2011 (6) TMI 708 - HC - VAT and Sales Tax

Whether annexure C order issued by the Tribunal in the appeal filed by the assessee against the KGST assessment is illegal and unauthorised because the Tribunal has no jurisdiction to direct revision of CST assessment which had become final and against which no appeal was filed even before the first appellate authority? Whether the assessment in this case is tenable? Held that - In this case the Tribunal directed revision of CST assessment in the course of disposal of an appeal filed against the KGST assessment, which in our view is impermissible. However, since the earlier order issued by the Tribunal was not challenged and had become final, we cannot interfere with the said order. he Tribunal could not have directed revision of CST assessment while disposing of an appeal filed against KGST assessment, though for the very same year. Therefore, the observation of the Tribunal on valuation could be considered as a ground for reopening of the CST assessment under rule 6(8) of the CST (Kerala) Rules referred above, by the officer. The time available to the officer for revision of assessment under the above provision is only four years from the expiry of the year to which the tax relates. In this case admittedly the CST assessment for the year 1997-98 was revised only on February 12, 2002 which is clearly outside the period of limitation provided therein. Moreover, on facts also, we do not find any justification for the officer to revise the assessment. We, therefore, allow the revision by vacating the order of the Tribunal and by cancelling the revised CST assessment issued against the assessee for the year 1997-98.

Summary

Issues:
1. Jurisdiction of the Tribunal to direct revision of CST assessment
2. Validity of the assessment in light of the Tribunal's directions
3. Imposition of penalty under section 51(7)(c) of the Act

Analysis:

1. Jurisdiction of the Tribunal to direct revision of CST assessment:
The case involved a revision filed by the assessee challenging the Sales Tax Appellate Tribunal's order confirming a revised assessment under the Central Sales Tax Act for the assessment year 1997-98. The Tribunal had directed the assessing officer to refix the turnover under both KGST and CST Acts, even though the matter regarding CST assessment was not before them. The Tribunal's power to enhance assessment is limited to the subject-matter of appeal. While the Tribunal can provide observations related to CST assessment if the commodity sold is the same, directing revision of CST assessment in the course of disposing of an appeal against KGST assessment is impermissible. However, since the earlier order was not challenged and had become final, the High Court could not interfere with it.

2. Validity of the assessment in light of the Tribunal's directions:
The High Court found that the Tribunal could not have directed revision of the CST assessment while dealing with an appeal against the KGST assessment for the same year. The Tribunal's observation on valuation could be a ground for reopening the CST assessment under the relevant rules, but the time limit for revision had expired in this case. Additionally, there was no justification for the assessing officer to revise the assessment. Therefore, the High Court allowed the revision by vacating the Tribunal's order and canceling the revised CST assessment for the year 1997-98.

3. Imposition of penalty under section 51(7)(c) of the Act:
The case also involved the imposition of a penalty under section 51(7)(c) of the Act on the assessee for alleged evasion of tax based on ingenuine documents found during a check-post interception. The Tribunal set aside the penalty, noting that there was no attempt to evade tax and that the account books appeared to be maintained in the normal course of business. The High Court found the Tribunal's decision reasonable and not perverse, as there was no evidence of evasion. Therefore, the order setting aside the penalty was upheld, and no substantial question of law was found to arise.

In conclusion, the High Court dismissed the appeal, addressing the issues of jurisdiction, assessment validity, and penalty imposition comprehensively based on the legal provisions and factual considerations presented in the case.