2024 (12) TMI 1293 - HC - VAT / Sales Tax

Entitlement to recall or set aside an assessment order issued under the Kerala Value Added Tax Act 2003 based on a subsequent order issued due to a mistake - benefit of an Amnesty Scheme - HELD THAT - The petitioner is not entitled to any relief in the present writ petition. It is not disputed before that Ext. P2 order which is issued under Section 25 (1) of the KVAT Act on 15.12.2018 has not been set aside or modified in any proceedings. If that be the case the provisions of Section 25 (1) of the KVAT Act does not permit the Assessing Authority to pass a fresh order for the same assessment year. If such course of action is permitted it would result in contradictory orders being passed without the original order being set aside or modified in a manner known to law. In such circumstances there are no hesitation to hold that the second assessment order (Ext. P3) dated 29.03.2021 is non-est in law and cannot be sustained. Therefore in that view of the matter it is not necessary to consider the question as to whether the prayer to recall the earlier assessment order dated 15.12.2018 was maintainable under Section 66 of the KVAT Act. The petitioner is not entitled to any reliefs as sought for in the writ petition. The writ petition will stand dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the second assessment order (Ext. P3) issued under Section 25 (1) of the KVAT Act for the year 2015-16 is valid when an earlier assessment order (Ext. P2) for the same year was already in place.
• Whether the petitioner is entitled to apply for rectification under Section 66 of the KVAT Act to recall or set aside the earlier assessment order (Ext. P2).
• Whether the petitioner can avail the benefits of the Amnesty Schemes of 2021 and 2022 based on the second assessment order (Ext. P3).
• Whether the petitioner can be permitted to file an appeal against the original assessment order (Ext. P2) despite not having done so initially.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Second Assessment Order (Ext. P3)

• Relevant legal framework and precedents: Section 25 (1) of the KVAT Act governs the assessment process. The law does not explicitly allow for a second assessment order without setting aside the first.
• Court's interpretation and reasoning: The court found that issuing a second assessment order (Ext. P3) without setting aside the first (Ext. P2) would lead to contradictory orders, which is not permissible under the KVAT Act.
• Key evidence and findings: The original assessment (Ext. P2) was completed based on internal audit observations, and the second order (Ext. P3) was issued due to a mistake and oversight.
• Application of law to facts: Since the first order was not set aside or modified, the second order is considered non-est in law.
• Treatment of competing arguments: The petitioner argued for the validity of the second order due to alleged hasty completion of the first order, but the court dismissed this by emphasizing the legal requirement to address the first order before issuing another.
• Conclusions: The second assessment order (Ext. P3) is invalid and cannot be sustained.

Issue 2: Entitlement to Rectification under Section 66

• Relevant legal framework and precedents: Section 66 of the KVAT Act allows rectification of errors apparent on the face of the record.
• Court's interpretation and reasoning: The court held that the petitioner's request for rectification to recall the first assessment order (Ext. P2) does not fall under the scope of rectifiable errors as defined by the Act.
• Key evidence and findings: The petitioner's application for rectification was based on the issuance of the second order, which was found to be non-est.
• Application of law to facts: The court found no error apparent on the face of the record that would justify rectification.
• Treatment of competing arguments: The petitioner's argument for rectification was not supported by the statutory provisions of Section 66.
• Conclusions: The petitioner's application for rectification was not maintainable.

Issue 3: Availing Benefits of the Amnesty Schemes

• Relevant legal framework and precedents: The Amnesty Schemes of 2021 and 2022 provide a framework for settling tax liabilities.
• Court's interpretation and reasoning: The court noted that the petitioner could apply for amnesty based on the original assessment order (Ext. P2), not the invalid second order (Ext. P3).
• Key evidence and findings: The petitioner sought to settle liabilities based on the lower demand in Ext. P3.
• Application of law to facts: The petitioner was informed of the possibility to pursue amnesty based on Ext. P2.
• Treatment of competing arguments: The court did not find merit in the petitioner's reliance on the invalid second order for amnesty purposes.
• Conclusions: The petitioner can apply for amnesty based on the original demand in Ext. P2.

Issue 4: Permitting Appeal Against the Original Assessment Order (Ext. P2)

• Relevant legal framework and precedents: The KVAT Act provides for an appeal process against assessment orders.
• Court's interpretation and reasoning: Despite the petitioner's failure to initially appeal, the court allowed an opportunity to file an appeal against Ext. P2, considering the peculiar circumstances.
• Key evidence and findings: The petitioner did not appeal initially but sought rectification and later filed a writ petition.
• Application of law to facts: The court provided a two-week window for the petitioner to file an appeal.
• Treatment of competing arguments: The court balanced the procedural lapse with the opportunity for redress through appeal.
• Conclusions: The petitioner is permitted to file an appeal against Ext. P2 within the specified time frame.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning:

• "If such course of action is permitted, it would result in contradictory orders being passed without the original order being set aside or modified in a manner known to law."

Core Principles Established:

• Issuing a second assessment order without addressing the first is impermissible and results in the second order being non-est.
• Rectification under Section 66 is limited to errors apparent on the face of the record and does not extend to recalling assessment orders.
• The opportunity to appeal should be provided in exceptional circumstances, even if initially missed.

Final Determinations on Each Issue:

• The second assessment order (Ext. P3) is declared invalid.
• The application for rectification under Section 66 is not maintainable.
• The petitioner may pursue amnesty based on the original assessment order (Ext. P2).
• The petitioner is allowed to file an appeal against Ext. P2 within the specified timeframe.