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2022 (2) TMI 89 - HC - VAT and Sales TaxValidity of assessment notice u/s 46 of WBVAT Act - carry forward of excess ITC to next FY - notice was challenged before the tribunal in on the ground that it is without jurisdiction as none of the grounds mentioned in the said provision are attracted for initiating assessment proceedings under Section 46 - reasons to believe - HELD THAT - The first aspect which strikes our mind is with regard to the similarity of both notices, one which was impugned before the tribunal and the other which was impugned in the writ petition. The assessee is precluded from taking a stand that they are not required to place the decision of the Learned Single Bench of this Court before the tribunal as jurisdiction exercised by the tribunal is with regard to the proceedings under the WBVAT Act and the notice which was impugned in the writ petition is under the CST Act read with WBVAT Act. This contention of the assessee deserved to be out-rightly rejected. The notice undoubtedly contains the very same allegations namely carry forward of excess ITC for the next assessment year. The quantum is also the same - the decision rendered by the Learned Writ Court validating the notice issued under Section 9 of the CST Act read with Section 46 of the WBVAT Act binds the assessee and it will also bind the tribunal on account of the fact that the notice impugned before the tribunal was issued under Section 46 of the WBVAT Act. However, we do not wish to comment upon as to whether who was at fault in not placing the order passed in the writ petition before the tribunal as the legal position is clear that the order passed in the writ petition would bind the tribunal. In fact, the tribunal in its order would state that the order passed in the writ petition has persuasive value, however to our mind the order binds the tribunal more particularly when the assessee is the same person and the transaction based on which the assessment proceedings were proposed to be initiated is the same transaction. Hence, the tribunal was fully justified in reviewing its decision. Whether there was a mistake apparent on the face of the order? - HELD THAT - It appears that the tribunal allowed the application at the admission stage without calling for the records or affidavits. The least that can be expected of the tribunal when a show cause notice is challenged is to first examine whether an application is maintainable challenging the show cause notice. More particularly, when Section 46 (3) provides an opportunity of being heard to the assessee before the decision is taken. Thus, this important aspect was not addressed by the tribunal, probably for the reason that the state did not canvass the same - the tribunal ought to have first addressed itself as to whether the application was maintainable or not thereby counting an error by allowing the application by a non-speaking order. Therefore, this is also one more ground which can be taken into consideration to recall the order passed by the tribunal dated 13.09.2017. Carry forward of excess ITC - HELD THAT - The contention of the assessee before us that as a matter of right they are entitled to carry forward the excess ITC is an incorrect interpretation of subsection (6) of Section 22. This conclusion of ours is fortified on account of the dealer being liable for penalty under Section 22A for any false claim of ITC. Thus, the proper manner of interpreting the provision is to have regard to the language of entire group of connected provisions which undoubtedly form an integral whole. To be noted that the allegations in the show cause notice is that excess ITC over ₹ 5,00,000/- has been carried forward to the next financial year. Therefore, what the revenue seeks to do is to initiate assessment proceedings on the allegation that excess ITC has been carried forward and not the ITC which has been carried forward. The allegation is that the assessee has carried forward excess ITC than what he is entitled to. If such being the allegation in the notice then it would be well within jurisdiction of the assessing officer to initiate assessment proceedings under Section 46 of the Act. The notice has been faulted on the ground that satisfaction of the authority has not been recorded - The show cause notice clearly states the allegation against the assessee namely excess carry forward of ITC over ₹ 5,00,000/- and the notice cannot be faulty as the assessing officer was prima facie satisfied that there were relevant material based on which he proposes to initiate assessment proceedings under Section 46 (1) of the Act. The rule of ejusdem generis is inapplicable to the case on hand as Section 46 (1) (b) does not contain enumeration of specific words; the circumstance enumerated in clause (b) does not constitute a class or category; contingencies mentioned therein is not exhausted by enumeration; the general terms do not follow the enumeration and there is clear indication of a different legislative intent. The words or for any other reasons should be given the widest meaning bearing in mind the scheme of the provisions of WBVAT - the notice was issued by respondent on the assessee are valid in law. Petition dismissed.
Issues Involved:
1. Jurisdiction of the revenue to issue notice under Section 46 of WBVAT. 2. Validity of the notice issued under Section 46 of WBVAT and Section 9 of CST Act. 3. Interpretation of the phrase “for any other reasons” in Section 46(1)(b) of WBVAT. 4. Applicability of the rule of noscitur a sociis and ejusdem generis. 5. Prima facie satisfaction and reasons to believe for issuing the notice. 6. Review jurisdiction of the tribunal. Issue-wise Detailed Analysis: 1. Jurisdiction of the revenue to issue notice under Section 46 of WBVAT: The revenue issued a notice under Section 46 read with Section 66 of WBVAT, alleging that the assessee carried forward excess ITC over ?5,00,000/- to the next financial year. The assessee challenged the notice before the tribunal, claiming it was without jurisdiction as none of the grounds mentioned in Section 46 were attracted. The tribunal initially quashed the notice but later reviewed its decision, acknowledging that an identical notice was upheld by the High Court in a separate writ petition. 2. Validity of the notice issued under Section 46 of WBVAT and Section 9 of CST Act: The assessee contended that the carry forward of excess ITC is not a reason specified in Section 46 of WBVAT to initiate assessment proceedings. The tribunal quashed the notice, but the High Court upheld an identical notice issued under the CST Act. The tribunal later reviewed its decision, stating that the High Court’s order had persuasive force, and the notice was valid as it alleged excess ITC carried forward, which could be a ground for assessment under Section 46. 3. Interpretation of the phrase “for any other reasons” in Section 46(1)(b) of WBVAT: The assessee argued that the phrase “for any other reasons” should be interpreted using the rule of noscitur a sociis, meaning it should be restricted to reasons analogous to short payment of net tax, excess claim of net tax credit, or loss of revenue to the State Government. The court, however, held that the provision is inclusive and should be given the widest meaning, including reasons for the purpose of refund of tax. 4. Applicability of the rule of noscitur a sociis and ejusdem generis: The court rejected the application of the rule of noscitur a sociis and ejusdem generis, stating that Section 46(1)(b) is an inclusive provision and should be interpreted broadly. The words “for any other reasons” are not restricted to the specific grounds mentioned but include any reason recorded in writing, including for the purpose of refund of tax. 5. Prima facie satisfaction and reasons to believe for issuing the notice: The court emphasized that the Commissioner must be prima facie satisfied before issuing a notice under Section 46(1)(b). The notice must have relevant material on which a reasonable person could form the requisite belief. The court found that the notice alleging excess ITC carried forward provided sufficient grounds for the Commissioner’s prima facie satisfaction. 6. Review jurisdiction of the tribunal: The tribunal reviewed its initial decision quashing the notice, citing the High Court’s order upholding an identical notice. The court held that the tribunal was justified in reviewing its decision as there was a mistake apparent on the face of the order. The tribunal’s review was within its jurisdiction, and the High Court’s decision had binding effect on the tribunal. Conclusion: The court dismissed the appeals, upholding the validity of the notices issued under Section 46 of WBVAT and Section 9 of CST Act. The tribunal’s review of its initial decision was justified, and the interpretation of Section 46(1)(b) was inclusive, allowing for a broad range of reasons to initiate assessment proceedings. The principle of noscitur a sociis and ejusdem generis was inapplicable, and the Commissioner’s prima facie satisfaction was adequately demonstrated.
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