2017 (7) TMI 782 - HC - VAT and Sales Tax

Natural justice - reasonable opportunity required to be provided under Section 82 of the VAT Act, was denied - inter-state sale - Held that - There can be a situation where the Revisional authority considers an assessment order to be incorrect. But when the assessment order is passed lawfully in due process and payable tax is determined, just because there is disagreement with the decision of the primary authority, the exercise of suo-motu power of revision is not permitted by law - it is not a case of concealment nor the Revisional power is exercised on account of some manipulation of figures by the Assessee. In fact, the turnover in the return was supported by all requisite bills and invoices. Even then, a higher turnover was assessed by the Primary Authority with reference to the market price of the goods and this was accepted by the Assessee and demanded tax on the determined turnover was paid. The exercise of Revisional power under Section 82 of the VAT Act in such circumstances is found to be untenable and the same stands quashed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Exercise of suo-motu Revisional power under the VAT Act.
2. Justification for re-assessment based on higher turnover.
3. Compliance with the mandatory requirements for Revisional power.
4. Disagreement between the Primary and Revisional Authority.
5. Legality of exercising Revisional power without proper justification.

Analysis:
1. The case involves the exercise of suo-motu Revisional power under the VAT Act for the assessment year 2005-2006. The Revisional Authority issued a show cause notice for re-assessment based on a higher turnover declared at the Assam Check-Gate during inter-state sales of jute. The petitioner challenged this exercise of power, arguing that the assessment made by the Primary Authority was not shown to be erroneous, a crucial requirement for invoking Revisional power.

2. The petitioner contended that the Revisional Authority failed to justify how the assessment was erroneous. The original assessment was based on the market price of jute, which was accepted by the dealer, and tax was paid accordingly. The Revisional Authority's decision to order re-assessment on a higher turnover lacked proper justification and did not meet the mandatory requirements under the VAT Act.

3. The judgment emphasized that for Revision under Section 82 of the VAT Act, the order to be revised must not only be prejudicial to the Revenue's interest but also erroneous. Mere disagreement with the original assessment does not warrant a fresh determination of tax on a higher turnover unless supported by relevant materials proving the error in the initial assessment.

4. The court noted that unless it is established that the market price of jute used in the assessment was incorrect, the Revisional Authority cannot overrule the Primary Authority's decision solely based on a different viewpoint. Disagreement alone does not justify the exercise of suo-motu Revisional power, especially when the original assessment was lawfully conducted and tax was paid as determined.

5. Furthermore, the judgment highlighted that the exercise of Revisional power should not be based on mere disagreement or a different interpretation of facts without concrete evidence of error in the assessment. In this case, where the turnover was supported by proper documentation and the tax was paid accordingly, the Revisional power was deemed unjustified and the re-assessment order was quashed.

In conclusion, the court allowed the case, finding the exercise of Revisional power without proper justification to be untenable and interfering with the re-assessment based on the impugned order.