2015 (5) TMI 63 - HC - VAT and Sales Tax

Reopening of assessment - Cancellation of assessment orders - Held that - Considering the language and the provisions of S.63 A of the KVAT Act, once the order of cancellation of the assessment order had been passed by the Revisional Authority, it could not proceed to pass a fresh assessment order but could only direct the Assessing Officer to pass a fresh assessment order. - With the coming into force of the amendment made with effect from 1.4.2013 in the KVAT Act whereby the word or has been substituted by and , after which it is now provided under the Act to the effect that the Revisional Authority can cancel the assessment order and direct fresh assessment, which would clearly mean that the same has to be read in conjunction and not separately. With this amendment, it is further fortified that after cancelling or setting aside the order of assessment, the Revisional Authority can only direct for a fresh assessment and not proceed to pass an order of reassessment. Thus, we are of the firm opinion that this is a case where the Revisional Authority has clearly exceeded its jurisdiction in proceeding to reassess the case and to that extent, the order passed by the Revisional Authority is wholly unjustified in law and liable to be quashed - earlier part of the order which relates to the reasons for cancellation or setting aside the assessment order is affirmed and is not being interfered with. - Decided partly in favour of assessee.

Summary

Issues:
Jurisdiction of Revisional Authority to pass reassessment order after setting aside assessment order under S.63 A of the KVAT Act.

Analysis:
The judgment involves a dispute regarding the tax period for the years 2006-07, 2007-08, and 2008-09, where the appellant, a manufacturing company, paid tax at a rate of 4% on sales of parts of UPS. The matter was reopened for reassessment under S.39(1) of the Karnataka Value Added Tax Act, 2003 (KVAT Act) by the Deputy Commissioner of Commercial Taxes. Subsequently, the Joint Commissioner of Commercial Taxes passed a reassessment order under S.63 A of the KVAT Act, which was challenged by the appellant. The key issue revolved around whether the Revisional Authority had the jurisdiction to pass a fresh assessment order after setting aside the original assessment order.

The appellant argued that the Revisional Authority exceeded its jurisdiction by passing a fresh assessment order, contending that the only option available under S.63 A was to direct the Assessing Officer for a fresh assessment. The appellant relied on a Division Bench decision that held passing a fresh assessment order by the Revisional Authority was impermissible. The respondent, however, argued that the Revisional Authority's powers were wide and included passing a fresh assessment order if circumstances justified it.

The Court analyzed S.63 A of the KVAT Act, noting that the provision allowed the Revisional Authority to cancel the assessment order and direct a fresh assessment. The Court emphasized that the amendment substituting 'or' with 'and' clarified that the Revisional Authority could only direct a fresh assessment after canceling the original order. Referring to the Division Bench decision, the Court agreed that the Revisional Authority should not step into the Assessing Officer's role to pass a fresh assessment order. The Court concluded that the Revisional Authority had exceeded its jurisdiction by proceeding with reassessment and quashed the order. It held that the dismissal of writ petitions due to the availability of alternate remedies was not justified when the order was without jurisdiction.

In conclusion, the Court allowed the appeals and set aside the revisional order to the extent that the Revisional Authority proceeded to pass a reassessment order after canceling the original assessment order. The Court affirmed the reasons for canceling the assessment order but set aside the part where the Revisional Authority passed a fresh reassessment order.