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2016 (5) TMI 77 - HC - VAT and Sales TaxSeeking quash of impugned SCN - Deductions had been wrongly claimed by the petitioner under Rule (5) of DSTWC Rules - Invokation of revisional powers under Section 46 of the DST Act - Petitioner contended that the assessment proceedings had lapsed on account of the fact that no reassessment order was passed and suo motu power under Section 46 of the DST Act cannot be invoked on the same ground. The reasons supplied on the request by the petitioner for invoking the powers under Section 46 of the DST Act had revealed that the original assessment order was neither stated to be erroneous nor prejudicial to the interests of the Revenue so the reasons are not sustainable in law since they failed to point out how the deductions had been wrongly allowed. Held that - the only reason for invoking the revisional powers under Section 46 of the DST Act is whereas it has come to the notice of the undersigned that in the assessment order for the year 2003-04 deductions have been wrongly allowed hence said order is erroneous and prejudicial to the interest of revenue. In other words, the language of Section 46 of the DST Act has been reproduced. The reasons fail to specify how the original assessment order is erroneous or prejudicial to the interests of the Revenue and in what manner deductions had been wrongly claimed and allowed to the petitioner. While it is true that in its judgment the Court concluded that no assessment order could be passed on account of limitation, the fact remains that there had to be strong reasons even prima facie for the Deputy Commissioner to invoke revisional powers under Section 46 of the DST Act. It is found that there was no subjective satisfaction of the Deputy Commissioner for initiation of the revisional proceedings by applying objective criteria. The Petitioner had been allowed deductions in violation of Rule 5 of the DSTWC Rules. Thus the decision to invoke the revisional power under Section 46 of the DST Act was not made independently by the Deputy Commissioner. She was acting on the directions of her superior officers. It is well settled legal position that a quasi judicial authority should discharge the statutory discretionary powers independently and not under the dictation of superior officers. It is evident that in exercise of the power under Section 46 of the DST Act, the Deputy Commissioner did not bear in mind the previous history of the case where the Court had quashed the notice dated 5th July 2007 which sought to reopen the assessment for AY 2003-04 on the same ground viz., that the deductions had wrongly been allowed to the Petitioner. Therefore, the invoking of the revisional power by the Deputy Commissioner under Section 46 of the DST Act was unjustified and unwarranted. The impugned SCN dated 2nd February 2010 requires to be quashed on this ground alone. - Decided in favour of petitioner
Issues Involved:
1. Refund of tax and reassessment proceedings. 2. Revisional power under the Delhi Value Added Tax Act (DVAT Act). 3. Validity and jurisdiction of the show-cause notice (SCN). Detailed Analysis: Refund of Tax and Reassessment Proceedings: The petitioner, a joint venture registered under the Income Tax Act, 1961, and the Delhi Sales Tax on Works Contract Act, 1999 (DSTWC Act), sought a refund of ?1,78,58,291 for the Assessment Year (AY) 2003-04. The refund application was filed on 2nd March 2005, but the Assessing Authority issued a notice for reassessment on 5th July 2007, claiming deductions were wrongly claimed. The reassessment notice was not acted upon, leading the petitioner to file Writ Petition (Civil) No. 8526 of 2008. The court directed the respondent to deposit the refund amount, which was eventually released to the petitioner. Revisional Power under the DVAT Act: Section 74A of the DVAT Act allows the Commissioner to revise orders prejudicial to revenue. An amendment in 2010 made this power retrospective from 1st April 2005. The court noted that this power did not revive the long-dead revisionary power under Section 46 of the DST Act. The decision in International Metro Civil Contractors v. CST/VAT supported this interpretation, stating Section 74A had no retrospective effect. Validity and Jurisdiction of the SCN: The SCN dated 2nd February 2010 was issued by the Deputy Commissioner under Section 16 of the DSTWC Act and Section 46 of the DST Act. The petitioner challenged the SCN on the grounds that it was identical to the reassessment notice quashed earlier and lacked specific reasons for invoking revisional powers. The court found that the SCN merely reproduced the language of Section 46 without specifying how the original assessment was erroneous or prejudicial to revenue. Merits of the SCN: The court examined the background note and reasons for reopening the assessment. It found that the Deputy Commissioner acted under the instructions of superior officers, without independent application of mind. This contravened the principle that quasi-judicial authorities must act independently. The court cited precedents where actions based on superior instructions were deemed invalid. Power and Jurisdiction of the Officer Issuing the SCN: The court confirmed that the Deputy Commissioner had the necessary power to issue the SCN, based on orders delegating revisional powers. However, the petitioner’s plea regarding the transfer of jurisdiction was not considered as it was not raised earlier. Conclusion: The court concluded that the Deputy Commissioner did not validly exercise the power of revision. Consequently, the SCN dated 2nd February 2010 was quashed. The writ petition was allowed, with no orders as to costs.
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