2017 (4) TMI 1321 - HC - VAT and Sales Tax

Revision - suo motu revisional power vested in the Deputy Commissioner of Taxes, Zone-B - section 36 of the erstwhile Assam General Sales Tax Act, 1993 - Held that - the rectification of mistakes in the original assessment order, as put in motion and concluded by the DCT, is definitely not for rectification of any arithmetical error or mistake of a factual nature within the meaning of section 37 of the Act. The proceeding under section 37 that had been initiated by the assessing officer with the notice dated May 26, 2009 did not proceed at all. It appeared to have been abandoned and no reason is found on record. The only plausible explanation would be that having regard to the contours of section 37 with its limited scope for making rectification which is confined to rectifying any arithmetical mistake or other mistake of a factual nature apparent from the record of the case, the said proceeding was cut short. Apparently, the short-coming in the assessment order dated July 5, 2007 was in respect of the percentum of deduction allowed in excess, contrary to the provisions under section 8(3)(iv)(b) of the Act. The exercise so contemplated was not certainly one falling under section 37 of the Act. The Act does not vest in the Revenue any specific power to question an order of assessment by means of an appeal. Corrective order was passed by reverting to the only possible mode available to the revisional authority under section 36(1) of the Act. Recourse to the said provision and satisfaction derived to the existence of the conditions precedent in section 36(1) justifying the impugned order dated July 10, 2011 is the critical issue for determination. The provision under section 37 of the Act is not applicable proprio vigore. Power under section 18 of the Act was not put in motion to reopen the concluded assessment. It was revised under section 36(1) of the Act, which power vested with the revisional authority. There can be no question of trenching of power in the present exercise. The present is a fit case for exercise of suo motu revisional power by the DCT under section 36(1) of the Act - revision petition fails and is accordingly dismissed.

Issues Involved:
1. Suo motu revisional power of the Deputy Commissioner of Taxes (DCT) under Section 36 of the Assam General Sales Tax Act, 1993.
2. Validity of the revisional order dated July 10, 2011, and the notice of demand dated July 18, 2011.
3. Affirmation by the Assam Board of Revenue of the DCT's order, except the direction to the assessing authority for revising the assessment order.
4. Petitioner's challenge to the revisional power and the assessment process.

Issue-wise Detailed Analysis:

1. Suo Motu Revisional Power of the DCT:
The essence of the suo motu revisional power vested in the DCT under Section 36 of the Assam General Sales Tax Act, 1993, was the primary contention. The DCT exercised this power to revise the assessment order dated July 5, 2007, finding it erroneous and prejudicial to the interest of the Revenue. The revisional authority's power under Section 36(1) allows for examining records and passing orders if the original order is found erroneous and prejudicial to the Revenue.

2. Validity of the Revisional Order and Notice of Demand:
The petitioner-company submitted its return for the assessment year 2004-05, which was scrutinized, and a notice for rectification was issued on May 26, 2009, due to excess deductions allowed. However, no action was taken on this notice. Subsequently, the DCT issued a show-cause notice on June 17, 2011, indicating errors in the assessment, such as excessive deductions and failure to include certain costs in taxable turnover. The DCT's order dated July 10, 2011, canceled the original assessment and issued a fresh demand notice on July 18, 2011, highlighting the short levy of tax amounting to ?43,14,189.

3. Affirmation by the Assam Board of Revenue:
The Assam Board of Revenue affirmed the DCT's order dated July 10, 2011, except for the direction to the assessing authority to revise the assessment order. The Board held that the assessment made by the revisional authority should be deemed as part of his revisional order.

4. Petitioner's Challenge to the Revisional Power and Assessment Process:
The petitioner-company contended that the DCT encroached upon the assessing authority's power to rectify mistakes and that the revisional power under Section 36(1) should be limited to jurisdictional errors. The petitioner argued that the DCT's actions were beyond the statutory powers and that the exercise of revisional power was illegal. The petitioner also challenged the validity of the deductions and the computation of taxable turnover.

Court's Findings:

Suo Motu Revisional Power:
The court clarified that the DCT's revisional power under Section 36(1) is not limited to jurisdictional errors but includes correcting erroneous orders prejudicial to the Revenue. The court referred to the Full Bench decision in Commissioner of Income-tax, Gauhati-1 v. Jawahar Bhattacharjee, which held that revisional power can be exercised for errors in assumption of facts, incorrect application of law, or lack of application of mind.

Validity of Revisional Order and Notice of Demand:
The court found that the DCT correctly exercised suo motu revisional power under Section 36(1) as the original assessment order allowed deductions exceeding the statutory limit of 25%, resulting in loss of revenue. The revisional order dated July 10, 2011, and the subsequent demand notice were upheld.

Affirmation by the Assam Board of Revenue:
The court upheld the Board's decision affirming the DCT's order, except for the direction to the assessing authority to revise the assessment order, which was deemed part of the revisional authority's order.

Petitioner's Challenge:
The court dismissed the petitioner's arguments, stating that the DCT's actions were within the statutory powers under Section 36(1). The court emphasized that the revisional authority's power is not confined to jurisdictional errors but includes correcting any erroneous order prejudicial to the Revenue.

Conclusion:
The court concluded that the DCT's exercise of suo motu revisional power under Section 36(1) was justified. The revisional order dated July 10, 2011, and the notice of demand dated July 18, 2011, were upheld, and the petition was dismissed without any order as to cost.

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