2023 (8) TMI 530 - HC - VAT and Sales Tax

Rectification of Assessment Order - Assessing Officer has exceeded its jurisdiction under Section 24(1) of the MVAT Act - non-application of mind - opportunity of hearing was before the order rectifying the mistake - re-determination of turnover of the petitioner No. 1 so as to add to the turnover, a tax liability which is worked out in the operative part of the order. HELD THAT - The Assessing Officer appears to have totally overlooked his jurisdiction under Section 24 which is purely for rectification of mistakes, and which would be exercised to rectify the mistake which was apparent on the face of the record. On perusal of the impugned order passed by the Assessing Officer under Section 24(1), it clearly appears that the Assessing Officer has exceeded his jurisdiction, inasmuch as, from the reasoning of the impugned order, which we have noted above, it cannot be said to be an order of rectification of mistake apparent on record. The Assessing Officer also appears to have resorted to a formality of a hearing and inviting reply to his notice for purported rectification of mistake, inasmuch as, the position on record as pointed out by the petitioners, of the Coimbatore Authorities not agreeing for issuance of Form F for transfer of the goods in question from Mumbai to Coimbatore for processing, has not been taken into consideration in passing the impugned order. The Assessing Officer has thus acted without application of mind as also completely mis-applied the provisions of Section 24 in passing the impugned order - Petition allowed.

Summary

Issues Involved:
1. Legality of the rectification order under Section 24(1) of the MVAT Act.
2. Requirement and submission of "Form F" for job work transactions.
3. Jurisdiction of the Assessing Officer in reviewing the assessment order.

Summary:

1. Legality of the Rectification Order:
The petition challenged the order dated 1 December 2021, passed by the Assistant Commissioner of State Tax under Section 24(1) of the MVAT Act, which purportedly rectified the assessment order dated 31 March 2021. The rectification order re-determined the turnover of the petitioner and raised a duty demand of Rs. 17,58,06,021/-. The petitioners contended that the rectification was, in fact, a review of the assessment order, which is not permissible under the law. The Court found that the Assessing Officer exceeded his jurisdiction under Section 24, which is meant solely for rectifying mistakes apparent on the record, not for reviewing the assessment. The impugned order was set aside as it did not qualify as a rectification of a mistake but rather a re-assessment.

2. Requirement and Submission of "Form F":
The petitioners, engaged in the business of jewellery manufacturing, argued that they received gold/bullion from customers in Mumbai, which was sent to their Coimbatore unit for processing. The processed jewellery was then returned to Mumbai and delivered to customers. The Assessing Officer had issued a notice stating that the petitioners did not submit "Form F" for these transactions, which was necessary to support their claim. The petitioners responded that the Tamil Nadu State Tax Authorities did not issue "Form F" for job work transactions, as supported by a letter dated 25 October 2021 from the Assistant Commissioner (ST), R.S. Puram Circle, Coimbatore. The Court referenced the Supreme Court's decision in Ambika Steels Ltd. vs. State of Uttar Pradesh & Ors., which held that if a State does not issue "Form F," the Assessing Officer should complete the assessment based on the merits of the transactions. The Court found that the Assessing Officer did not consider this legal position and the letter from the Tamil Nadu authorities, thus acting without proper application of mind.

3. Jurisdiction of the Assessing Officer:
The Court observed that the Assessing Officer's action of issuing a rectification notice and subsequently passing the rectification order was beyond his jurisdiction under Section 24(1) of the MVAT Act. The rectification power is limited to correcting mistakes apparent on the face of the record, not for re-assessing or reviewing the original assessment. The Court emphasized that the Assessing Officer's actions amounted to a review, which is not permissible under the guise of rectification.

Conclusion:
The Court allowed the petition, quashing the rectification order as it was perverse, without jurisdiction, against the principles of natural justice, and bad in law. The petitioners were granted relief in terms of prayer clause (a), and no costs were imposed.