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2021 (2) TMI 481 - HC - VAT / Sales TaxMaintainability of petition - availability of alternate remedy of appeal - Re-assessment of tax - demand of tax - HELD THAT - The power of re-assessment, of, under-assessed or escaped assessment, of, tax as borne in the apposite returns, filed by the taxable unit, becomes visibly vested in the assessing authority, through statutory empowerment, becoming conferred, upon the assessing authority. In sequel thereto, the latter through an order borne in Annexure P-12A, anvilled its reassessment, of, the initially assessed tax qua the petitioner-Unit, upon, an audit observation - The apposite order of reassessment, as, embodied in Annexure P- 12-A, displays qua an allusion being made to the audit observations, appertaining to the purported under-assessed or escaped tax, and, further reveals qua theirs arising from purported breaches being visited, to, the provisions of Section 11(1) and 11 (3) of the Act Hon ble Apex Court, in case rendered in case titled as FIS Global Business Solutions India Pvt. Ltd. Versus Principal Commissioner of Income Tax-3, New Delhi and another decided on 16.11.2018 in 2018 (12) TMI 130 - DELHI HIGH COURT , (i) wherein it has been expostulated that the expostulations of law, borne in a judgment rendered in case title as Carlton Overseas Pvt. Ltd. v. Income Tax Officer Ors 2009 (8) TMI 57 - DELHI HIGH COURT (ii) inasmuch as the reassessment of the completely assessed tax, upon, apposite tax returns, filed by the taxable unit, being valid, only upon, tangible material being made available to the revenue, and, also that hence an audit objection or an audit report issued by the revenue rather not constituting potent material - The afore expostulations of law borne in the judgment, for all the hereinabove reasons, is pointedly and squarely applicable to the factual matrix available hereat, and, in consonance therewith, this Court proceeds to set aside the impugned Annexures, through its invoking the power of judicial review, invested under Article 226 of the Constitution. Petition allowed.
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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