1965 (2) TMI 81 - SC - VAT and Sales Tax

Supreme Court sets aside High Court order, emphasizes procedural remedies in tax matters.

The Supreme Court allowed the appeal, setting aside the High Court's order and quashing the assessment order. The case was remitted to the Sales Tax ... Whether the petitioner was a dealer within the meaning of section 2(f) of the Rajasthan Sales Tax Act, and came to the conclusion that the petitioner must be deemed to be a dealer within the said section 2(f)? Whether the sales had taken place in the course of import? Held that:- Appeal allowed and remitted. we have come to the conclusion that the High Court should not have decided disputed questions of fact, but should merely have quashed the assessment order on the ground that the Sales Tax Officer had not dealt with the question raised before him, and remanded the case. Accordingly, we allow the appeal, set aside the order of the High Court, quash the assessment order in so far as it relates to the turnover of ₹ 23,92,252-75 nP., and remit the case to the Sales Tax Officer to decide the case in accordance with law. Issues Involved:1. Whether the Sales Tax Officer failed to consider the impact and effect of Article 286(1)(b) of the Constitution.2. Whether the petitioner was a dealer within the meaning of section 2(f) of the Rajasthan Sales Tax Act.3. Whether the High Court should have entertained the petition under Article 226 of the Constitution.4. Whether the sales were made in the course of import within Article 286(1)(b) of the Constitution.Detailed Analysis:Issue 1: Consideration of Article 286(1)(b) of the ConstitutionThe assessee argued that the sales were in the course of import and thus exempt from sales tax under Article 286(1)(b) of the Constitution. The Sales Tax Officer did not address this contention, focusing instead on the assessee's status as a dealer under section 2(f) of the Rajasthan Sales Tax Act. The High Court found that the Sales Tax Officer failed to consider the impact of Article 286(1)(b), which led to the quashing of the assessment order.Issue 2: Definition of Dealer under Section 2(f)The High Court examined whether the petitioner qualified as a dealer under section 2(f) of the Rajasthan Sales Tax Act. It concluded that the petitioner must be deemed a dealer within the meaning of the section. The Sales Tax Officer had determined that the assessee acted as an agent for a non-resident dealer and was liable for sales tax, a conclusion the High Court upheld.Issue 3: Entertaining the Petition under Article 226The High Court chose to entertain the petition under Article 226, despite the State's objection that an alternative remedy of appeal was available. The High Court reasoned that the issue raised involved jurisdictional questions under Article 286(1)(b) of the Constitution. However, the Supreme Court opined that the High Court should have declined to entertain the petition, emphasizing that Article 226 should not convert High Courts into original or appellate assessing authorities in tax matters. The Supreme Court stressed that exceptional circumstances must exist to warrant such jurisdiction, which were not present in this case.Issue 4: Sales in the Course of ImportThe High Court held that the sales in question were made in the course of import, as the property in the goods passed to the ultimate buyers while the goods were still in transit. The High Court relied on the precedent set in J.V. Gokal and Co. (Private) Ltd. v. The Assistant Collector of Sales Tax, concluding that the sales were exempt under Article 286(1)(b). The Supreme Court did not delve into the merits of this conclusion, noting that the Sales Tax Officer had not addressed this issue and that it was not the High Court's role to make such determinations in a petition under Article 226.Conclusion:The Supreme Court allowed the appeal, set aside the High Court's order, quashed the assessment order concerning the disputed turnover, and remitted the case to the Sales Tax Officer for a fresh determination. The Sales Tax Officer was directed to find all necessary facts and make an independent decision, untrammelled by the High Court's views. The Supreme Court emphasized the importance of following procedural remedies and the limited scope of High Court intervention under Article 226 in tax matters. No order as to costs was made.