2019 (11) TMI 1157 - HC - VAT and Sales Tax

Levy of Entry Tax - section 8(2) of the Bihar Tax on Entry of Goods in to Local Areas for Consumption, use or sale Therein Act, 1993 - Principles of natural justice - ex parte order of assessment - HELD THAT - While the assessment order for the period 2014-15 (ET) has been passed on 22.06.2019, an order under section 39 (2) of the BVAT Act for the period 2015-16 has been passed on 12.01.2019 (Annexure-6) itself taking into consideration the amount of entry tax accepted by the petitioner in their returns and the amount of entry tax actually paid by the petitioner for the relevant period. As per order under section 39(2) of the BVAT Act, 2005 for the period 2015-16, while the petitioner has been found liable to pay further a sum of ₹ 13.32 crores (approx), in the assessment order dated 22.06.2019 for the period 2014-15. It has been found that a sum of ₹ 15.33 crores (approx) is refundable to the petitioner and it has further ordered that the same would be refunded by way of adjustment against the tax for the next year i.e. 2015-16. Thus, if the respondent authorities has passed the assessment order for the period 2014-15 prior to passing of order under section 39(2) for the period 2015-16, there would not have been any tax liability of the petitioner for the period 2015-16 which was calculated to the tune of ₹ 13.32 crores (approx) and which comes to ₹ 20.11 crores (approx) after adding of interest. From the facts stated and the documents referred to hereinabove the respondent no. 2 cannot be permitted to blow hot and cold at the same time. On one hand he states that the refund of ₹ 15,04,59,365/- for the financial year 2014-15 was credited to the account of the petitioner vide challan no. 297 dated 31.03.2015 and also in the assessment order for the period 2014-15 a sum of ₹ 15,33,20,981/- is found refundable to the petitioner and it has been stated that the same would be refunded by adjustment for the period 2015-16 but in the order impugned dated 12.01.2019 for the period 2015- 16, a further sum of ₹ 13,32,32,322/- is found payable and together with interest of ₹ 6,79,48,484, a total sum of ₹ 20,11,80,806/- has been found payable by the petitioner - Either the respondent authorities should have proceeded to accept the Form ET-05 submitted by the petitioner for the period 2015-16 according to which a sum of ₹ 1.72 crores in excess by way of tax had already been paid or in the alternate they should have passed orders for the period 2014-15 prior to passing of the impugned order for the period 2015-16, on which, no tax would have been found payable by the petitioner. The order of assessment dated 12.01. 2019 passed by the respondent Assistant Commissioner, State Tax Special Circle, Patna contained in Annexure-6 to the application is not sustainable in law - appeal allowed.

Summary

Issues Involved:

1. Quashing of the ex parte order of assessment dated 12.01.2019.
2. Adjustment and refund of entry tax for the periods 2010-11, 2014-15, and 2015-16.
3. Legality and jurisdiction of the assessment order and demand notices issued.

Issue-wise Detailed Analysis:

1. Quashing of the ex parte order of assessment dated 12.01.2019:

The petitioner sought to quash the ex parte order of assessment dated 12.01.2019 passed by the Assistant Commissioner State Tax, Special Circle, Patna, under section 8(2) of the Bihar Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1993 (BTEG Act, 1993) read with section 39(2) of the Bihar Value Added Tax Act, 2005 (BVAT Act). The assessment determined a sum of ?13,32,32,322/- as entry tax dues for the period 2015-16, along with interest of ?6,79,48,484/-, totaling ?20,11,80,806/-. The petitioner argued that the assessment did not consider the refund adjustments due for the periods 2010-11 and 2014-15, resulting in an incorrect demand.

2. Adjustment and refund of entry tax for the periods 2010-11, 2014-15, and 2015-16:

The petitioner is a company engaged in the sale of cement and had paid entry tax for the period 2010-11, which was later refunded by adjustment for the period 2014-15. The petitioner utilized this refund against the liability of entry tax for April, May, and June 2015. The assessment order dated 22.06.2019 for the period 2014-15 confirmed a refund of ?15,33,20,981/- to be adjusted against the entry tax dues for 2015-16. The petitioner contended that after accounting for the refund and payments made, a sum of more than ?1.72 crores was refundable for 2015-16. However, the assessment order dated 12.01.2019 did not consider these adjustments and incorrectly calculated the tax due.

3. Legality and jurisdiction of the assessment order and demand notices issued:

The petitioner argued that the assessment order dated 12.01.2019 was illegal and without jurisdiction, as it was issued beyond the permissible period for scrutiny. The petitioner also challenged the demand notices dated 12.01.2019 and 28.01.2019. The respondent authorities contended that the petitioner admitted the entry tax liability and that the assessment was based on the return filed by the petitioner, which showed a discrepancy in the tax paid. The authorities issued a demand notice under section 47(i) of the BVAT Act, 2005 read with section 8 of the BTEG Act, 1993, and the bank paid the demanded amount.

Judgment:

The court found that the issue related to entry tax for three financial years: 2010-11, 2014-15, and 2015-16. The refund for 2010-11 was to be adjusted towards 2014-15, and the assessment order for 2014-15 confirmed a refund of ?15,33,20,981/-. However, the authorities passed the assessment order for 2015-16 first, resulting in an incorrect demand. The court noted that if the 2014-15 assessment had been completed first, there would have been no tax liability for 2015-16. The court held that the assessment order dated 12.01.2019 was unsustainable in law and set it aside, along with the consequential demand notices. The court allowed the writ application and granted liberty to the respondents to pass fresh orders in accordance with the law, considering the observations made.