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2009 (10) TMI 860 - HC - VAT and Sales TaxBest judgment assessment - Held that - We opine that the assessee may be otherwise liable to pay the tax as quantified and determined by the revisional authority. The tax as quantified and determined by the revisional authority if has not yet got time-barred and the appellant was liable to pay this amount by way of tax to the State and the respondents are serious about ensuring that, definitely they can do that; in fact it is their duty but that can be achieved only if the respondents, the officials of the Commercial Tax Department take care to follow the statutory provisions at least now and not to act in a negligent and careless manner as had been done hitherto. We are also surprised about the manner in which the Additional Commissioner has chosen to exercise his revisional powers to set aside the order of the appellate authority which was undoubtedly a correct order for the reason of the original authority not having jurisdiction to pass the best judgment assessment order.
Issues:
1. Jurisdiction of assessing officer under section 38(7) of the Karnataka Value Added Tax Act, 2003. 2. Authorization requirement for passing best judgment assessment order. 3. Compliance with statutory provisions by the Commercial Tax Department officials. 4. Exercise of revisional powers by the Additional Commissioner. 5. Observations on the conduct of statutory authorities and improvement needed. Jurisdiction of Assessing Officer under Section 38(7) of the Act: The case revolved around the jurisdiction of the assessing officer to pass a best judgment assessment order under section 38(7) of the Karnataka Value Added Tax Act, 2003. The appellant, a dealer/partnership firm, had not registered under the Act as required by section 22. The Deputy Commissioner passed a best judgment assessment order for the appellant for certain periods in 2005. The first appellate authority held that the officer lacked competence as he was not authorized by the Commissioner of Commercial Taxes. The Additional Commissioner, exercising revisional powers, set aside the appellate order and restored the original assessment. The High Court examined the statutory provisions and found that the assessing officer was not competent to pass the order due to lack of proper authorization. Authorization Requirement for Passing Best Judgment Assessment Order: The High Court emphasized the importance of proper authorization for passing best judgment assessment orders. It noted that the authority authorized by the Commissioner must assess a dealer failing to register, as per section 38(7) of the Act. The court scrutinized the documents presented by the government advocate and found them inadequate to establish compliance with the authorization requirements. The court highlighted the necessity for precise authorization by the Commissioner for such assessments and criticized the careless manner in which the officials handled their duties. Compliance with Statutory Provisions by Commercial Tax Department Officials: The judgment criticized the Commercial Tax Department officials for their inadequate understanding and negligent performance of duties. It pointed out the lack of proper records and highlighted the need for adherence to statutory provisions. The court stressed that statutory authorities must act within the boundaries of the law and exercise their powers in a bona fide manner. It urged officials to follow statutory provisions diligently to ensure proper revenue realization without prejudice or animosity towards dealers. Exercise of Revisional Powers by the Additional Commissioner: The High Court expressed surprise at the Additional Commissioner's decision to set aside the correct order of the appellate authority. It emphasized that revisional powers should be exercised judiciously and in line with legal requirements. The court noted that while ensuring revenue collection is important, it should be done in accordance with the law and not through improper use of authority. Observations on Conduct of Statutory Authorities and Improvement Needed: In concluding remarks, the High Court highlighted the quasi-judicial role of statutory authorities and the need for them to act in a fair and lawful manner. It noted that officials should not treat dealers as adversaries but should ensure compliance with the law. The court spared the respondents from costs but urged them to consider the observations in the judgment and improve their conduct in the future. In summary, the High Court set aside the impugned orders, allowed the appeals, and emphasized the importance of proper authorization, compliance with statutory provisions, and judicious exercise of revisional powers by statutory authorities under the Karnataka Value Added Tax Act, 2003.
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