2014 (7) TMI 887 - HC - VAT and Sales Tax

Restoring of re assessment order - Exercise of suo moto revisional authority - Held that - effect of the order passed by the Commissioner in exercising of revisional jurisdiction has virtually left the assessee without remedy of first appeal, as the Commissioner after setting aside the order of the first appellate authority has left the matter at that stage without directing the first appellate authority to examine the merits of the appeal and to pass orders by himself and not by remanding the matter to the original authority. - As there is a statutory bar for the first appellate authority to remand the matter to the assessing authority, to that extent, the order passed by the first appellate authority has undoubtedly committed an error in law - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Appeal under section 24 of the Karnataka Sales Tax Act, 1957 against common order dated January 6, 2010 passed by the Additional Commissioner of Commercial Taxes for two assessment periods: 2003-04 and 2004-05.

Analysis:
The judgment involves an appeal by the assessee under section 24 of the Karnataka Sales Tax Act, 1957 against a common order passed by the Additional Commissioner of Commercial Taxes for two assessment periods: 2003-04 and 2004-05. The Additional Commissioner, while exercising suo motu revisional powers, set aside the common appellate order passed by the Joint Commissioner of Commercial Taxes. The assessee had appealed against the reassessment order passed by the assessing authority, which was annulled by the Appellate Commissioner. However, the Additional Commissioner's decision left the appellant without the remedy of first appeal under section 20 of the Act, as the appellant was deprived of the remand order passed by the Joint Commissioner (Appeals).

The appeal was admitted on November 3, 2011, without reference to any questions of law. The court heard arguments from both parties. The counsel for the assessee contended that the Additional Commissioner's order was not legally tenable. The assessing authority had passed the assessment order after the liberty reserved by the Appellate Commissioner, which was also set aside. The counsel argued that the revisional jurisdiction exercised by the Commissioner effectively denied the assessee the statutory appellate remedy under section 20 of the Act.

On the other hand, the Additional Government Advocate argued that the Commissioner acted within his powers by passing suo motu revisional orders. The Commissioner was entitled to revise and set aside the first appellate authority's order if it was found detrimental to the revenue's interest or legally unsustainable. The court noted that the Commissioner's order had left the assessee without the remedy of first appeal, as the matter was not directed back to the first appellate authority for fresh examination.

The court held that the Commissioner's order, while within his powers, erred in denying the appellant the opportunity for a first appeal. The court set aside the order of the revisional authority and directed a modification for a remand to the first appellate authority. The first appellate authority was instructed to reexamine the appeal independently and pass orders accordingly, without remanding the matter back to the assessing authority. Consequently, the appeals were allowed, and the assessee was directed to appear before the first appellate authority for further instructions on the matter.