2008 (5) TMI 606 - HC - VAT and Sales Tax

Whether proceeding under Rule 12(8) of the CST (O) Rules can be initiated on the basis of any new materials which was not the subject-matter before the assessing officer at the time of original assessment? Whether, on the facts and circumstances of the case, proceeding under Rule 12(8) read with Rule 10 of the CST (O) Rules can be initiated for the assessment year 2001-02 which was earlier completed and second appeal arising out of such assessment order is pending before the Tribunal? Whether appellate authorities exercising their power to enhance the assessment while disposing of the appeal arising out of an assessment order can take into consideration any fresh or new material which was not before the assessing officer and subsequently comes to light only after completion of the assessment order ? Held that - Proceeding under Rule 12(8) of the CST (O) Rules can be initiated on the basis of any new materials which was not the subject-matter before the assessing officer at the time of original assessment. For a particular year proceedings under Rule 12(8) of the CST (O) Rules can be initiated on the basis of the subject-matter which was not before the assessing officer at the time of original assessment in respect of which any appeal is pending either before the first appellate authority or second appellate authority. In the present case since the assessing officer has issued notice under Rule 12(8) of the CST (O) Rules on the basis of some new/fresh material alleging escapement of turnover relating to inter-State sale from the original assessment he was fully justified to take action under the said rule and issue notice under Rule 10 of the CST (O) Rules and to complete the reassessment on the basis of such notice. The appellate authorities while disposing of the appeal arising out an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment. the appellate authorities while disposing of the appeal arising out an assessment order cannot take into consideration any fresh or new material which was not before the assessing officer but subsequently comes to light after completion of the assessment for the purpose of enhancement of the assessment.

Summary

Issues Involved:
1. Jurisdiction of the Assessing Officer to reopen assessment under Rule 12(8) of the CST (O) Rules.
2. Validity of reassessment proceedings during the pendency of an appeal.
3. Scope of appellate authorities to consider new material for enhancement of assessment.

Issue-Wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer to Reopen Assessment:
The petitioner challenged the jurisdiction of the Assessing Officer in reopening the assessment for the year 2001-02 under Rule 12(8) of the CST (O) Rules. The court noted that Rule 12(8) allows for reassessment if there is reason to believe that the turnover has escaped assessment or has been under-assessed. The Assessing Officer must record prima facie reasons for such belief. In this case, the Assessing Officer indicated that the petitioner had not disclosed certain inter-State sales from Paradeep terminal, which led to the belief that there was escapement of assessment. The court held that the conditions for initiating reassessment under Rule 12(8) were satisfied as the reasons were communicated to the petitioner.

2. Validity of Reassessment Proceedings During Pendency of an Appeal:
The petitioner argued that reassessment proceedings could not be initiated while an appeal was pending before the Tribunal. The court distinguished this case from precedents where the appellate authority was revising the same order under appeal. Here, the reassessment was based on new material not considered in the original assessment. The court noted that the appellate authorities could not consider new material that was not before the Assessing Officer. Therefore, the reassessment proceeding was valid despite the pending appeal.

3. Scope of Appellate Authorities to Consider New Material for Enhancement of Assessment:
The petitioner contended that appellate authorities could consider new material for enhancing assessment. The court rejected this argument, stating that appellate authorities could only decide on issues adjudicated in the original assessment order. They could not consider new material that came to light after the original assessment. The court emphasized that allowing appellate authorities to consider new material would lead to judicial impropriety and was not supported by the statute.

Conclusion:
The court concluded that the Assessing Officer had jurisdiction to reopen the assessment under Rule 12(8) based on new material indicating escapement of assessment. The reassessment proceeding was valid even during the pendency of an appeal, as it was based on new material not considered in the original assessment. Appellate authorities could not consider new material for enhancing assessment. The writ petition was dismissed, and the petitioner was advised to prefer a statutory appeal against the assessment order.