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2024 (8) TMI 197 - HC - VAT and Sales Tax


Issues:
Impugning assessment order and notice of demand under MVAT Act based on jurisdiction and procedural grounds.

Analysis:
The petitioner challenged an assessment order and notice of demand dated 28th March 2024 issued by the Deputy Commissioner of State Tax under the Maharashtra Value Added Tax Act, 2002. The petitioner, engaged in the exploration of petroleum resources in specific fields off the coast of Mumbai, argued that the transfer of title in crude and natural gas to the Government nominee at the delivery point in the contract areas exempted them from the jurisdiction of the Deputy Commissioner of State Tax. The petitioner contended that a show cause notice issued lacked details, rendering them handicapped. Despite this, the petitioner submitted various financial and audit documents. Subsequently, another vague letter was sent, followed by the impugned order under Section 23 of the MVAT Act, passed without addressing the petitioner's submissions and solely on a best judgment basis.

The court examined Section 23 (2) of the MVAT Act, which outlines the assessment process for registered dealers. It mandates that if the Commissioner deems it necessary to ensure the correctness and completeness of a return, and further documents are required, a notice specifying the documents needed must be served. The court noted that the show cause notice and subsequent letter failed to specify the documents required, despite the petitioner having previously furnished relevant documents. The best judgment assessment under Section 23 (2) can only be made if the dealer fails to comply with the notice's terms, which was not the case here due to the lack of specific document requirements.

Consequently, the court held that the impugned order and demand notice were unsustainable due to the failure to meet the pre-conditions for a best judgment assessment. Therefore, the court quashed and set aside both the order and the demand notice, ruling in favor of the petitioner engaged in petroleum exploration activities.

 

 

 

 

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