2001 (3) TMI 983 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the revisional authority u/s 22A to effectively pass an order of reassessment.
2. Validity of the show cause notice issued by the revisional authority.
3. Scope of powers exercisable by the revisional authority u/s 22A.

Summary:

1. Jurisdiction of the Revisional Authority u/s 22A:
The primary issue was whether the revisional authority, while exercising powers u/s 22A, could effectively pass an order of reassessment. The court observed that the revisional authority has wide jurisdiction to pass orders in revision, including enhancing, modifying, or canceling the assessment, or directing a fresh assessment. However, the revisional authority in this case effectively reassessed the matter, which was deemed erroneous. The court emphasized that the revisional authority should not prejudge the issue and must not convey to the assessee that the authority has already made up its mind. The revisional authority's action of virtually reassessing the case was beyond its jurisdiction.

2. Validity of the Show Cause Notice:
The show cause notice issued by the revisional authority was found to be defective. The notice not only proposed to revise the earlier orders but also indicated a conclusion, which suggested that the authority had already decided the outcome. This was considered a serious error as it defeated the purpose of issuing a show cause notice, which is to provide the assessee with a full and complete opportunity to respond. The court held that the errors in the show cause notice were fatal to the revisional proceedings.

3. Scope of Powers Exercisable by the Revisional Authority u/s 22A:
The court examined whether the revisional authority could substitute the earlier assessment order with a new one. It was argued that u/s 22A, the revisional authority has wide powers, including the ability to enhance, modify, or cancel the assessment and direct a fresh assessment. However, the court upheld the argument that the revisional authority cannot step into the shoes of the assessing officer and redo the assessment. The statutory powers are circumscribed by the wording of section 22A, which indicates that if reassessment is necessary, the revisional authority can only direct reassessment and not perform it themselves. This ensures that the right of appeal and revision is preserved.

Conclusion:
The court set aside the revisional order and remanded the cases to the assessing authority with a direction to issue notice to the assessees, hear them, and pass fresh assessment orders according to law. The show cause notice was also quashed due to its legal defects. The appeals were allowed with no order as to costs.