2005 (6) TMI 526 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against the order revising assessment under section 21(2) of the Karnataka Sales Tax Act, 1957.

Analysis:
The petitioner, a dealer under the Act, approached the Court against the order revising the assessment dated July 1, 2003, passed by the assessing authority for the period April 1, 2001 to March 31, 2002. The revisional authority found that the assessing officer should have determined the tax liability only based on the option for composition, not a regular assessment. The revisional order called upon the petitioner to pay tax only based on the composition option under section 17(6) of the Act. The petitioner argued that the composition option operates only if accepted by the assessing authority and since no order accepting the application was passed, the regular assessment was proper. The revisional authority's order was challenged as illegal and prejudicial to the Revenue.

The Court noted that the application for composition filed by the petitioner was pending before the assessing authority when the relevant rule was amended. The amended rule stated that once an application for composition is filed, it cannot be withdrawn. The Court emphasized that the composition becomes operative only upon acceptance by a positive order from the assessing authority. Without such an order, the composition cannot be imposed on the assessee later, even if it benefits the Revenue.

The Court further held that the assessing officer's inaction in not passing the order at the appropriate time could be irregular, but the order itself was not illegal. Therefore, the order was not subject to revision under section 21 of the Act, even if it resulted in some revenue loss. Consequently, the impugned order revising the assessment was quashed by issuing a writ of certiorari, and the respondents were directed to refund the taxes paid by the petitioner in accordance with the law.

In conclusion, the Court found that the revisional order revising the assessment based on the composition option was unsustainable as the composition was not accepted by a positive order from the assessing authority. The Court emphasized the importance of following the legal procedures for composition under the Act and ruled in favor of the petitioner, quashing the revisional order and directing a refund of taxes paid based on the quashed order.