2008 (9) TMI 907 - HC - VAT and Sales Tax

Escaped turnover - Reassessment - whether inter-State sales made by the assessee were sales not supported by C form required under section 8(1) of the CST Act, therefore, exemption under the notification was not available to the assessee? - Held that - This court is of the opinion that learned Tax Board has wrongly set aside the order of the Deputy Commissioner (Appeals) dated February 16, 2001 as well as order of learned assessing authority passed section 12 of the Act dated March 14, 1997. The contention of learned counsel for the respondent-assessee that since the assessee was availing of benefit under the Incentive Scheme of 1987 and, therefore, no such additional tax could be imposed upon him is also of no avail. The said Incentive Scheme operated in a different field for granting exemption from taxes on the basis of eligible investment made by the assessee during the operative period of the Scheme. Such exemption could not override the exemption wrongly granted to the assessee on account of non-compliance with the mandatory provisions of section 8(1) of the CST Act by not furnishing C form as prescribed in law. Consequently, this revision petition is allowed and the impugned order of Tax Board dated June 18, 2003 is set aside. The Revenue would be entitled to recover the due tax in pursuance of reassessment order dated March 14, 1997

Summary

Issues:
1. Interpretation of statutory provisions regarding reassessment powers under the Central Sales Tax Act, 1956 and the Rajasthan Sales Tax Act, 1994.
2. Validity of assessment order based on non-compliance with mandatory requirements for furnishing "C" form.
3. Jurisdiction of authorities to rectify assessment orders under different sections of the Act.
4. Impact of availing benefits under an Incentive Scheme on tax liabilities.

Analysis:

1. The case involved a dispute where the Revenue challenged the Tax Board's decision to set aside the Deputy Commissioner's order allowing the assessee's appeals for assessment years 1990-91, 1991-92, and 1992-93. The Revenue contended that the Deputy Commissioner wrongly rejected the appeal based on the Supreme Court's decision in a similar case. The Tax Board allowed the assessee's appeal, stating that the Deputy Commissioner could not convert the order under one section into another, as the limitation had expired. The Revenue argued that the assessment order should not be invalidated due to a lack of prescribed form and that the Tax Board erred in setting it aside.

2. The main contention revolved around the requirement of furnishing the "C" form for availing exemptions under the Central Sales Tax Act. The court emphasized that without the "C" form, the exemption could not be granted, making it necessary to reassess and recover any wrongly granted exemptions. The assessing authority's use of Section 12 of the Act for reassessment was deemed correct, considering the binding Supreme Court decision on this matter.

3. The court found that both the Deputy Commissioner and the Tax Board erred in considering the application of Section 17 for rectification of the assessment order. While acknowledging the overlap between reassessment and rectification powers, the court upheld the Revenue's argument that mentioning the wrong provision for withdrawing exemptions would not invalidate the assessment order. The court highlighted the provisions of the RST Act supporting this stance.

4. Lastly, the court addressed the argument regarding the Incentive Scheme of 1987 and its impact on tax liabilities. It was clarified that the benefits under the scheme did not override the requirement to furnish the "C" form for availing exemptions under the CST Act. Therefore, the court allowed the Revenue's revision petition, setting aside the Tax Board's order and allowing the recovery of due taxes based on the reassessment order from 1997.

In conclusion, the judgment clarified the statutory provisions related to reassessment powers, emphasized the importance of complying with mandatory requirements for availing exemptions, discussed the jurisdiction of authorities for rectification, and highlighted that incentive schemes do not negate the need for fulfilling statutory obligations.