2018 (8) TMI 939 - HC - VAT and Sales Tax

Principles of Natural Justice - Whether the prescribed authority can issue a notice of re-assessment under Section 39(1) of the KVAT Act read with Section 9(2) of the CST Act without first recording his satisfaction/belief that there is an understatement of tax liability? Similar issue decided in the case of The State of Karnataka vs. M/s. V.N.Corporation 2018 (8) TMI 935 - KARNATAKA HIGH COURT where it was held that giving one declaration form for one calendar month as provided in the first proviso is a mere procedural formality rather than a substantive provision and no substantial question of law arises requiring our consideration in these matters. The substantial questions of law is answered in favour of the petitioner-assessee and against the Revenue - decided in favor of assessee.

Summary

Issues:
1. Substantial questions of law raised in STRP No.20/2016 & STRP Nos.79-89/2016.
2. Substantial questions of law raised in STRP No.154/2016 & STRP Nos.256-166/2016.

Analysis:

Substantial Questions of Law in STRP No.20/2016 & STRP Nos.79-89/2016:
The petitioner-assessee raised questions regarding the authority's power to issue a re-assessment notice without recording satisfaction of tax liability understatement and the interpretation of Rule 12(5) of the CST Rules. The Tribunal's decision was based on the need for a single 'F' Form to cover transactions of only one calendar month. The High Court, after considering relevant legal provisions and precedents, held that the furnishing of 'F' forms for branch or stock transfers does not determine sales tax liability. The Court upheld the Tribunal's decision, dismissing the Revenue's revision petitions.

Substantial Questions of Law in STRP No.154/2016 & STRP Nos.256-166/2016:
The petitioner-assessee raised questions regarding the limitation period for re-assessment, interpretation of Rule 12(5) of the CST Rules, refusal to consider compliance with the law, dismissal of appeals without assessing re-assessment validity, and failure to consider previous decisions on interest levy. The High Court referred to relevant legal provisions and previous judgments, emphasizing the procedural nature of Rule 12(5) and the distinction between 'F' forms and Forms 'C' and 'D' under the CST Act. The Court upheld the Tribunal's decision, dismissing the Revenue's revision petitions.

In both sets of cases, the High Court analyzed the legal provisions, precedents, and the Tribunal's decisions to determine the correct interpretation of the law. The Court emphasized the procedural nature of Rule 12(5) of the CST Rules and clarified the distinction between different forms under the CST Act. The judgments favored the petitioner-assessees, upholding the Tribunal's decisions and dismissing the Revenue's revision petitions.