2019 (7) TMI 915 - HC - VAT and Sales Tax

Concessional rate of tax - genuineness of the 'C' Forms produced by the revision petitioner - validity of assessment order - powers vested under Section 35 of the Kerala General Sales Tax Act on Deputy Commissioner - years 2003-04 and 2004-05 - HELD THAT - Section 35 of the KGST Act enables the Deputy Commissioner to pass an order directing to make such enquiry as he deem fit. The re-assessment on the basis of such an order has to be made only based on an enquiry and only based on convincing materials. As pointed out in the order of the first appellate authority, the Department, under special instructions from the Commissioner, had undertaken some cross verifications with respect to 'C' Forms filed by the Plywood dealers in the state. It is mentioned that special Inter-state Investigation Team was deputed to the issuing states to find out the genuineness of the 'C' Forms. But in the case at hand, as observed by the first appellate authority, there is no proof regarding such verification made or materials collected with respect to the disputed 'C-Forms' in order to arrive at any conclusion that those 'C' Forms were bogus. Unless and until the Assessing Authority became convinced that the 'C' Forms produced were not genuine, based on any materials collected, the assessments made rejecting the claim for concessional rate of tax, cannot be sustained. The matter requires an in-depth verification by the original authority itself - revision petition allowed by way of remand.

Summary

Issues:
Challenging assessment orders under the Central Sales Tax Act, time limit for assessments under Section 17(6) of the KGST Act, validity of setting aside earlier assessments, genuineness of 'C' Forms, lack of verification by Assessing Authority, need for in-depth verification by original authority.

Analysis:
1. The revision petitioner challenged assessment orders under the Central Sales Tax Act, which were set aside by the Deputy Commissioner under Section 35 of the KGST Act due to doubts regarding the genuineness of 'C' Forms. The Tribunal remanded the cases for fresh disposal on the question of the 'C' Forms' genuineness, leading to the filing of revision petitions against the Tribunal's order.

2. The revision petitioner contended that the assessments were passed beyond the time limit stipulated under the relevant statute. The Tribunal held that in the absence of a specific time limit in the CST(Ker) Rules, provisions of the KGST Act could be relied upon. The Tribunal also noted that the time limit under Section 17 cannot operate against the Assessing Authority when assessments are set aside and remitted.

3. It was argued that assessments should be finalized within a reasonable time, but the Tribunal found no delay in finalizing fresh assessments after the earlier assessments were set aside. The Tribunal dismissed the argument regarding time limit based on precedents and the specific circumstances of the case.

4. Another contention raised was that the Deputy Commissioner should not have set aside the earlier assessments. However, the Tribunal found that the revision petitioner participated in the proceedings and challenged them before the first appellate authority, thereby estopping them from raising this contention.

5. On the merits, it was found that the Assessing Authority lacked relevant materials to conclude that the disputed 'C' Forms were bogus. No verification was conducted with the issuing states regarding the genuineness of the 'C' Forms. The Tribunal held that assessments rejecting the claim for concessional rate of tax cannot be sustained without convincing materials.

6. Given the circumstances, the High Court decided to remit the matter to the original authority for an in-depth verification and fresh decision regarding the genuineness of the 'C' Forms. The impugned order of the Tribunal was modified, and the matters were remitted to the Assessing Authority for reconsideration after due verification.

7. The revision petitions were allowed, and the impugned assessments were set aside, directing the Assessing Authority to decide the matter afresh after affording a reasonable opportunity to the revision petitioner, emphasizing the need for thorough verification and adjudication regarding the 'C' Forms' genuineness.