2013 (11) TMI 1531 - HC - VAT and Sales Tax

Reassessment proceedings - Penalty @150% - Held that - reassessment order has been passed by the AO solely on the basis of show cause notice issued by the Excise Department. It can be seen that the assessment which was previously concluded was reopened on the premise that during the excise raid, it was revealed that the petitioner had clandestinely removed goods without payment of excise duty. The Sales Tax Department, therefore, formed a belief that value of the goods Excise duty evaded and formed part of turnover of the assessee for the purpose of tax under the VAT Act. Identical question came to be considered by this Court in the case of Futura Ceramics Pvt. Ltd. (2012 (12) TMI 955 - GUJARAT HIGH COURT) and a similar reassessment order which was passed on the basis of the show cause notice issued by the Excise Department has been set aside - Decided in favour of assessee.

Summary

Issues:
Challenge to reassessment order based on show cause notice from Excise Department.

Analysis:
The petitioner, a registered dealer under the VAT Act, challenged a reassessment order directing payment of balance tax and penalty based on a show cause notice issued by the Excise Department. The petitioner contended that the reassessment solely on this basis was impermissible, citing a previous court decision setting aside a similar order. The respondent did not dispute this and requested liberty to reassess lawfully. The court noted the previous decision where a reassessment solely on a show cause notice was quashed, emphasizing the need for an independent opinion based on evidence, not just the notice. Consequently, the court quashed the impugned reassessment order but allowed for a lawful reassessment with proper opportunity for the petitioner.

This case highlights the importance of conducting reassessments based on thorough examination and independent findings rather than solely relying on notices from other departments. The court emphasized the need for proper inquiry and evidence before making additions for tax purposes. The decision serves as a reminder that legal procedures must be followed diligently to ensure fair and lawful assessments.