2015 (4) TMI 124 - HC - VAT and Sales Tax

Enhancement in total turnover - invocation of the provisions of Section 35 of the KGST Act - Held that - original assessment orders were carried in appeal by the petitioner before the First Appellate Authority. The First Appellate Authority modified the assessment orders in appeal. The original orders therefore merged in the orders of the Appellate Authority. The revenue authorities, who were aggrieved by the mistake or discrepancy in the appellate order, did not choose to carry the said appellate order in appeal or revision before the higher authorities. The appellate order therefore attained finality. In such an event, when consequential orders are passed by the Assessing Authority, pursuant to the directions in the appellate order, I do not think that the power of the Deputy Commissioner under Section 35 of the KGST Act can be invoked to modify or vary the consequential orders passed by the Assessing Authority pursuant to the appellate order of the Appellate Authority. To permit the 2nd respondent to do so would tantamount to ignoring the order of the appellate authority that had already attained finality. The action of the 2nd respondent in invoking the provisions of Section 35 of the KGST Act to modify Exts.P12 to P16 orders of the 1st respondent are therefore wholly without jurisdiction and are necessarily to be set aside. - Decided in favour of assessee.

Summary

Issues:
1. Validity of reopening of assessments under Section 35 of the KGST Act based on excise duty component.
2. Jurisdiction of the Deputy Commissioner to modify consequential orders passed by the Assessing Authority post-appellate order finality.

Issue 1: Validity of reopening of assessments under Section 35 of the KGST Act based on excise duty component:
The petitioner, a manufacturer of Indian Made Foreign Liquor and a registered dealer under the Kerala General Sales Tax Act, challenged the reopening of assessments for the years 2000-01 to 2004-05 by the 2nd respondent. The 2nd respondent sought to invoke Section 35 of the KGST Act to set aside the consequential orders passed by the 1st respondent based on the excise duty component not being considered in the original assessment. The respondents argued that the Deputy Commissioner had the power to pass orders under Section 35 (2A) of the KGST Act on points not decided in appeal, justifying the reopening of assessments. However, the Court held that the power of revision under Section 35 is limited to the original assessment order and does not extend to modifying consequential orders passed post-appellate order finality. The Court found the actions of the 2nd respondent to be without jurisdiction and set aside the reopening of assessments.

Issue 2: Jurisdiction of the Deputy Commissioner to modify consequential orders post-appellate order finality:
The Court emphasized that the power of the Deputy Commissioner under Section 35 of the KGST Act is restricted to revising the original assessment order. In this case, since the original assessment orders were appealed and modified by the First Appellate Authority, the revenue authorities did not challenge the appellate order further. As a result, the appellate order had attained finality, and the Deputy Commissioner could not use Section 35 to modify or vary the consequential orders passed by the Assessing Authority based on the appellate order. The Court held that allowing the 2nd respondent to modify the consequential orders would disregard the finality of the appellate order. The Court rejected the argument of an alternate remedy under the KGST Act, stating that when an authority acts beyond its jurisdiction, the availability of an alternate remedy does not prevent the court from entertaining a writ petition under Article 226 of the Constitution of India. Consequently, the Court allowed the writ petition, setting aside the orders of the 2nd respondent and the notice issued by the 1st respondent, with no order as to costs.