2007 (12) TMI 422 - HC - VAT and Sales Tax

Reassessment of commercial tax - Held that - Perusal of the order of the assessing authority shows that it had not adverted to at all to the said pleas/ objections raised by the assessee-firm. In these circumstances, without commenting any further on the merits of the controversy, it would be appropriate, if the matter is remanded back to the assessing authority for fresh determination with regard to the reassessment of tax, since the order of penalty passed originally by the assessing authority has already been set aside. Consequently, the present petitions are allowed.

Summary

Issues:
1. Reassessment of commercial tax for various assessment years.
2. Reassessment of entry tax for the same assessment years.
3. Validity of penalty imposed by the assessing authority.
4. Consideration of objections raised by the petitioner-firm.
5. Adequacy of material provided by the department during reassessment proceedings.
6. Revisional authority's decision on reassessment and penalty.

The judgment by the High Court of Madhya Pradesh pertains to eight writ petitions filed by the same assessee, M/s. Adinath Traders. The petitions involve a dispute regarding reassessment of commercial tax and entry tax for multiple assessment years. The petitioner-firm, a registered dealer under the M.P. Vanijiyak Kar Adhiniyam, 1994, deals in coconuts sourced from Tamil Nadu for sale in Madhya Pradesh. The assessing authority issued a show cause notice under section 28 of the Act, suspecting sales had escaped assessment, leading to a reassessment order and penalty imposition. The revisional authority initially allowed the revision petition, remanding the matter for reconsideration. Subsequently, a reassessment order was passed, demanding additional tax and imposing a penalty, which was challenged by the petitioner-firm through a revision petition.

The petitioner-firm contested the reassessment orders, arguing that no material was provided by the department to justify the reassessment. The revisional authority upheld the reassessment for additional tax but set aside the penalty, considering the lack of evidence connecting the sales from Tamil Nadu dealers to the petitioner-firm. The petitioner-firm raised objections regarding the lack of material and the reliance on incomplete evidence by the assessing authority. The revisional authority's decision to set aside the penalty based on insufficient evidence was deemed contradictory and legally unsustainable by the petitioner's counsel.

The government counsel argued that the assessing authority was justified in issuing the show cause notice under section 28 of the Act based on a reason to believe that sales were concealed. As the petitioner-firm failed to provide material to support the original assessment, the reassessment was deemed valid. The court considered the arguments from both sides and reviewed the observations made by the revisional authority in its order.

The court noted that the revisional authority accepted the petitioner's plea regarding the lack of connection between sales in the account books of Tamil Nadu dealers and the petitioner-firm, leading to the setting aside of the penalty. However, the court found that the assessing authority did not address the objections raised by the petitioner-firm, indicating a lack of consideration for crucial points during the reassessment process. Therefore, the court decided to remand the matter back to the assessing authority for a fresh determination on the reassessment of tax, given the setting aside of the penalty.

In conclusion, the court allowed the petitions, setting aside the orders of the revisional authority and the assessing authority regarding the reassessment of tax. The matter was remanded to the assessing authority for a fresh determination solely on the tax issue. The court also directed that any requests for record/documents by the petitioner-firm in the fresh proceedings should be addressed in accordance with the law.