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2017 (2) TMI 82 - HC - VAT and Sales TaxJurisdiction - revisional power - Whether revisional power could be exercised on the basis of judgment of Hon ble the Supreme Court in K. Raheja Development Corporation v. State of Karnataka, 2005 (5) TMI 7 - Supreme Court , even if the matter had been referred to be considered by a larger Bench by Hon ble the Supreme Court? - Held that - judgment of Hon ble the Supreme Court in K. Raheja Development Corporation s case was a binding precedent declaring the law at that time on the subject to be followed by all courts and authorities below and action could have been taken by the authorities on the basis thereof, if considered appropriate. Whether extended period of limitation for exercise of revisional jurisdiction will apply even in cases where the period provided in the Act prior to the amendment had already expired? - Held that - a dead claim cannot be revived. Right to revise the order had extinguished, which could not be revived. Further life could be injected only in the cases where limitation for revising an assessment order was still existing - extended period for exercise of revisional jurisdiction will be applicable only in cases where period prescribed prior to the amendment had not expired and not where the period had earlier expired as the amendment cannot put life to a dead claim. Whether a show cause notice issued to exercise revisional jurisdiction is bad as it is lacking in basic facts to invoke exception clause and extended period of limitation? - Held that - This court is not going into this aspect of the matter for the reason that at this stage, it has lost its significance, in terms of the earlier order passed by this court, the Commissioner has already disposed of the preliminary objections raised by the petitioner regarding assumption of jurisdiction. Once the order has already been passed, this court is examining the validity of the order as such - The issue is not being examined as in pursuance to the SCN, orders have already been passed and those are under consideration before this court. Whether exception clause enabling exercise of revisional jurisdiction beyond the normal period of limitation prescribed in the Act, could be invoked even in cases where the event had taken place during the normal period prescribed in the Act? - Held that - The question posed deserves to be answered in negative opining that for exercise of power of revision while invoking extended period of limitation as provided for in second proviso to Section 34(1) of the Act, in normal circumstances, the event has to be after the normal period of limitation had already expired. However, there can be some exception where event occurred just before the expiry of period of limitation and the action was taken within reasonable time or the delay is satisfactorily explained. Exception clause is to be invoked only in exceptional circumstances. It is always required to be strictly interpreted even if there is hardship to any of the parties. Whether the circulars issued by the Department are binding on the department and the assessees? - Held that - Any instructions issued by the Department are binding on the departmental authorities except on the issue where any judgment to the contrary exists. These are not binding on the court. A circular which is contrary to statutory provisions has no existence in law. Whether explanation (i) to Section 2(1)(zg) of the Act is ultra vires? - Held that - As the vires of the aforesaid provision has already been upheld by this court, we do not find any reason to re-examine the issue. Whether levy of tax on builders can be sustained in the absence of machinery provisions? - Held that - For the period upto 16.5.2010, there were no Rules or instructions on the subject, to provide for manner of calculation of taxable turnover. In the absence of the machinery provisions specifying the details, though the levy as such cannot be disputed but it has become unenforceable upto 16.5.2010 - From 17.5.2010 onwards, there being Rules in existence, having been amended, we do not find that the levy cannot be sustained. Whether assessment could be framed in the name of a company which stood merged in another company and lost its entity by operation of law? - Held that - no assessment can be framed against a company, which stood dissolved after its merger with another company. As fairly stated by learned counsel for the State, the assessment order dated 8.3.2016 (Annexure P-8), passed against M/s Sukh Realtors Pvt. Ltd., the company which already stood dissolved after merger with M/s S. S. Group Pvt. Ltd., is set aside. There is no question of grant of specific liberty to the department to pass any fresh order, as if the law permits, it can always take action. Petitions disposed off.
Issues Involved:
1. Revisional power based on the Supreme Court judgment in K. Raheja Development Corporation. 2. Applicability of extended period of limitation for revisional jurisdiction. 3. Validity of show cause notice lacking basic facts for invoking exception clause. 4. Invocation of exception clause for revisional jurisdiction beyond the normal period. 5. Binding nature of departmental circulars. 6. Vires of Explanation (i) to Section 2(1)(zg) of the Act. 7. Levy of tax on builders in the absence of machinery provisions. 8. Assessment framed in the name of a dissolved company. Detailed Analysis: Issue No. 1: Revisional Power Based on K. Raheja Development Corporation Judgment The court held that the judgment of the Supreme Court in K. Raheja Development Corporation was a binding precedent and declared the law on the subject at that time. This judgment remained binding until it was reconsidered by a larger bench in L&T's 2nd case, which upheld the law declared in K. Raheja Development Corporation's case. Therefore, authorities could take action based on this judgment. Issue No. 2: Applicability of Extended Period of Limitation for Revisional Jurisdiction The court ruled that the extended period for revisional jurisdiction applies only to cases where the period prescribed before the amendment had not expired. A dead claim cannot be revived by the amendment. The amendment cannot inject life into claims where the limitation period had already expired before the amendment. Issue No. 3: Validity of Show Cause Notice Lacking Basic Facts for Invoking Exception Clause The court did not delve into this issue in detail as the orders had already been passed and were under consideration. The significance of the show cause notice's contents was deemed less relevant at this stage. Issue No. 4: Invocation of Exception Clause for Revisional Jurisdiction Beyond the Normal Period The court opined that the exception clause for invoking extended limitation should be used only in exceptional circumstances. Generally, the event justifying the exception should occur after the normal limitation period has expired. However, if the event occurs just before the expiry and action is taken within a reasonable time or the delay is satisfactorily explained, the exception can be invoked. Issue No. 5: Binding Nature of Departmental Circulars The court held that departmental circulars are binding on the departmental authorities but not on the courts, especially if there is a contrary judicial pronouncement. Circulars contrary to statutory provisions have no legal existence. Issue No. 6: Vires of Explanation (i) to Section 2(1)(zg) of the Act The court upheld the vires of Explanation (i) to Section 2(1)(zg) of the Act, referring to a previous judgment in CHD Developers Limited's case. The explanation was deemed a definition clause and not a charging section, thus not unconstitutional. Issue No. 7: Levy of Tax on Builders in the Absence of Machinery Provisions For the period up to 16.5.2010, the court found that there were no machinery provisions for calculating taxable turnover in the Act or Rules, making the levy unenforceable. From 17.5.2010 onwards, with the amended Rules in place, the levy was sustained. Issue No. 8: Assessment Framed in the Name of a Dissolved Company The court held that no assessment could be framed against a company that had been dissolved after merging with another company. The assessment order against M/s Sukh Realtors Pvt. Ltd., which had merged with M/s S. S. Group Pvt. Ltd., was set aside. Relief: The court disposed of the writ petitions by addressing each legal issue comprehensively, providing clarity on the application of the law in the context of the Haryana Value Added Tax Act, 2003.
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