2011 (2) TMI 1337 - HC - VAT and Sales Tax

Input-tax credit disallowed - whether in the absence of the allocation of the area by issue of a direction under section 61(1) of the Act, the revisional authority had no jurisdiction to make the reassessment? Whether in the absence of any fresh evidence being available, the question of passing a second reassessment order as contemplated under section 39(2) of the Act is without jurisdiction Held that - The learned counsel for the State has produced before the court, the order passed by the Commissioner bearing No. 4 2005-06 dated June 7, 2005 where under the Act, the various courts have been re-designated and also their jurisdiction has been redefined. In view of the aforesaid Government orders, we do not see any substance in the first contention. In so far as the second contention as the order discloses the main grounds on which the input tax have been disallowed is the documents on which reliance is placed do not indicate payment of tax or the genuineness of the document is doubtful and the assessing authority has not properly applied his mind. All these may be a good ground to set aside the assessment order. But after setting aside the order as the matter was remitted back to the assessing authority on other aspects, the revisional authority should have directed the assessing authority to reappreciate the material on record in this regard also and pass appropriate orders. Therefore to that extent probably the order passed by the revisional authority cannot be sustained. Appeal partly allowed.

Summary

Issues:
Challenging reassessment disallowing input-tax credit; Jurisdiction of revisional authority; Validity of second reassessment order under section 39(2) of the Act.

Analysis:
The appeals challenge the order of reassessment disallowing input-tax credit granted to the assessee, covering four different periods but with similar questions. The assessee, a holder of a quarrying license, was found to have not declared taxable sales of granites, leading to penalty and interest levied under the Karnataka Value Added Tax Act, 2003. The appellate authority annulled the audit orders without legal authority, prompting proceedings under section 64(1) of the Act. The revisional authority found improper allowance of input-tax credit due to invalid tax invoices and lack of proper verification. A show-cause notice was issued, and after hearing the assessee, the revision was allowed, setting aside the appellate order and restoring the assessing authority's decision.

The first ground raised was the jurisdiction of the revisional authority without the allocation of area under section 61(1) of the Act. The argument was that the revisional authority lacked jurisdiction due to the absence of specific direction. However, the court noted that section 64 confers revisional powers without the need for additional direction, and the argument was dismissed based on a government order redefining court jurisdictions.

The second ground questioned the validity of passing a second reassessment order under section 39(2) of the Act without fresh evidence. The court highlighted that for a second reassessment, fresh evidence must be present, and the assessing authority must reevaluate the material on record. While the grounds for disallowing input tax were valid, the revisional authority failed to direct the assessing authority to reassess the matter properly. Consequently, the order was partly allowed, directing the assessing authority to adjudicate the entitlement to input tax deduction based on the material available and observations made.

In conclusion, all four appeals were partly allowed, requiring the assessing authority to reconsider the input tax deduction eligibility based on the revisional authority's observations. The miscellaneous applications were dismissed, and the orders were made accordingly.