2024 (2) TMI 1076 - HC - VAT and Sales Tax

Validity of grant of permission to the petitioner s assessing authority, namely, Deputy Commissioner, Sector-7, Commercial Tax, Ghaziabad, to re-assess the petitioner for the A.Y. 2012-2013 (U.P. and Central), in the extended period of limitation provided under Section 29 (7) of the Act - petitioner s regular assessment proceeding for A.Y. 2012-13 was reopened - Effect of Section 27 of the Act - HELD THAT - There did not pre-exist any principle of law where under an assessee could claim a deemed assessment or a consequence in law, equivalent to that. The U.P. Trade Tax Act that was repealed by the Act, did not contain a concept of a deemed assessment. Under that law, whenever limitation to frame assessment lapsed, no assessment arose. However, Section 27 of the Act made a clear departure from that pre-existing law. In no uncertain terms it provided that the annual return of turnover and tax filed under Section 24(7) of the Act would constitute a deemed assessment. It would arise on the last day of filing of the annual return. Further, the facts disclosed, and figures mentioned in that return were deemed to be part of the assessment order. The deeming fiction in law revived upon order dated 01.02.2016 being passed. Earlier, it may have remained in the shadow and thus dormant in face of the specific/conscious assessment order dated 04.01.2016 yet, in view of that order being recalled on 01.02.2016, it got resurrected by the force of law. It became absolute upon expiry of period of limitation to make a fresh assessment i.e. on 30.09.2016. Since, the assessing officer failed to make any specific order of assessment in terms of Section 29(6) of the Act till 30.09.2016, his powers to make the regular assessment stood exhausted. It is on the occurrence of that passive event on 30.09.2016 i.e. lapse of limitation to make a regular assessment that the deeming fiction of law created by Section 27 of the Act became absolute. If however, as in the present case, jurisdiction to reassess had remained from being assumed within the normal period of limitation - that expired on 31.03.2016, the subsequent setting aside of the regular ex parte assessment order would have no effect as to jurisdiction to initiate such reassessment proceeding - Therefore, in the present facts the assessing authority was obligated to first obtain an approval of his higher authority namely the Additional Commissioner to proceed to reassess the petitioner in the extended period of limitation namely eight years. There was neither any relevant material nor any reason was recorded by the assessing authority that any part of the turnover of the petitioner had escaped assessment. Consequently, the jurisdiction to reassess the petitioner never arose with the assessing authority for A.Y. 2012-13. Unfortunately, that basic aspect escaped the attention of the Additional Commissioner, who appears to have granted the permission to the petitioner- assessing authority to reassess the petitioner in the extended period of limitation, in a mechanical exercise of his power. It is not examined whether the reassessment order dated 17.03.2021 is ante dated or not. Since the jurisdiction never arose, the entire proceedings were conducted without jurisdiction and are a nullity. There are no hesitation to record satisfaction that the order dated 30.01.2021, as modified on 08.02.2021 passed by that authority, granting permission to the assessing authority, namely, Deputy Commissioner, Sector-7, Commercial Tax, Ghaziabad as well as the reassessment order dated 17.03.2021 for the Assessment Year 2012-2013 (U.P. and Central) are a nullity. They are quashed. Petition allowed.

Issues Involved:
1. Validity of the proposal and consequent order for reassessment under Section 29(7) of the Uttar Pradesh Value Added Tax Act, 2008.
2. Legality of the ex-parte reassessment order dated 17.03.2021.
3. Effect of Section 27 of the Act regarding deemed assessment.
4. Jurisdiction and limitation for reassessment under Section 29 of the Act.
5. Compliance with procedural requirements for reassessment.

Summary:

1. Validity of the proposal and consequent order for reassessment under Section 29(7) of the Uttar Pradesh Value Added Tax Act, 2008:
The petitioner challenged the proposal dated 29.05.2018 and the consequent order dated 30.01.2021 (modified on 08.02.2021) issued under Section 29(7) of the Act, which granted permission to reassess the petitioner for A.Y. 2012-2013 in the extended period of limitation. The court found that the Additional Commissioner granted permission in a mechanical exercise of his power without relevant material or recorded reasons.

2. Legality of the ex-parte reassessment order dated 17.03.2021:
Despite a stay order, an ex-parte reassessment order was passed by the assessing authority on 17.03.2021. The court quashed this order, noting that the jurisdiction to reassess never arose, and the entire proceedings were conducted without jurisdiction, rendering them a nullity.

3. Effect of Section 27 of the Act regarding deemed assessment:
The court emphasized that Section 27 of the Act creates a deeming fiction in law, where the annual return filed by the assessee constitutes a deemed assessment order. The petitioner's annual return for A.Y. 2012-2013 was filed within the extended time, and thus a deemed assessment arose on 31.12.2013. This deemed assessment became absolute upon the lapse of limitation to make a regular assessment on 30.09.2016.

4. Jurisdiction and limitation for reassessment under Section 29 of the Act:
The court highlighted that reassessment proceedings could only be initiated against a valid "reason to believe" recorded by the assessing authority, based on objective material. The court found no such material or recorded reason in the present case. The limitation to initiate reassessment expired on 31.03.2016, and subsequent actions by the assessing authority did not extend this limitation.

5. Compliance with procedural requirements for reassessment:
The court noted procedural lapses, including the failure to inform the coordinate bench about relevant developments and the lack of cogent material or recorded reasons to justify reassessment. The court referred to the principles established in M/s Manaktala Chemical Pvt. Ltd. and Fag Precision Bearings, emphasizing the need for rational, genuine, and relevant reasons for reassessment.

Conclusion:
The court quashed the orders dated 30.01.2021, 08.02.2021, and 17.03.2021, declaring them null and void due to the lack of jurisdiction and procedural compliance. The writ petition was allowed, with no order as to costs.

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