2022 (5) TMI 1112 - HC - VAT and Sales Tax

Seeking permission for reassessment - power to grant permission for reassessment - Whether section 56(1) of the Act permits the Assessing Officer to refer the case to the Commissioner or Joint Commissioner for assessment/re-assessment? - HELD THAT - Section 31 of the Act provides rectification of the order on an application of any interested person; whereas, section 29 of the Act empowers on the reason recorded by the assessing authority or the Commissioner on its own after being satisfied that it is just and expedient to do so to grant permission of the closed assessment for reassessment, where the turnover of a dealer for any assessment year or part thereof has escaped assessment to tax or has been under-assessed or has been assessed, but taxed at a lower rate than what at which it is assessable under the Act or any deduction or exemption have wrongly been allowed in respect thereof; meaning thereby, under sections 29 31 of the Act appropriate order can be passed by moving an application or seeking permission by the authority concerned - section 56 of the Act does not provide any power to the Commissioner to grant permission of reassessment on the application of the assessing authority. There is no dispute that the Commissioner, on its own motion, call for and examine the records relating to any order passed by any Officer subordinate to him for the purposes of satisfying himself as to the legality or propriety of such order and thereafter, passed such order in respect thereof as he deems fit. The power of the Commissioner is not in question in the present revision as per section 56(1) of the Act. The issue involved in the present revision is only confined to the initiation of the reassessment proceedings by the assessing authority seeking permission of the Commissioner to reassess the revisionist under section 56(1) of the Act. If this procedure is permitted, then section 29 of the Act provides for reassessment will become redundant. Once there is a specific provision empowering authorities to act as per the procedure, the same must be adhered to. Any deviation from such procedure will cause havoc in the State. Section 56 of the VAT Act would reveal that the section has wide power, but seeking of permission by the assessing authority for making reassessment of the dealer is not conferred under the said provision. For reassessment, different provision has been prescribed under the VAT Act,i.e., section 29 and its sub-sections. It is not the case of the Department that section has wrongly been quoted, but specifically the Joint Commissioner (Executive), in the opening paragraph of the order under section 56(1) of the VAT Act while granting permission, has mentioned the said fact that the permission for reassessment is sought by the assessing authority and the permission has wrongly been granted by the Joint Commissioner (Executive) - The Joint Commissioner (Executive) has exceeded in his jurisdiction, which has been endorsed by the Tribunal without looking into the provisions of the Act, which is very clear. The revision is allowed with cost of Rs. 5,000/-, which shall be deposited within a month from today.

Summary

Issues Involved:
1. Legality of the Tribunal's decision upholding the Joint Commissioner's order.
2. Authority of the Assessing Officer to refer the case for reassessment under section 56(1) of the U.P. VAT Act.

Issue-Wise Detailed Analysis:

1. Legality of the Tribunal's Decision Upholding the Joint Commissioner's Order:
The revisionist argued that the proceedings initiated under section 56(1) of the VAT Act were without authority of law. The Joint Commissioner (Executive) failed to address the core issue of whether permission for reassessment could be granted under section 56(1) of the Act. The Tribunal, while deciding the appeal, relied on the judgment in M/s Samrat Carpet Vs. CTT, which was deemed inappropriate as it pertained to a different context. The Tribunal and the Joint Commissioner (Executive) did not adequately consider whether the Commissioner had the authority to grant reassessment permission under section 56(1). The court concluded that the Tribunal should have allowed the dealer's appeal, as the Joint Commissioner (Executive) exceeded his jurisdiction, which was endorsed by the Tribunal without proper examination of the Act's provisions.

2. Authority of the Assessing Officer to Refer the Case for Reassessment Under Section 56(1) of the U.P. VAT Act:
The court examined sections 29, 31, and 56 of the U.P. VAT Act to determine the authority for reassessment. Section 29(7) empowers the Commissioner to grant reassessment permission within eight years of the assessment year, based on reasons recorded by the assessing authority. Section 31 allows for rectification of mistakes apparent on the face of the record. However, section 56 does not provide the Commissioner with the power to grant reassessment permission on the application of the assessing authority. The court emphasized that the Commissioner could only call for and examine records on his own motion under section 56(1). The initiation of reassessment proceedings by the assessing authority seeking the Commissioner's permission under section 56(1) was deemed improper. The court held that allowing such a procedure would render section 29 redundant and cause administrative issues. The Division Bench's ruling in M/s A.K. Corporation & Another Vs. State of U.P. & Others was cited, reinforcing that the revisional authority could not initiate reassessment or rectification proceedings.

Conclusion:
The court set aside the Tribunal's order, allowed the revision with a cost of Rs. 5,000, and mandated compliance within a specified period. The questions of law were answered in favor of the revisionist, emphasizing that the Joint Commissioner (Executive) and the Tribunal had misinterpreted the scope of section 56(1) concerning reassessment permissions.