2015 (6) TMI 406 - HC - VAT and Sales Tax

Jurisdiction of assessing authority to pass a separate order imposing interest after assessment had concluded - Held that - A considered appraisal of the facts reveals that during assessment proceedings, a separate notice was served, requiring the appellant to show cause against the proposed levy of interest and penalty. The assessing authority should have, ideally decided the question of penalty and interest along with the assessment order but its failure to do so is, at the most, an irregularity, that does not render the impugned order null and void for want of jurisdiction. - An argument that once assessment stood concluded, the assessing authority could not have passed a separate order demanding interest and should have instead filed an application for rectification of the assessment order and then also within two years, disregards the fact that notice requiring the appellant to show cause against proposed levy of interest, was issued and was pending during assessment proceedings and thus, there was no need to have resort to rectification proceedings under Section 33 of the Act. - Decided against assessee.

Summary

Issues:
1. Jurisdiction of assessing authority to impose interest after assessment concluded.
2. Validity of separate order imposing interest after assessment proceedings.
3. Applicability of Section 33 of the Haryana Sales Tax Act, 1973.
4. Interpretation of show cause notice for penalty and interest during assessment proceedings.
5. Impact of irregularity in not deciding penalty and interest along with assessment order.
6. Comparison with the judgment in Commissioner of Trade Tax, U.P. Versus Kanhai Ram Thekedar case.
7. Requirement of rectification proceedings under Section 33 of the Act for imposing interest post-assessment.

Analysis:
1. The appellant contested the orders of the Haryana Tax Tribunal imposing interest post-assessment, arguing that interest should have been imposed during assessment and not in a separate order. Citing the Commissioner of Trade Tax, U.P. Versus Kanhai Ram Thekedar case, the appellant claimed that the assessing authority lacked jurisdiction to pass a separate interest order after concluding assessment.

2. The State of Haryana justified the separate interest order, stating that a show cause notice for penalty and interest was pending during assessment proceedings. The assessing authority was deemed to have the jurisdiction to decide on interest post-assessment, even if penalty proceedings were dropped.

3. The High Court found that a notice to show cause against interest and penalty was issued during assessment, justifying the assessing authority's decision to impose interest separately. The failure to decide on penalty and interest along with the assessment order was considered an irregularity, not affecting the order's validity.

4. The appellant argued that the assessing authority should have rectified the assessment order under Section 33 of the Act if interest was not imposed initially. However, the court ruled that the pending show cause notice during assessment proceedings negated the need for rectification proceedings, as the authority had the right to impose interest separately.

5. The court dismissed the appeal, upholding the Tribunal's decision, which rejected the appellant's contention regarding the assessing authority's jurisdiction to impose interest post-assessment. The irregularity in not deciding on penalty and interest along with the assessment order was deemed non-fatal to the order's validity.

6. The judgment in Kanhai Ram Thekedar's case was distinguished, as in the present case, a show cause notice was issued and interest was levied accordingly, unlike the situation in the referenced case where interest was sought without a formal order.

7. The court emphasized that the notice for proposed levy of interest during assessment proceedings justified the separate interest order post-assessment, eliminating the necessity for rectification proceedings under Section 33 of the Act. Consequently, the appeal was dismissed, affirming the Tribunal's decision.