2014 (6) TMI 881 - HC - VAT and Sales Tax

Court rules Sales Tax Officer exceeded time limit under Section 72, dismisses Sales Tax Reference

The High Court upheld the tribunal's decision in a Sales Tax Reference case, determining that the Sales Tax Officer could only exercise powers under ... Whether on the facts and in the circumstances of the case, the decision of the tribunal that the Sales Tax Officer could have passed the order for levying interest only under the provisions of Section 72 of the Gujarat Sales Tax Act, 1969 is legally correct - Held that:- It is not in dispute that the notice was issued by the Sales Tax Officer and not by the Commissioner. If the authority, who have exercised the revisional power under Section 67 of the Act, would have been the Commissioner and/or its Delegate, then it was a different case but that is not the case here. It is not the case on behalf of the appellant that any such powers were delegated to the Sales Tax Officer to exercise the revisional jurisdiction and, therefore, the only power, which could have been available to the Sales Tax Officer was under Section 72 of the Act only. - tribunal has not committed any error in considering and/or treating the power exercised by the Sales Tax Officer levying the interest under Section 72 of the Act Whether on the facts and in the circumstances of the case, the decision of the tribunal that the order passed by the Sales Tax Officer should be deemed to have been passed under the provisions of Section 72 of the Gujarat Sales Tax Act, 1969 and that as it was passed after the prescribed period of limitation contained therein was over, it was time-barred, is legally correct? - Held that:- Once it is held that the powers were exercised by the Sales Tax Officer under Section 72 of the Act, such powers of rectifying its own mistake were required to be exercised within a period of two years. In the present case, it has been found that the powers were exercised by the Sales Tax Officer beyond the period of two years. Under the circumstances, no error has been committed by the tribunal in allowing the appeal and quashing and setting aside the order passed by the Sales Tax Officer confirmed by the first appellate authority - Decided against Revenue. Issues:1. Interpretation of powers under Section 72 of the Gujarat Sales Tax Act, 1969 for levying interest.2. Determination of the time limitation for exercising powers under Section 72 of the Act.Issue 1 - Interpretation of powers under Section 72:The case involved a Sales Tax Reference made by the Gujarat Sales Tax Tribunal, where the appellant, State of Gujarat, questioned the tribunal's decision regarding the Sales Tax Officer's authority to levy interest under Section 72 of the Gujarat Sales Tax Act, 1969. The respondent, a registered dealer, was assessed for not depositing tax under the Central Sales Tax Act, 1956. The Sales Tax Officer issued an order for interest payment under Section 47(4A) of the Local Act. The tribunal held that this order was passed under Section 72 of the Act, beyond the two-year limitation, and thus time-barred. The appellant argued that the tribunal erred in treating the order as under Section 72 instead of Section 67. The High Court rejected this argument, stating that the Sales Tax Officer, not being the Commissioner or a delegate, could only exercise powers under Section 72. Therefore, the tribunal's decision on this issue was upheld.Issue 2 - Time limitation for exercising powers under Section 72:Regarding the time limitation for exercising powers under Section 72, the High Court found that since the Sales Tax Officer's powers were indeed exercised under Section 72, they should have been rectified within two years. As the Officer's actions exceeded this period, the tribunal's decision to quash the order and allow the appeal was deemed appropriate. Consequently, the High Court ruled against the appellant on this issue as well. Both questions referred to the Court were decided against the appellant, leading to the dismissal of the Sales Tax Reference.