2018 (8) TMI 878 - HC - VAT and Sales Tax

Reassessment of tax - Section 28(2)(ii) of the Act - Validity of SCN - Held that - In the show-cause-notice as well as impugned order, it has been mentioned that the appellate authority did not allow the appeal on merit, but the appeal was allowed only on the ground of limitation. This ground taken in the show-cause-notice as well as appeal is prima facie against the record. The appellate authority had passed the order in appeal and allowed the same on merit as well as on limitation and, therefore, the very basis of show-cause-notice and the impugned order is incorrect. The Department cannot take recourse to the proceedings under Section 29(7) of the Act after the order of appellate authority which was passed on merit as well as on limitation. Petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Validity of the order granting permission for reassessment under Section 29(7) of the Uttar Pradesh Value Added Tax Act, 2008 for Assessment Year 2011-12.

Analysis:
The petitioner, a company engaged in the business of manufacturing and selling cement, filed regular returns for the Assessment Year 2011-12, which were accepted, and an order was passed by the Deputy Commissioner, Commercial Tax. Subsequently, it was brought to the authorities' attention that certain purchases made by the petitioner from specific firms had discrepancies regarding tax payments, leading to a show-cause notice for reopening the assessment. The Assessing Authority disallowed input tax credit claimed on these purchases, directing the petitioner to pay additional tax. The petitioner appealed this decision, and the appellate authority set aside the order on merit and limitation grounds.

The Department filed an appeal before the Commercial Tax Tribunal against the appellate authority's decision, which was pending. Meanwhile, the Assessing Authority proposed reassessment under Section 29(7) based on the same information. The petitioner objected to the notice issued for reassessment, citing incorrect grounds mentioned in the notice. Despite the petitioner's submissions, the Additional Commissioner, Commercial Tax, granted permission for reassessment.

Upon review, the High Court found discrepancies in the grounds mentioned in the show-cause notice and the impugned order, as they contradicted the appellate authority's decision, which was based on both merit and limitation. The Court emphasized that the Department could not initiate Section 29(7) proceedings after an appellate order, especially when an appeal was pending before the Tribunal. Consequently, the Court set aside the order granting permission for reassessment, ruling in favor of the petitioner.

In conclusion, the High Court allowed the writ petition, holding that the impugned order for reassessment under Section 29(7) for the Assessment Year 2011-12 was unsustainable and set it aside, emphasizing the importance of adherence to appellate decisions and pending appeals in tax matters.