2010 (5) TMI 807 - HC - VAT and Sales Tax

Whether after submission of the annual return, the proceedings could have taken place in pursuance to the provision contained in Section 25 (1 ) (ii) of UPVAT Act, 2008? Held that - submission of the learned Additional Chief Standing Counsel to relegate the matter to statutory forum does not seem to be correct. Since the authorities lacks jurisdiction to pass the impugned order, it is a fit case where the jurisdiction conferred by Article 226 of the Constitution of India should be exercised keeping in view the settled propositions of law - instead of proceeding under Section 25 (1)(ii) of the Act, the department has to proceed with regard to assessment in pursuance to Section 26 of the Act. The filing of annual return under Section 24 of the Act, is one more reason for setting aside the impugned order. Petition allowed - decided in favor of assessee.

Summary

Issues:
1. Interpretation of Section 25 (1) (ii) of the Uttar Pradesh Value Added Tax Act, 2008.
2. Whether the assessing authority can proceed under Section 25 (1) (ii) after the submission of the annual return.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Analysis:

Issue 1: Interpretation of Section 25 (1) (ii) of the Act
The petitioner, a proprietorship firm, filed the annual original return as required under Section 24 of the Act. The impugned order was passed under Section 25 (1) (ii) for provisional assessment, leading to a demand notice for tax payment. The key contention was whether such proceedings could be initiated after the submission of the annual return. The court analyzed Section 25, emphasizing that the power under this provision can only be exercised when the tax return is not filed. The court held that once the annual tax return is filed within the stipulated period, the assessing authority must proceed under Section 26 of the Act, not under Section 25 (1) (ii).

Issue 2: Assessment Procedure Post Annual Return Submission
The petitioner argued that the assessing authority lost the right to proceed under Section 25 (1) (ii) upon filing the annual return. The respondent contended that since a notice was issued before the return filing, they had the right to proceed. The court held that the impugned demand notice was improper after the annual return submission. It highlighted that the revenue should assess under Section 26, considering all relevant facts and materials. Proceeding under Section 25 would lead to conflicting assessments, and the revenue had the power to review all materials while assessing under Section 26.

Issue 3: Jurisdiction of High Court under Article 226
The court addressed the argument of relegating the matter to an appellate forum under Section 55 of the Act. It cited various Supreme Court judgments emphasizing that courts have the constitutional duty to intervene if authorities act without jurisdiction or violate fundamental rights. The court held that the High Court's jurisdiction under Article 226 should be exercised when authorities exceed their legal boundaries, even if alternative remedies are available. The court allowed the writ petition, quashing the impugned order under Section 25 (1) (ii) and directing the revenue to proceed based on the original annual return within three months.

In conclusion, the High Court's decision clarified the proper procedure post annual return submission, emphasizing the statutory provisions and the court's jurisdiction to intervene when authorities act beyond their legal scope.