2022 (12) TMI 264 - HC - VAT and Sales Tax

Maintainability of assessment / re-assessment order - existence of alternative remedy of appeal under Section 48 of the VAT Act - HELD THAT - The question is what is the meaning to be ascribed to the date of order of assessment and assessment or re-assessment of a dealer has been made as appearing in Section 22 of the VAT Act. We are in accord with the view taken by the learned Single Judge. The provisions make it abundantly clear that an assessment or re-assessment of a dealer had to be made by way of an order before exercise of powers under Section 22 of the VAT Act can be made, that too, within the period of five calendar years from the date of order of assessment. It is only in the event of passing an order, period of five calendar years, which is the limitation period, can be reckoned from the date of order of assessment. Invocation of Section 22 is permissible only when assessment of a dealer (a) has been under assessed or has escaped assessment or (b) has been assessed at a lower rate or (c) any wrong deduction has been made while making the assessment or (d) a rebate of input tax has incorrectly been allowed while making the assessment or (e) is rendered erroneous and prejudicial to the interest of revenue consequent to or in the light of any judgment or order of any Court or Tribunal, which has become final. The aforesaid conditions precedent cannot be countenanced in absence of an order of assessment in writing and in that view of the matter, in respect of deemed assessment, recourse cannot be taken under Section 22 of the VAT Act. Rule 20 under Chapter VI of VAT Rules, 2006 relates to Returns. Rule 20(2)(d), on which reliance is placed by Mr. Sharma was inserted by notification dated 02.06.2011. Subsequently, by notification dated 21.10.2011, the words in two copies after the words form 17-A in Rule 20(2)(d) were inserted. Rule 20(2)(d) provides that after submission of electronic return, form 17-A in two copies be submitted along with copy of the challan of the tax deposited within thirty days in the relevant circle and acknowledgment has to be obtained. Rule 20(2)(e) provides that if the acknowledgment prescribed under clause (d) is not obtained, then it will be deemed that no return has been filed. Argument of Mr. Sharma that the date of acknowledgment of submission of electronic return is the date of the order of deemed assessment, and therefore, it is incorrect to say that there is no date of order of assessment, is misconceived. Appeal dismissed.

Issues Involved
1. Validity of Instruction No.12/2013 dated 05.07.2013 issued by the Commissioner.
2. Legality of the re-assessment orders dated 26.12.2016.
3. Applicability of Notification No.17 to the petitioner.
4. Jurisdiction and basis of re-assessment proceedings.
5. Imposition of penalty on the petitioner.
6. Classification of purchases as "telecommunication cables and accessories".

Issue-wise Detailed Analysis

1. Validity of Instruction No.12/2013 dated 05.07.2013 issued by the Commissioner:
The petitioner challenged the Instruction No.12/2013 dated 05.07.2013, which directed the levy of entry tax on telecom companies purchasing telecommunication cables and accessories. The High Court did not specifically address the validity of this instruction in the judgment, focusing instead on the legality of the re-assessment orders and the jurisdictional issues.

2. Legality of the re-assessment orders dated 26.12.2016:
The re-assessment orders were quashed by the learned Single Judge, who held that the re-assessment proceedings under Section 22(1) of the VAT Act could not be initiated without a formal order of assessment. The court emphasized that the term "order of assessment" in Section 22(1) implies a formal adjudication, not merely a deemed assessment under Section 21(2). The Division Bench upheld this view, stating that the re-assessment orders were without jurisdiction as no formal assessment order was passed within the prescribed time frame.

3. Applicability of Notification No.17 to the petitioner:
The petitioner sought a declaration that Notification No.17 was not applicable to them. However, the court did not specifically address this issue in the judgment, focusing instead on the procedural and jurisdictional aspects of the re-assessment orders.

4. Jurisdiction and basis of re-assessment proceedings:
The court held that the re-assessment proceedings were without jurisdiction as they were initiated based on deemed assessments rather than formal assessment orders. The court noted that Section 22(1) requires a formal order of assessment before re-assessment can be initiated. The court also highlighted that the limitation period for re-assessment under Section 22(1) is five years from the date of the formal order of assessment, which was not applicable in this case due to the absence of such an order.

5. Imposition of penalty on the petitioner:
The penalty imposed under Section 22(2) of the VAT Act was also quashed. The court held that since the re-assessment orders were without jurisdiction, the penalty imposed based on those orders was also invalid. The court noted that the penalty could only be imposed if the omission leading to re-assessment was attributable to the dealer, which was not the case here as no formal assessment order was passed.

6. Classification of purchases as "telecommunication cables and accessories":
The petitioner contended that their purchases could not be classified as "telecommunication cables and accessories" and should not be subjected to entry tax. The court did not specifically address this classification issue, focusing instead on the procedural validity of the re-assessment orders and the jurisdictional aspects.

Conclusion
The High Court upheld the learned Single Judge's decision to quash the re-assessment orders and the penalties imposed, emphasizing the requirement of a formal order of assessment under Section 22(1) of the VAT Act before initiating re-assessment proceedings. The court found that the re-assessment orders were without jurisdiction and invalid due to the absence of such an order. Consequently, the writ appeals were dismissed.

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