2024 (2) TMI 1246 - HC - VAT and Sales Tax

Maintainability of petition - Jurisdiction - powers of AO to re-assess the escape turnover - Power of suo moto revision. Maintainability of petition - HELD THAT - The Supreme Court of India in the case of Godrej Sara Lee Limited Vs. Excise and Taxation Officers-cum-Assessing Authority and Others 2023 (2) TMI 64 - SUPREME COURT has observed that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and the Article 226 does not in terms impose any limitation or restraint on the exercise of powers to issue writs. Mere existence of an alternative statutory remedy would not oust the jurisdiction of this court to entertain writ petitions and to issue prerogative writs under Article 226 of the Constitution of India if the case of the petitioner falls within any of the exceptions carved out in the case of Whirlpool Corporation Vs. Registrar of Trade Marks Mumbai 1998 (10) TMI 510 - SUPREME COURT . There appears to be no dispute at bar that the power of assessment under Section 14 of the Nagaland (Sales of Petroleum and Petroleum Products including Motor Spirit and Lubricants) Taxation Act 1967 has been delegated to the Superintendent of Taxes by the Commissioner of Taxes under Section 45 of the said Act. In the instant case also in all the writ petitions the original assessment orders were passed by the Superintendent of Taxes. The petitioner s contention in all three writ petitions is that the powers to re-assess the escape turnover is primarily vested by Section 14 on the Assessing Officer and same is to be exercised subject to certain limitations and that in exercise of power under Section 20(1) of the Act the Additional Commissioner does not have the power to re-assess the escape turnover which is outside the purview of the powers of suo-motu revision conferred on the Additional Commissioner. In the present bunch of writ petitions the petitioner has challenged the very jurisdiction of the respondent authorities to issue impugned show cause notices as well as to pass impugned order. From a reading of subsection (1) of Section 20 it is clear that the power of suo-moto revision can be exercised by the Commissioner only if on examination of the records of any proceeding under this Act he considers that any order passed therein by the person appointed to assist him is erroneous in so far as it is prejudicial to the interest of revenue - The Commissioner cannot initiate proceedings with a view to starting fishing and roving inquiries into matters or orders which are already concluded. Such actions will be against the well accepted policy of law and there must be a point of finality in all legal proceedings. That stale issue should not be re-activated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must be in other spheres of human activity. For exercising powers under Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products including Motor Spirit and Lubricants) Taxation Act 1967 the Commissioner must come to a conclusion that the orders passed by the person appointed under Section 5 of the Act to assist him is erroneous however in the instant case bare perusal of the orders dated 09.09.2020 passed in connection with the Assessment year 2014-2015 2012-2013 and 2013-2014 it appears that though it is observed therein that the assessment orders are erroneous so far as it is prejudicial to interest of revenue however it is also mentioned therein that it requires further inquiry and verification which itself shows that the respondent No. 3 had not arrive at a conclusion that the order of assessment passed by the Assessing Officer were erroneous rather it appears that the respondent No. 3 had embarked upon reverification and recalculation of the assessment proceedings which were already examined by the assessing authority at the time of completion of the original assessment - The finding that the assessment orders are erroneous and prejudicial to the interest of revenue must be based on the materials available from records called for by the Commissioner and for arriving at the said conclusion he cannot call for the documents from the assessee himself as it would amount to reexamination and reverification of the returns filed by the assessee. The respondent No. 3 cannot initiate proceedings with a view to start a fishing and roving inquiry in matters or orders which are already concluded unless there are materials available on records called for by him from which he arrives at a conclusion that the assessment orders are erroneous and prejudicial to the interest of revenue - the power under Section 20 of the Act cannot be exercised by the Commissioner without satisfying the two components mentioned in the Section 20(1) of the Act the Commissioner does not have the power to reexamine the accounts and determine the turnover himself at a higher figure merely because he is of the opinion that the estimate made by the assessing authority was on the lower side. This Court is of considered opinion that the respondent No. 3 acted beyond jurisdiction in issuing show cause notices dated 28.04.2020 to the petitioner for the assessment years mentioned therein and also in issuing orders by which the assessment for the years 2012-2013 2013-2014 and 2014-2015 were revised and turnover escaped assessment and short payment of notice taxes were determined. The respondent No. 4 has also acted beyond jurisdiction in issuing demand notices dated 09.09.2020 on the basis of orders passed by respondent No. 3 - The proceeding for suo-motu revisions under Section 20 (1) of the Act in all three cases pending before the Additional Commissioner of Taxes are hereby quashed. Petition allowed.

Summary

Issues Involved:

1. Legality and jurisdiction of the show cause notice and subsequent orders.
2. Powers of the Commissioner under Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967.
3. Maintainability of the writ petitions despite the availability of alternative remedies.

Summary:

Issue 1: Legality and Jurisdiction of the Show Cause Notice and Subsequent Orders

The common question for determination was whether the show cause notice dated 28.04.2020, the orders revising assessments for the years 2012-13, 2013-14, and 2014-15, and the subsequent demand notices dated 09.09.2020 were prima facie illegal and without jurisdiction, contrary to Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Act, 1967. The court found that the respondent No. 3 had not arrived at a conclusion that the assessment orders were erroneous and prejudicial to the interest of revenue. Instead, he embarked upon reverification and recalculation of the facts and figures, which were already examined by the assessing authority. The court held that the Commissioner cannot initiate proceedings for fishing and roving inquiries into matters or orders already concluded unless there are materials on record to show that the assessment orders are erroneous and prejudicial to the interest of revenue.

Issue 2: Powers of the Commissioner under Section 20

The court examined Section 20 of the Nagaland (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1967, which allows the Commissioner to revise orders if they are erroneous and prejudicial to the interest of revenue. The court noted that the Commissioner must base his conclusion on the materials available from the records called for by him and cannot call for additional documents from the assessee. The court found that the Commissioner had acted beyond his jurisdiction by reexamining and reassessing the returns filed by the assessee without first concluding that the original assessment orders were erroneous and prejudicial to the interest of revenue.

Issue 3: Maintainability of the Writ Petitions

The court addressed the maintainability of the writ petitions despite the availability of alternative remedies. Citing the Supreme Court ruling in "Godrej Sara Lee Limited Vs. Excise and Taxation Officers-cum-Assessing Authority and Others," the court held that the power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and not limited by the existence of alternative remedies. The court found that the present case fell within the exceptions carved out in the case of "Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai," as it involved questions of jurisdiction and the Commissioner acting beyond his powers.

Conclusion:

The court quashed the proceedings for suo-motu revisions under Section 20 (1) of the Act in all three cases pending before the Additional Commissioner of Taxes. The show cause notices, orders revising assessments, and subsequent demand notices were declared illegal and without jurisdiction. The writ petitions were allowed, and no orders as to costs were made. The registry was directed to send the case records and a copy of the judgment to the registry of the Kohima permanent bench of the High Court.