be sustained when the alleged unauthorised collection of tax required action under the forfeiture provisions and not a general assessment on the entire turnover; (iv) whether the assessment orders were unsustainable for their omnibus and non-specific findings.

Issue (i): Whether the writ petitions were liable to be rejected on the ground of availability of alternative remedies.

Analysis: The petitions had remained pending for several years, and the Court declined to non-suit the petitioner merely because statutory appellate and revisional remedies were available. In the circumstances, the writ jurisdiction was entertained.

Conclusion: The objection based on alternative remedy was rejected, in favour of the petitioner.

Issue (ii): Whether the petitioner was entitled to sales tax exemption under the relevant industrial policy and scheme.

Analysis: The Court applied the earlier binding decision upholding the scheme and holding that existing industrial units with eligibility certificates under the 1991 policy were entitled to the benefit of exemption. Reading the scheme as a whole, the Court held that eligible industrial units were granted exemption from sales tax under both the State enactment and the Central enactment during the currency of the scheme.

Conclusion: The petitioner was entitled to the exemption claimed, in favour of the petitioner.

Issue (iii): Whether the impugned assessment and demand could be sustained when the alleged unauthorised collection of tax required action under the forfeiture provisions and not a general assessment on the entire turnover.

Analysis: The Court held that if tax had been collected contrary to the exemption, the proper course was to proceed under the statutory provisions dealing with forfeiture or penal consequences. It was not permissible to presume unauthorised collection across the entire turnover from some transactions and then levy tax on the whole turnover without examining each transaction separately.

Conclusion: The assessment and demand could not be sustained on that basis, in favour of the petitioner.

Issue (iv): Whether the assessment orders were unsustainable for their omnibus and non-specific findings.

Analysis: The impugned orders proceeded on general assumptions that the petitioner had collected and retained tax in all transactions, without transaction-wise verification, without specific findings on individual dealings, and without meaningful consideration of the petitioner's stand regarding C forms and refund claim on declared goods. Such sweeping findings were held to be legally unsustainable.

Conclusion: The assessment orders were unsustainable in law and on facts, in favour of the petitioner.

Final Conclusion: The impugned assessment orders and consequential demand notices were quashed, though the State was left free to proceed in accordance with law under the appropriate statutory provisions if so advised.

Ratio Decidendi: Where an assessee is entitled to statutory sales tax exemption, any alleged unauthorised collection of tax must be dealt with under the specific forfeiture or penal mechanism provided by law, after transaction-wise scrutiny, and cannot be converted into a general assessment on the entire turnover.

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