2011 (1) TMI 1280 - HC - VAT and Sales Tax

Whether when the assessment order was revised under section 21, the assessment order merged with that revisional order, therefore, the Additional Commissioner of Commercial Taxes had no jurisdiction to again revise the assessment order as it was not in existence at all? if the Additional Commissioner of Commercial Taxes is exercising his power under section 22, setting aside the order of revisional authority as well as the assessment order, he should have set aside the entire order and should have remitted the matter back to the assessing authority for denovo enquiry and for fresh assessment, he could not have made a restricted remand and decided the other issues? Held that - It is not disputed that such a power is vested with the Additional Commissioner of Commercial Taxes. Therefore, when the revisional proceedings were initiated under section 22, revised order passed under section 21, the revision is maintainable and therefore, we do not see any substance in the said contention. In the instant case, in respect of the matter where material available on record and on undisputed facts, he has passed the orders which is final. On matters where he did not have sufficient material and enquiry was required, he has remanded the matter to the assessing officer for enquiry. Therefore, said conduct cannot be found fault with as it is well within his jurisdiction. Appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of Additional Commissioner of Commercial Taxes to revise the assessment order.
2. Scope of remand by the revisional authority.

Analysis:

Issue 1: Jurisdiction of Additional Commissioner of Commercial Taxes to revise the assessment order

The appeal was filed by the assessee challenging the order passed by the revisional authority under section 22(A)(1) of the Karnataka Sales Tax Act, 1957. The assessee, a partnership firm engaged in construction and sale of residential houses, believed that the Act did not apply to them as they were constructing on their own land and selling houses with undivided shares. However, based on a Supreme Court judgment, they filed returns and paid taxes. The Assistant Commissioner of Commercial Taxes passed an assessment order granting benefits and refunds. Subsequently, the Commissioner proposed to revise the assessment order, which was dropped by the Joint Commissioner. The Additional Commissioner then set aside the revisional order and assessment order for the year 2004-05, remanding certain aspects. The counsel for the assessee contended that the Additional Commissioner had no jurisdiction to revise the assessment order as it had merged with the revisional order. However, the court held that the Additional Commissioner had the power to revise the order dated July 29, 2008, not the original assessment order dated February 7, 2007. Therefore, the revision was deemed maintainable, and the appeal on this ground was dismissed.

Issue 2: Scope of remand by the revisional authority

The counsel for the assessee further argued that the Additional Commissioner, if exercising power under section 22, should have set aside the entire order and remitted the matter for fresh assessment, rather than making a restricted remand and deciding other issues. The court clarified that the revisional authority has the jurisdiction to set aside orders of assessment and direct reassessment. The authority can decide issues based on available material, remand matters lacking sufficient material, or make final decisions. In this case, the revisional authority's actions were within its jurisdiction, as it passed final orders on certain issues where material was sufficient and remanded matters requiring further enquiry to the assessing officer. The court found no fault with the authority's conduct and upheld the order. Consequently, the appeal was dismissed as there was no justification to interfere with the revisional authority's well-considered decision.