2004 (7) TMI 614 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of reassessment proceedings under section 19 of the Repealed Act.
2. Effect of the repeal of the Act on ongoing assessment proceedings.
3. Jurisdiction of the departmental authorities post-repeal of the Act.

Issue 1: Validity of reassessment proceedings under section 19 of the Repealed Act
The appellant, a registered dealer under the Madhya Pradesh General Sales Tax Act, 1958, was assessed for the year 1994-95. The assessing officer allowed deductions based on documents filed by the appellant. Subsequently, it was discovered that some documents were fake, leading to a reassessment notice under section 19 of the Act. The appellant contended that the initiation of proceedings under section 19 was void due to the repeal of the Act by the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994. The assessing authority overruled this objection, stating that the proceedings would continue. The Court held that the departmental authorities were justified in proceeding against the appellant under section 19 despite the repeal, as the appellant incurred a liability to pay evaded tax under the Repealed Act due to the erroneous deductions.

Issue 2: Effect of the repeal of the Act on ongoing assessment proceedings
The appellant argued that reassessment could only be done under section 28 of the Adhiniyam and not under section 19 of the repealed Act. However, the Court found no merit in this argument, citing section 81 of the Adhiniyam which deals with repeal and saving provisions. The Court emphasized that the repeal of the Act did not affect any rights, privileges, obligations, or liabilities acquired under the Repealed Act. Therefore, the departmental authorities were justified in initiating reassessment proceedings under the repealed Act despite its repeal by the Adhiniyam of 1994.

Issue 3: Jurisdiction of the departmental authorities post-repeal of the Act
The Court, after hearing arguments from both parties, concluded that there was no merit in the appeal. It was noted that fraud was involved as certain deductions were wrongly allowed based on fake documents submitted by the appellant. The Court upheld the decision of the assessing authority to proceed under section 19 of the Act, emphasizing that fraud vitiates everything. The Court found no grounds to interfere with the reasoned order passed by the learned single Judge, leading to the dismissal of the appeal without any costs.

In conclusion, the High Court upheld the validity of reassessment proceedings under the repealed Act, emphasizing the liability incurred by the appellant due to erroneous deductions. The Court clarified the effect of the repeal on ongoing assessment proceedings and affirmed the jurisdiction of the departmental authorities to proceed under the repealed Act post its repeal by the Adhiniyam of 1994.