2019 (4) TMI 6 - HC - VAT and Sales Tax

Jurisdiction - power of Assessing Authority - the Tribunal had decided the issue, on merits, in favour of the petitioner and had thereafter remanded the matter to the Assessing Authority on a limited question - whether the Assessing Authority had no jurisdiction to look beyond that order of the Tribunal or to examine any other or further issue in the proceedings thus remanded to it? Held that - A finding recorded by the higher Appellate Authority or Court, that is otherwise binding on a lower authority, cannot be permitted to be disobeyed by the former - Once the power of the original/Assessing Authority was held to be subject to the directions of the higher Appellate Authority, clearly, the Assessing Authority is restrained from acting contrary to the directions issued by the higher Appellate Authority. Once the directions issued in the order of remand are binding on the Assessing Authority, the specific findings recorded by the higher Appellate Authority on specific issues have to be held binding on the Assessing Authority, as well. In the facts of the present case, the Assessing Authority would remain bound by the finding of the Tribunal on the issue of eligibility to exemption available to the assessee on Forms-D issued by such purchasing dealers/institutions, on the reasoning they may not be the Central Government or a State Government. That finding having attained finality, no contrary conclusion is permissible to be drawn. Similarly, the Assessing Authority is bound to consider the claim of exemption/concession made by the assessee on the strength of Forms-C, D and F etc., that were submitted by the assessee before the Tribunal by way of additional evidence, at that evidence was admitted by the Tribunal. The Assessing Authority cannot be permitted to ignore that evidence or to refuse to verify the claim of exemption/concession made on the strength of such evidence. The Assessing Authority cannot be permitted to ignore that evidence or to refuse to verify the claim of exemption/concession made on the strength of such evidence. Also, the Assessing Authority cannot rake up the same grounds to doubt the correctness of the books of accounts of the assessee for A.Y. 2005-06 (U.P. & Central) and 2006-07 (Central), as had found favour with that authority in the first innings of the assessment proceedings and which had been specifically disapproved by the Tribunal. Besides the above issues on which the Assessing Authority would remain bound by the findings and directions of the Tribunal contained in its order dated 16.10.2015, it would remain open to the Assessing Authority to raise such other and fresh questions and issues as may be found existing and relevant in the context of the fresh assessment orders to be passed upon the remand made by the Tribunal - At present, it cannot be said that the issues raised in the impugned notices are such as had been raised earlier and that had been decided by the Tribunal. No definite conclusion can be drawn in that regard. The impugned notices cannot be quashed in entirety. However, subject to the observations made above, the assessment proceedings may be completed and concluded as expeditiously as possible, strictly in accordance with law - petition disposed off.

Issues Involved:
1. Entitlement to concessional rate of tax on sales against Forms-D.
2. Production and examination of balance sheets and books of accounts.
3. Eligibility to exemption on additional Forms-C, D, and F submitted during appeals.
4. Rejection of books of accounts for specific assessment years.
5. Scope of remand order and powers of the Assessing Authority.

Issue-wise Detailed Analysis:

1. Entitlement to Concessional Rate of Tax on Sales Against Forms-D:
The petitioner challenged three show cause notices issued by the Assessing Authority for the assessment years 2004-05, 2005-06, and 2006-07. The primary contention was that the Tribunal had already decided in favor of the petitioner regarding the eligibility for concessional tax rates based on Forms-D. The Tribunal's order dated 16.10.2015 had attained finality as it was not challenged by the revenue. The Tribunal had specifically found that the petitioner was entitled to claim the concessional rate of tax on the basis of Forms-D, despite the institutions issuing these forms not being government entities. The Assessing Authority was thus bound by this finding and could not re-examine the issue.

2. Production and Examination of Balance Sheets and Books of Accounts:
The petitioner argued that the Assessing Authority could not call for the production of balance sheets or re-examine the books of accounts since the Tribunal had already accepted the books for the relevant assessment years. The Tribunal had remanded the matter only to verify the additional Forms submitted and quantify the exemption accordingly. Therefore, the Assessing Authority's inquiry into the books of accounts was beyond the scope of the remand order.

3. Eligibility to Exemption on Additional Forms-C, D, and F Submitted During Appeals:
The Tribunal had admitted additional Forms-C, D, and F submitted by the petitioner during the appeal proceedings. The Assessing Authority was directed to verify these forms and grant the proportionate benefit. The Tribunal's order had attained finality, and thus, the Assessing Authority was bound to consider these forms and could not refuse to verify them or deny the exemption based on them.

4. Rejection of Books of Accounts for Specific Assessment Years:
For the assessment years 2005-06 and 2006-07, the Tribunal had disapproved the grounds on which the Assessing Authority had rejected the books of accounts. Therefore, the Assessing Authority could not revisit the issue of rejection of books of accounts on the same grounds that were already settled by the Tribunal. The books of accounts for these years stood accepted, and any inquiry into their acceptance was beyond the scope of the remand.

5. Scope of Remand Order and Powers of the Assessing Authority:
The Tribunal's order was one of limited remand, directing the Assessing Authority to verify the additional forms and quantify the exemption. The Assessing Authority was bound by the Tribunal's findings and could not raise new issues or revisit settled matters. The Full Bench decision in M/s. Ram Dayal Harbilas Vs. Commissioner of Sales Tax was cited, which held that the Assessing Authority has the same powers as it originally had while making the assessment, subject to carrying out the directions of the higher Appellate Authority. The principle of judicial discipline requires that the Assessing Authority adheres to the binding findings of the Tribunal.

Conclusion:
The High Court concluded that while the Assessing Authority has broad powers during reassessment, it must adhere to the specific findings and directions of the Tribunal. The impugned notices could not be quashed entirely, but the assessment proceedings must be completed in accordance with the Tribunal's binding directions. The writ petition was disposed of with no order as to costs.

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