2018 (12) TMI 1082 - HC - VAT and Sales Tax

Reopening of assessment - rate of tax - non-stick cookware and aluminum utensils - reopening on the ground that assessee having returned only 4% tax, for the turnover of non-stick cookware dealt with by the assessee; which was levied tax @ 12% - time limitation - Held that - Clause (d) of sub-section (2) of Section 17D provides for reopening of assessment, but however only when there is fresh receipt of materials pertaining to tax evasion - In the present case, there is no fresh material obtained by the Department and the assessment was reopened only on the finding that there was a mistake in the return in so far as showing the tax leviable on non-stick cookware at 4%, as against the actual levy at 12% - the proviso to clause (d) enables reopening with the prior permission of the Commissioner, in which event the issue of fresh receipt of materials would not at all arise. Hence, when there is an order of the Commissioner definitely there could be a reopening made even in the absence of receipt of fresh materials. Time limitation - Held that - There is no question of there being a limitation in so far as a reopening is concerned, either by receipt of fresh materials or by permission obtained from the Commissioner. Section 17D is a code by itself and is not controlled by the provisions of the KGST Act, which are in conflict with the scheme as envisaged therein. The issues decided herein cannot be reopened in the quantum appeal if at all filed - revision rejected.

Issues Involved:
1. Limitation for Reopening Assessments
2. Fresh Material Requirement for Reopening
3. Authority of a Single Officer to Reopen Assessments
4. Commissioner's Power to Permit Reopening Without Notice

Detailed Analysis:

1. Limitation for Reopening Assessments:
The primary issue was whether the reopening of assessments for the years 2003-04 and 2004-05 was barred by limitation. The petitioner contended that Section 17D did not override the limitation provisions under Section 19 of the KGST Act. However, the court found that Section 17D, which begins with a non-obstante clause, operates independently of any other provisions in the KGST Act, including Section 19. The court emphasized that Section 17D does not specify any limitation period for reopening assessments, thus allowing for reopening either upon receipt of fresh materials or with the Commissioner's permission, without any time constraint. The court referenced the decision in Hindustan Petroleum Corporation, affirming that Section 17D is a standalone provision not controlled by other conflicting provisions of the KGST Act.

2. Fresh Material Requirement for Reopening:
The court examined whether the reopening of assessments was valid in the absence of fresh material indicating tax evasion. The reopening was based on the incorrect tax rate of 4% applied to non-stick cookware instead of the correct rate of 12%. The court noted that while clause (d) of sub-section (2) of Section 17D requires fresh material for reopening, the proviso allows reopening with the Commissioner's prior permission, regardless of the presence of fresh material. Thus, the court held that the reopening was valid under the proviso to Section 17D(2)(d).

3. Authority of a Single Officer to Reopen Assessments:
The petitioner challenged the reopening of assessments by a single officer when the original assessments were completed by a Fast Track Team. The Tribunal had already ruled in favor of the petitioner on this issue, and the State did not seek a revision. The court concurred with the Tribunal's decision, affirming that a single officer could not reopen assessments completed by a team of officers.

4. Commissioner's Power to Permit Reopening Without Notice:
The court addressed whether the Commissioner could permit reopening of assessments without notifying the petitioner. The Tribunal did not consider this issue, but the court noted its relevance. The court referenced a Division Bench decision in Abhilash T. Mathew, which held that even with an enabling provision, notice to the assessee is necessary before extending the period of limitation. In this case, the Commissioner’s permission for reopening was not referenced in the notice or the final order, and no notice was issued to the petitioner. However, given the significant delay and procedural history, the court found that remanding the case would be futile. The court upheld the Tribunal's order directing a fresh consideration by the Fast Track Team, noting that the assessment had already been completed, and any dispute on quantum could be addressed in an appeal.

Conclusion:
The court concluded that the reopening of assessments was not barred by limitation under Section 17D, which operates independently of Section 19. The reopening was valid even without fresh material, given the Commissioner's permission. The challenge to the single officer's authority to reopen was upheld, but the lack of notice for the Commissioner's permission did not warrant a remand due to the procedural delays and futility. The revisions were rejected, affirming the Tribunal's order and allowing the assessee to appeal the quantum if disputed.

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