2008 (7) TMI 885 - HC - VAT and Sales Tax

Reopen the assessment proceedings - cross-examination - witnesses could not be presented for cross-examination - Held that - At this stage, it may be noticed that an attempt was made by the revisional authority to offer an opportunity of cross-examination to the assessee-firm by issuing summons to the witnesses and by supplying the material documents to the assessee-firm. In these circumstances, deem it appropriate that rather than remitting the matter to the assessing authority, it would be just and proper, if the matter is remanded to the revisional authority, so that revision petition filed by the assessee-firm can be re-adjudicated, in the light of the observations made by this court. The revision petition filed by the assessee-firm is restored to its original number. The revisional authority shall re-decide the aforesaid revision petition, in accordance with law, and by keeping in view the observations made by this court in the above discussion.

Issues Involved:
1. Jurisdiction of the assessing authority.
2. Reopening of assessment proceedings.
3. Non-supply of adverse material and denial of cross-examination.
4. Limitation period for reassessment.
5. Use of statements and material collected during investigation.

Detailed Analysis:

1. Jurisdiction of the Assessing Authority:
The initial assessment proceedings for the period April 14, 1982, to March 31, 1983, were completed on July 22, 1985. The petitioner-firm challenged the reopening of these assessments under section 19(1) of the M.P. General Sales Tax Act, 1958. The court directed the assessing authority to first determine the question of jurisdiction, which was decided against the assessee. This decision was upheld by the court in subsequent appeals.

2. Reopening of Assessment Proceedings:
The reassessment proceedings were initiated based on adverse material collected by the Department. The petitioner-firm sought copies of this material and the opportunity to cross-examine the witnesses whose statements were used to reopen the assessment. The assessing authority denied these requests, leading to the reassessment order dated December 29, 1997. The revisional authority initially accepted the limitation objection raised by the assessee, but the Board of Revenue later set aside this decision, allowing the reassessment to proceed.

3. Non-supply of Adverse Material and Denial of Cross-examination:
The assessee-firm consistently requested the supply of adverse material and the opportunity to cross-examine the witnesses. The revisional authority initially agreed, remanding the case to the assessing authority to provide these opportunities. However, the assessing authority again denied the cross-examination request in the reassessment order dated January 13, 2006. The revisional authority later issued summons to the witnesses, but they did not appear, and their statements were used against the assessee without cross-examination.

4. Limitation Period for Reassessment:
The revisional authority initially accepted the assessee's argument that the reassessment was barred by limitation. However, the Board of Revenue overturned this decision, allowing the reassessment to proceed. The revisional authority's subsequent decision to proceed with the reassessment, despite the non-appearance of witnesses for cross-examination, was contested by the assessee.

5. Use of Statements and Material Collected During Investigation:
The court emphasized that the statements and material collected during the investigation could not be used against the assessee without the opportunity for cross-examination. The absence of the witnesses, despite being summoned, should have led to an adverse inference against the Department, not the assessee. The court noted that the principles of fair play and natural justice were violated by using these statements without cross-examination.

Conclusion:
The court allowed the writ petition, setting aside the revisional order dated January 31, 2007. The revision petition filed by the assessee-firm was restored, and the revisional authority was directed to re-adjudicate the petition, considering the court's observations. The parties were directed to appear before the revisional authority on August 25, 2008.

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