NUMECH EMBALLAGE LTD Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THE petitioner is engaged in the manufacture and sale of HDPE woven sacks, HDPE woven sacks laminated with paper and HDPE woven sacks with loose paper liner inside. It is selling its manufactured products in the State of Gujarat as well as outside Gujarat in the course of inter-State trade and commerce. It has its registered administrative office at Mumbai in the State of Maharashtra. Its factory is at Bhilad, District Valsad. In the course of its trade, it is also required to transfer its manufactured products from Bhilad, where it has its factory to its main office at Mumbai.

(2.) BY this petition under article 226 of the Constitution of India, the petitioner-company seeks quashing the impugned orders dated April 26, 2000 (annexure E) and May 17/19, 2000 (annexure I) passed by the Sales Tax Officer, Valsad, respondent No. 1 in purported exercise of powers under sections 48a and 41b of the Gujarat Sales Tax Act (hereinafter referred to as "the local Act") read with section 9 (2) of the Central Sales Tax Act, 1956. The Sales Tax Officer, Valsad, respondent No. 1 has invoked his jurisdiction under section 41b and under section 48a for making provisional assessment and for that purpose has made a provisional attachment of the properties of the petitioner. Section 41b, which empowers the Commissioner or his delegates to make provisional assessment, in its relevant parts, reads as under :

(3.) LEARNED Assistant Government Pleader Shri Kodekar appearing for the Sales Tax Department supports the action of the sales tax authority. Attention of the court is invited to the contents of the reply affidavit filed on behalf of the concerned Sales Tax Officer, Valsad. On behalf of the department, it is stated that search was conducted of the office of the petitioner-company at Bhilad and search was also conducted at its head office at Mumbai by Maharashtra sales tax authority. In the course of search conducted at Bhilad, it was found that certain transactions described as branch transfers were not such but they were predetermined sales. In the garb of branch transfers consignments of manufactured goods were directly diverted to a customer of Ratnagiri district of Maharashtra. Such branch transfers were effected without "c" forms. Investigations made in such transactions reveal that certain predetermined sales were effected in the garb of branch transfers without "c" forms and tax on transaction in the tune of Rs. 2,95,00,309 was evaded for the period between 1992-93 to 1996-97. Proceedings for block assessment on provisional basis were therefore initiated for the period 1992-93 to 1994-95 giving rise to an aggregate demand of Rs. 2,44,04,606 which has not yet been satisfied. The petitioner has paid tax only in the sum of Rs. 1,28,22,278. In the reply affidavit, on the above facts, it is stated that there were sufficient reasons for the authority to believe that the petitioner has evaded tax necessitating initiation of proceedings for provisional assessment for the block period and for attachment of the property of the petitioner for protecting revenue. After hearing the learned counsel appearing for the dealer and the department and on going through the records and the contents of the reply affidavit, we have come to the conclusion that in the instant case, it cannot be justifiably be complained that the Sales Tax Officer casually or without application of mind has initiated proceedings for provisional assessment for block period under section 41b and illegally effected attachment of the property of the petitioner under section 48a of the Act. The decision of the division Bench of this Court in the case of Batliboi and Co. Ltd. [2000] 119 STC 583, on which heavy reliance is placed, is distinguishable on facts. In that case, the sales tax authority which had taken the action had failed to produce material to justify its action of provisional assessment and attachment of properties of the dealer. The division bench took note of the fact that in the reply affidavit, in that case the Sales Tax Officer had merely stated thus : " As a very large amount of tax was involved and regular assessment of the petitioner was likely to take time, he had decided to make provisional assessment. "