2014 (4) TMI 409 - HC - VAT and Sales Tax

Assessment Finalization of provisional Assessment - Assessment on the turnover on imported set top boxes on the activation charges Held that - As against the provisional assessment of April, 2013 and June, 2013 the Tribunal had remanded the matter on the grounds that the assessment was made ex-parte, the question of law, however, in each of the provisional assessment is the same - The assessments are in fact not based on any computation of tax but on the question of law which has been returned against the petitioner in each of the provisional assessment - In view of Section 25(2) providing that assessing authority after filing of the annual return should proceed to make the final assessment, this court is of view that no useful purpose will be served nor the revenue will benefit in making provisional assessments. The question of law raised in each of the assessments is the same, which will arise in making the final assessment and thus it will be more appropriate that the assessing authority may make a final assessment in accordance with the law and to decide the questions of law raised before him - The writ petition is disposed of with directions to the assessing authority to make the final assessment - For a period of three months or until the final assessment is made, the effect and operation of the orders of provisional assessments for the months of September, 2013 and October, 2013 shall remain stayed - The provisional assessment orders, however, will be subject to the result of final assessment orders Decided in favour of Assessee.

Summary

Issues:
Provisional assessments under Section 25 (1) of UP Value Added Tax Act, 2008 challenged by petitioner for September and October 2013.
Validity of provisional assessments when annual return for assessment year 2012-13 already filed.
Interpretation of Section 25(2) of the Act regarding making final assessment after filing annual return.
Appropriateness of making provisional assessments when questions of law remain the same for final assessment.
Directions to assessing authority for final assessment within three months and stay on provisional assessment orders for September and October 2013.

Analysis:
The petitioner challenged the provisional assessments made under Section 25(1) of the UP Value Added Tax Act, 2008 for September and October 2013, concerning the Value Added Tax assessed on imported set-top boxes for activation charges. The petitioner argued that despite the availability of a statutory appeal against provisional assessment orders under Section 55 of the Act, the assessments were being contested due to a previous appeal decision by the Trade Tax Tribunal regarding provisional assessments for April and June 2013. The petitioner contended that the annual return for the assessment year 2012-13 was filed on 7.8.2013, suggesting that final assessments should have been conducted instead of provisional ones as per Section 25(2) of the Act, which prohibits provisional orders after the dealer submits consolidated details.

The State respondents, represented by the Standing Counsel, defended the provisional assessments, stating that they can be made independently in cases where the tax return is not submitted, or discrepancies are found in the computations, input tax credit claims, or tax payable amounts. The State argued that provisional assessments can also be based on available records indicating unreliable turnover information provided by the dealer. However, the Court noted that the assessments in question were not based on tax computations but on legal issues, which were consistent across different provisional assessments.

Given the provisions of Section 25(2) of the Act, which mandate final assessments after the annual return is filed, the Court concluded that making provisional assessments would not serve any purpose or benefit the revenue. The Court emphasized that the same legal questions raised in the provisional assessments would arise during the final assessment process, making it more appropriate for the assessing authority to conduct a final assessment in accordance with the law and address the legal issues raised. Consequently, the Court disposed of the writ petition directing the assessing authority to conduct the final assessment within three months, with a stay on the provisional assessment orders for September and October 2013 until the final assessment outcome, ensuring that the provisional orders are subject to the final assessment decisions.