2017 (3) TMI 401 - HC - VAT and Sales Tax

Legality and validity of suo motu revisional order passed by the Joint Commissioner - the assessee has been deprived of his right to object to the levy of higher rate of tax of 12.5% on the sale of second hand Tippers - Held that - once all the orders passed by the authorities below were set aside by the learned Tribunal, the learned Tribunal ought to have directed the assessing authority to pass fresh orders in accordance with law. Not having done that, even though the records were sent back to the assessing authority under the impugned order, we are of the opinion that the assessee as well as the purchaser of the second hand Tippers have been deprived of their legal rights to raise their contentions before the assessing authority, even though the orders of the lower authorities were set at naught and matter was sent back by the Tribunal to square one, in the absence of any further directions by the learned Tribunal, this difficulty has arisen - matter will now stand restored back to the assessing authority and the assessing authority will be required to undertake the assessment procedure afresh - petition allowed by way of remand.

Summary

Issues: Impugned re-assessment order, forfeiture order under Section 9(2) of the Central Sales Tax Act, 1956, read with Section 47(3) of the Karnataka Value Added Tax Act, 2003; Deprivation of assessee's right to object to levy of higher tax rate; Lack of direction to assessing authority; Maintainability of suo motu revisional order; Negation of rights due to absence of further direction by Tribunal; Restoration of matter to assessing authority; Conclusion of fresh proceedings within one year.

Analysis:

The judgment revolves around the impugned re-assessment order and forfeiture order under specific tax acts. The Karnataka Appellate Tribunal set aside these orders without providing further directions to the assessing authority. The petitioner's counsel argued that this deprived the assessee of the right to object to the higher tax rate imposed on the sale of second-hand Tippers. The Tribunal's decision negated the assessee's ability to contest the tax imposition or the purchaser's refund claim, creating a legal vacuum.

The Court refrained from delving into the suo motu revisional order's maintainability under the tax act. However, it emphasized that after setting aside all lower authorities' orders, the Tribunal should have directed the assessing authority to reevaluate the matter. Failing to issue such a directive left the parties without the opportunity to present their contentions before the assessing authority, despite the reset of proceedings. To rectify this, the Court directed the matter to be restored to the assessing authority for a fresh assessment procedure.

The judgment clarified that the assessing authority must conduct the fresh proceedings within a year from the judgment date. It allowed the concerned parties to raise objections before the assessing authority without making any observations on the merits of their claims. The Court concluded by disposing of the Revision Petition and scheduling the assessee's appearance before the assessing authority on a specified date.