2007 (5) TMI 588 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Adjustment of excess tax paid for previous years against the tax liability of the current year.
2. Validity of rectification of assessment order without providing an opportunity of being heard.
3. Competence of the revisional authority to direct fresh rectification after setting aside the earlier rectification order.

Summary:

1. Adjustment of Excess Tax Paid:
The petitioner, a partnership firm engaged in works contracts, submitted its return of turnover for the year 1996-97, claiming adjustment of excess tax paid for the years 1993-94 and 1994-95 against the tax liability of 1996-97. The Superintendent of Taxes initially allowed this adjustment and passed the assessment order u/s 17(4) of the Assam General Sales Tax Act, 1993. However, after two years, the Superintendent issued a notice stating that the adjustment was made in contravention of section 30 of the Act, leading to a rectification of the assessment order u/s 37(1) of the Act, disallowing the adjustment and raising an additional tax demand.

2. Validity of Rectification Without Hearing:
The petitioner objected to the rectification, arguing that it was done without providing an opportunity of being heard, violating principles of natural justice. The Joint Commissioner of Taxes set aside the rectification order on this ground and directed the Superintendent to pass a fresh rectification order after allowing the petitioner an opportunity of being heard.

3. Competence of Revisional Authority for Fresh Rectification:
The petitioner contended that the revisional authority could not direct a fresh rectification after setting aside the earlier order, as the period of limitation u/s 37(1) of the Act had expired. The court, however, upheld the revisional authority's competence to issue such a direction, citing section 37(2) of the Act and relevant case law, including *Director of Inspection of Income-tax (Investigation) v. Pooran Mall & Sons* and *Commissioner of Income-tax v. National Taj Traders*. The court emphasized that a literal construction of the limitation period would lead to absurd results and frustrate the purpose of the Act.

Conclusion:
The court found no merit in the petitioner's arguments and upheld both the revisional and appellate orders. The writ petition was dismissed, and the Tribunal's judgment was affirmed, with no order as to costs.