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2018 (9) TMI 296 - HC - VAT and Sales TaxJurisdiction of the Respondent No. 1 - power of Respondent No. 1 to pass an order under Section 63-A 1 of the Act pending reassessment proceedings under Section 39 2 e of the Act. Whether the Respondent No.1 acted without jurisdiction in invoking Section 63-A of the Act pending reassessment proceedings under Section 39 2 e of the Act? Held that - When once a notice is issued for the purpose of making reassessment, the assessment proceedings would be reopened and the order of assessment ceases to operate. In the present set of facts, notices for reassessment were issued under Section 39 2 e of the Act by the Respondent No.2 on 25.06.2016 whereby the proceedings initiated under Section 39 2 of the Act were dropped. Thus, it can be held that once notice dated 25.06.2016 was issued by the Respondent No.2 to initiate reassessment proceedings, against the reassessment order dated 16.08.2014 passed under Section 39 2 of the Act, the said order dated 16.08.2014 ceases to operate, or in other words, it ceases to be in existence to revise the said order - The Respondent No.1 initiated the revisional proceedings by issuing notice dated 3.11.2016 to revise the order dated 16.08.2014 passed under Section 39 2 of the Act which has ceased to be operative on 25.06.2016 when notice was already issued by the Respondent No.2 under Section 39 2 e of the Act. It can be held that the proceedings initiated by the Respondent No.1 under Section 63-A 1 of the Act is without jurisdiction and nullity in the eye of law - petition allowed.
Issues:
Jurisdiction of Respondent No.1 to pass an order under Section 63-A[1] of the Act pending reassessment proceedings under Section 39[2][e] of the Act. Analysis: The petitioner, engaged in civil works contracts, challenged the legality of orders passed by the Respondents related to reassessment under the Karnataka Value Added Tax Act, 2003. The Respondent No.2 conducted audits and issued reassessment orders for various periods, demanding payments for ineligible input credits. Subsequently, further reassessment notices were issued alleging short payment of tax due to excessive allowance of labor charges. The main challenge in the writ petitions was regarding the jurisdiction of Respondent No.1 to revise orders passed by Respondent No.2 under Section 63-A[1] of the Act during pending reassessment proceedings under Section 39[2][e]. The petitioner contended that the initiation of revisional proceedings by Respondent No.1 was without authority of law as it was based on dropped proceedings by Respondent No.2. The petitioner relied on legal precedents to support their argument. On the other hand, the Additional Government Advocate argued that the revisional powers of Respondent No.1 were justified due to the failure of Respondent No.2 to act on reassessment notices, necessitating action under Section 63-A of the Act. The crucial issue for consideration was whether Respondent No.1 acted within jurisdiction in invoking Section 63-A of the Act during ongoing reassessment proceedings under Section 39[2][e]. The Court referred to legal judgments emphasizing that once reassessment proceedings are initiated, the initial assessment order ceases to operate. In this case, notices for reassessment were issued by Respondent No.2, rendering the order passed by Respondent No.2 under Section 39[2] inoperative. Consequently, the Court held that the revisional proceedings by Respondent No.1 were without jurisdiction and nullity in the eye of the law. Therefore, the impugned orders were quashed, allowing Respondent No.2 to proceed with reassessment proceedings under Section 39[2][e] in accordance with the law. The writ petitions were disposed of with instructions for expedited reassessment proceedings, leaving all rights and contentions of the parties open to be adjudicated before Respondent No.2.
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