2024 (5) TMI 1326 - HC - VAT and Sales Tax

Challenge to order of Reassessment - notice issued stating that the petitioner s turnover escaped assessment for the year 2010-2011 and accordingly, proposes to assess the petitioner s turnover for the period 2010-2011 to the best of assessing authority judgment under Section 40 of the Act. It is the specific case of the petitioner that though the re-assessment has been completed in the purported exercise of power under Section 40 of the Act of 2003 read with Section 174 of the Assam Goods and Service Tax Act, 2017, but Section 40 of the Act of 2003 could not have been invoked inasmuch as, the said powers can be invoked only when the dealer have been assessed under Sections 34, 35, 36 and 37 of the Act of 2003. HELD THAT - No assessment whatsoever was completed by the assessing authority under Sections 34, 35, 36 and 37 of the Act of 2003 - there was no assessment. As such, the very initiation of proceeding under Section 40 of the Act of 2003 is absolutely illegal, without jurisdiction and not tenable in law. The present case is covered by the decision of this Court in Assam Gas Company Ltd Vs. State of Assam 2 Others 2024 (5) TMI 1173 - GAUHATI HIGH COURT where it was held that ' In the present case, there was no assessment under section 35 of the Act, 2003, made during the prescribed period. Therefore, no assessment can be deemed to have been made in law - the said order of re-assessment having been completed without any assessment made under section 35 of the Act, 2003, the order of reassessment dated 17.03.2018 is absolutely illegal and without jurisdiction.' The impugned Order of Re-assessment dated 29.03.2018 and the Notice of Demand alongwith the Recovery Notices dated 06.08.2018 and 28.09.2018 are set aside and quashed - petition allowed.

Summary

Issues:
Challenge to Order of Reassessment and Recovery Notices for assessment year 2010-2011 under Assam Value Added Tax Act, 2003.

Analysis:
The petitioner challenged the Order of Reassessment dated 29.03.2018 and subsequent Recovery Notices issued for the assessment year 2010-2011. The assessing authority had issued a notice under Section 35 of the Assam Value Added Tax Act, 2003, stating that the petitioner's turnover escaped assessment for the said year. The re-assessment was completed on 29.03.2018, determining a liability of Rs. 30,34,338.00. Subsequently, a Notice of Demand and Recovery Notices were issued. The petitioner contended that the powers under Section 40 of the Act of 2003 could not have been invoked as no assessment was completed under Sections 34, 35, 36, and 37 of the Act. The petitioner argued that the re-assessment was illegal and without jurisdiction.

The petitioner highlighted that the annual return for the assessment year 2010-2011 was not submitted within the stipulated time. The monthly returns were also submitted late. As per the provisions, the petitioner was required to submit the annual return before 31.10.2011. The petitioner submitted the annual return on 12.11.2011, which was beyond the deadline. Consequently, Section 35 of the Act of 2003 was deemed inapplicable. The petitioner emphasized that no assessment was completed under the relevant sections of the Act.

Referring to a previous judgment, the Court reiterated the conditions for re-assessment under Section 40 of the Act, emphasizing the necessity of a prior assessment. The Court observed that without a valid assessment under Sections 34, 35, 36, or 37 of the Act, the authorities lacked jurisdiction to conduct a re-assessment under Section 40. The Court concluded that the initiation of proceedings under Section 40 without a prior assessment was illegal and untenable in law. The Standing Counsel for Finance & Taxation Department also acknowledged that the present case aligned with the previous judgment.

In light of the concession by the Standing Counsel and the precedent set by the previous judgment, the Court set aside the Order of Reassessment dated 29.03.2018, along with the Notice of Demand and Recovery Notices. The Court allowed and disposed of the writ petition in favor of the petitioner, emphasizing the illegality of the re-assessment without a valid prior assessment.