2017 (5) TMI 441 - HC - VAT and Sales Tax

Reopening of assessment - The permission to reopen the assessment has been granted only for the reason that one of the Forms-F No.03Q-600527 issued by the consignee agent M/s Ram Badra Sales Agency, New Delhi was reported to be fake/furzi and was not issued by the department to the said consignee agent rather to some other dealer - whether the Additional Commissioner is justified in granting permission u/s 29(7) of the VAT Act to the Assessing Authority to reassess the petitioner? Held that - he petitioner in the explanation accepted that on enquiry regarding the disputed Form-F it had come to its knowledge that there may be some irregularity in using the said Form but that is solely attributable to the consignee agent. Therefore, the petitioner has even lodged a first information report against him for the misuse of the said Form if any - The moment the petitioner on his own verification lodges an FIR against consignee agent regarding the use of the disputed Form-F, it is apparent that to some extent the petitioner is also convinced that there is some illegality or misuse in the utilization of the said Form-F - thus, the necessity to reassess the petitioner if any turnover of the petitioner has escaped assessment or if any wrong tax exemption in respect of the consignment covered by the aforesaid Form-F cannot be ruled out. It is not a fit case for interference in exercise of writ jurisdiction - petitioner is open to raise issues with regard to its bonafidy and the grant of tax exemption against the aforesaid Form-F etc. before the Assessing Authority - petition dismissed - decided against petitioner.

Issues Involved:
1. Justification of the Additional Commissioner in granting permission under Section 29(7) of the VAT Act for reassessment.
2. Validity of the Form-F used by the petitioner for tax exemption.
3. Consideration of the petitioner's objections before granting permission for reassessment.

Issue-wise Detailed Analysis:

1. Justification of the Additional Commissioner in Granting Permission under Section 29(7) of the VAT Act for Reassessment:
The core issue was whether the Additional Commissioner was justified in granting permission to the Assessing Authority to reassess the petitioner. According to Section 29(1) of the VAT Act, the Assessing Authority can reassess a dealer if there is a reason to believe that the turnover has escaped assessment, the dealer has been under-assessed, assessed at a lower rate, or any exemptions have been wrongly allowed. Sub-Section (3) limits reassessment to within three years from the end of the relevant assessment year, while Sub-Section (7) extends this period to eight years with the Commissioner's satisfaction.

The court observed that the Commissioner does not act as an adjudicating authority but as an administrative authority. The permission granted by the Additional Commissioner was based on a letter from the Joint Commissioner Special Investigation Branch, which indicated that Form-F used by the petitioner was fictitious. The court held that the material available provided a sufficient basis for the "reason to believe" that income had escaped assessment, thus justifying the reassessment.

2. Validity of the Form-F Used by the Petitioner for Tax Exemption:
The petitioner argued that the Form-F in question was not fake and that they had no role in its issuance. The court referenced several precedents where it was held that a dealer cannot be penalized for the misuse of forms unless there is evidence of collusion or negligence. The court noted that the petitioner had lodged an FIR against the consignee agent, indicating some acknowledgment of irregularity.

The court concluded that the validity of the Form-F and the petitioner's entitlement to tax exemption would be determined during the reassessment proceedings by the Assessing Authority. The court emphasized that the reassessment permission did not necessarily mean the exemption would be refused but required a thorough examination by the Assessing Authority.

3. Consideration of the Petitioner's Objections Before Granting Permission for Reassessment:
The petitioner contended that their objections were not considered before granting permission for reassessment. The court found that the petitioner was given notice and had submitted an explanation, which was considered. The petitioner had acknowledged potential irregularities in the Form-F and had taken action against the consignee agent.

The court held that the petitioner's objections were indeed considered, and the permission granted was neither arbitrary nor unreasonable. The court left it to the Assessing Authority to determine the correctness of the tax exemption during reassessment.

Conclusion:
The court dismissed the petition, stating that the Additional Commissioner’s permission for reassessment was justified and in accordance with the law. The petitioner was advised to present their case during the reassessment proceedings, where the Assessing Authority would consider the validity of the tax exemption independently.

← Previous Next →