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2021 (2) TMI 481 - HC - VAT / Sales Tax


Issues Involved:
1. Maintainability of the writ petition in the presence of an alternative statutory remedy.
2. Validity of the reassessment order and tax demand notice in light of statutory limitations.
3. Compliance with statutory norms and principles of natural justice in the reassessment process.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The primary issue was whether the writ petition was maintainable given the availability of an alternative statutory remedy. The court acknowledged that typically, the existence of an alternative remedy would prima facie render the writ petition non-maintainable. However, the court also noted exceptions to this rule, such as gross breaches of statutory norms, ineffectiveness of the alternative remedy, defiance of judicial principles, invocation of repealed provisions, and violation of natural justice principles. The court cited the judgment in Commissioner of Income Tax vs. Chhabil Dass Agarwal (2014) 1 SCC 603 to support these exceptions.

2. Validity of the Reassessment Order and Tax Demand Notice:
The court examined the reassessment order (Annexure P-12A) and the subsequent tax demand notice (Annexure P-14) issued to the petitioner. The petitioner argued that the reassessment was barred by the limitation period prescribed under Section 23 of the Himachal Pradesh Value Added Tax Act, 2005. According to Section 23, reassessment must occur within three years from the date of the original assessment. The court found that the initial assessment was made on January 19, 2016, and the reassessment was initiated in 2020, clearly beyond the three-year limitation period. The court also considered Section 24, which allows for reassessment beyond the limitation period only to give effect to orders made by a court or other authority under the Act. The court concluded that audit observations do not qualify as "other authority" under the Act, and therefore, the reassessment was time-barred.

3. Compliance with Statutory Norms and Principles of Natural Justice:
The court scrutinized whether the reassessment adhered to statutory norms and principles of natural justice. The reassessment was based on audit observations which alleged breaches of Sections 11(1) and 11(3) of the Act. The court noted that although the reassessing authority appeared to have independently applied its mind to the audit observations, the reassessment still lacked legal sanctity due to the violation of the statutory limitation period. The court referenced a judgment from the Hon’ble Apex Court in FIS Global Business Solutions India Pvt. Ltd. vs. Principal Commissioner of Income Tax, which emphasized that reassessment must be based on tangible material and not merely on audit objections. The court found that the reassessment in this case did not meet this criterion.

Conclusion:
The court concluded that the reassessment order and the tax demand notice were invalid due to the breach of the statutory limitation period and the lack of tangible material justifying the reassessment. Consequently, the court allowed the writ petition and set aside the impugned Annexures P-12A and P-14, invoking its power of judicial review under Article 226 of the Constitution. All pending applications were disposed of accordingly.

Order:
The petition is allowed, and the reassessment order and tax demand notice are set aside.

 

 

 

 

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