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2019 (3) TMI 235 - HC - VAT and Sales TaxValidity of remand order - Whether the order of the Tribunal below in sustaining the remand of the matters for A.Y. 2012-13 (U.P.) by the first appellate authority despite the application dated 13.06.2017 moved by the revisionist for its withdrawal and without there being any request made by the department for enhancement of assessment is contrary to the provisions of Section 55 of the U.P. VAT Act? Held that - The nature of the right given to the assessee was examined by this Court in the case of R.R. Brick Factory Vs. Commissioner Of Sales Tax 2004 (5) TMI 537 - ALLAHABAD HIGH COURT . Though it is true, in that case, the Court had the occasion to consider the language of the proviso to Section 9(3)(b) of the U.P. Sales Tax Act, 1948, however, it cannot be denied that the language of proviso to Section 55(5) of the Act is pari materia in material aspect i.e. as to the effect of a proper application filed to Section 9(3)(b) of the U.P. Sales Tax Act, 1948. The first difference in the language of two provisions appears to be, under the Central Act, the person/authority who could make the request and defeat the right of the assessee to withdraw his appeal was not specified. It could be made by any authority. Only requirement was it (request), had to exist for the purpose of making the enhancement of tax or penalty as the case may be whereas under the VAT Act that request may be made by the Commissioner (as defined under the Act). It includes within its meaning officers of the rank of Joint Commissioner and above - Second, the request now required to be made not with respect to enhancement but to examine the legality or propriety of the order under appeal. However, as to the effect of the application being moved in absence of such request, the two provisions are pari materia. Once the assessment had been made by the assessing authority, no power survived with him to either directly review that order or to ask any authority to be permitted him to review the same. The assessing authority did not have a right to defeat the withdrawal application filed by the assessee. The legislature appears to have been conscious of the fact that an appeal that may be filed by the assessee may be at different stages of hearing before the first appeal authority when the appellant-assessee may choose to withdraw his appeal - Therefore, the proviso to Section 55(5) of the Act clearly states, the appeal authority may allow the appeal to be dismissed as withdrawn at any stage of the appeal. The only rider that has been placed being while doing so, the appeal authority may have the right to make such observations as it may deem fit. Interestingly, after rejecting the assessee s application to withdraw the appeal, the appeal authority did not pass the final order with reference to his powers under Section 55(5)(a)(ii) of the Act. It has not made any enhancement to the assessed turnover of the assessee. He has not varied the turnover assessed - Therefore, even if it is assumed, there existed any power with the appeal authority to decide assessee s appeal on merits even then, the appeal order could not be justified on that reasoning inasmuch as the eventual order passed by the appeal authority is not to enhance the assessment but to set aside the same which is referable to Section 55(5)(iii) of the Act. Once the assessee filed an application to withdraw his appeal, in view of that right having been given to him under the proviso to Section 55(5) of the Act, the assessee had validly interjected the appeal authority s inquiry and clearly signified his intent to not press any ground of challenge raised by him, in his appeal. The assessee thus successfully prevented the appeal authority from passing any order in his favour that may further allow the appeal authority to issue any directions for the purpose of conduct of a fresh inquiry for the purpose of making fresh assessment - the appeal authority had no jurisdiction surviving in him to pass any order referable to Section 55(5)(iii) of the Act after the assessee had filed an application to withdraw his appeal and there was no request made by the Commissioner to examine the legality or propriety of the order under appeal. Appeal allowed - decided in favor of assessee.
Issues Involved:
1. Legality of the Tribunal's order sustaining the remand of the matters for A.Y. 2012-13 (U.P.) despite the assessee's application for withdrawal. 2. Legality of the Tribunal's order sustaining the direction for a fresh assessment for A.Y. 2012-13 (Central), which was not under appeal. Issue-wise Detailed Analysis: 1. Legality of the Tribunal's Order Sustaining the Remand for A.Y. 2012-13 (U.P.): The assessee's business premises were surveyed on 21.01.2013, leading to the seizure of certain documents. The assessment for A.Y. 2012-13 (U.P.) was concluded with additions for undisclosed purchases and sales, resulting in a disputed tax amount of ?4,89,675/-. The assessee challenged these additions in the first appeal. However, the assessee filed an application on 13.06.2017 to withdraw the appeal, which the first appellate authority did not address. Instead, a notice under Section 55(5)(2)(ii) of the Act was issued on 20.06.2017, requiring the assessee to show cause on underassessment points. The first appellate authority issued another notice on 07.12.2017 under Section 55(5)(a)(ii) of the Act. The assessing authority responded, indicating that a final opinion on underassessment could only be formed after reconciling seized documents with the books of account. The first appellate authority decided on 14.12.2017 to remit the matter for fresh assessment, noting that the assessee had not provided a specific reply to the notice. The Tribunal upheld this remand, reasoning that the assessee failed to respond to the enhancement notice and the assessing authority sought an opportunity to re-examine the seized material. The Tribunal distinguished the case from R.R. Brick Factory Vs. CST and Orissa Cement Ltd. Vs. State of Orissa, noting differences in the statutory provisions and factual circumstances. The court, however, found that the assessee had a near-absolute right to withdraw the appeal under Section 55(5) of the Act, provided no request from the Commissioner was pending. The court held that the first appellate authority's notices were not valid requests from the Commissioner and that the assessing authority's request to re-examine the seized material fell outside the scope of the proviso to Section 55(5). Thus, the appellate authority should have allowed the withdrawal application and dismissed the appeal with observations, without remanding the matter for fresh assessment. 2. Legality of the Tribunal's Order Sustaining the Direction for Fresh Assessment for A.Y. 2012-13 (Central): The first appellate authority noted an undisclosed Central sale based on seized documents and directed reassessment under Section 29(9) of the Act. The Tribunal upheld this direction, referring to the same seized documents and Section 29(9). The court found that the first appellate authority had no jurisdiction to direct reassessment for A.Y. 2012-13 (Central) as it was not under appeal. The court emphasized that Section 29(9) only provides for limitation and does not grant the appellate authority powers to pass orders beyond the scope of the appeal before it. The court concluded that the direction for reassessment of A.Y. 2012-13 (Central) was beyond jurisdiction and thus invalid. Conclusion: The court answered both questions in favor of the assessee, setting aside the orders of the Tribunal and the first appellate authority. The matter was remitted to the first appellate authority to pass a fresh order in accordance with the law, respecting the assessee's right to withdraw the appeal. The revision was allowed, emphasizing the correct interpretation and application of Section 55(5) and Section 29(9) of the U.P. VAT Act.
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