2012 (1) TMI 169 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Limitation for reopening assessment.
2. Violation of natural justice.
3. Powers of the Deputy Commissioner u/s 35 of the KGST Act.

Summary:

1. Limitation for reopening assessment:
The petitioner challenged the Deputy Commissioner's order for reopening the sales tax assessment for 1996-97, arguing that the limitation period had expired u/s 19(1) of the KGST Act. The High Court clarified that the assessing officer has five years from the end of the relevant year to revise an assessment. However, the Deputy Commissioner, exercising supervisory powers u/s 35(1), has four years from the date of the original assessment order to correct any omissions or mistakes. The Court rejected the petitioner's contention, stating that the limitation periods for the assessing officer and the Deputy Commissioner are distinct and serve different purposes.

2. Violation of natural justice:
The petitioner contended that the Deputy Commissioner's order was passed without issuing notice and providing an opportunity to be heard, violating sub-section (3) of section 35. The High Court found that notice was served through affixture at the petitioner's business place, as the business was closed and no residential address was provided. The Court noted that the Deputy Commissioner directed a re-examination of the assessment due to new information from a crime file indicating tax evasion. The Court concluded that the petitioner still had the opportunity to contest the reassessment before the assessing officer, thus there was no denial of natural justice.

3. Powers of the Deputy Commissioner u/s 35 of the KGST Act:
The High Court upheld the Deputy Commissioner's authority to revise orders prejudicial to the interest of the Revenue u/s 35(1). The Court emphasized that the Deputy Commissioner's powers are supervisory and distinct from the assessing officer's powers u/s 19(1). The Deputy Commissioner acted within the four-year limitation period provided u/s 35(2)(c) to correct the assessment based on new evidence of tax evasion. The Court found no infirmity or irregularity in the Deputy Commissioner's order, as it aimed to prevent tax evasion and ensure proper tax collection.

Conclusion:
The High Court dismissed the appeal, affirming the Tribunal's order and the Deputy Commissioner's authority to revise the assessment. The Court found no violation of natural justice or limitation issues, emphasizing the distinct supervisory powers of the Deputy Commissioner u/s 35 of the KGST Act.