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TMI Blog2017 (4) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... short-coming in the assessment order dated July 5, 2007 was in respect of the percentum of deduction allowed in excess, contrary to the provisions under section 8(3)(iv)(b) of the Act. The exercise so contemplated was not certainly one falling under section 37 of the Act. The Act does not vest in the Revenue any specific power to question an order of assessment by means of an appeal. Corrective order was passed by reverting to the only possible mode available to the revisional authority under section 36(1) of the Act. Recourse to the said provision and satisfaction derived to the existence of the conditions precedent in section 36(1) justifying the impugned order dated July 10, 2011 is the critical issue for determination. The provision under section 37 of the Act is not applicable proprio vigore. Power under section 18 of the Act was not put in motion to reopen the concluded assessment. It was revised under section 36(1) of the Act, which power vested with the revisional authority. There can be no question of trenching of power in the present exercise. The present is a fit case for exercise of suo motu revisional power by the DCT under section 36(1) of the Act - revision petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2004-05 under the AGST Act, 1993. Sir, Where on scrutiny of your case records for the year 2004-05 it was found that contain claims made by you were reduced during completion of assessment for that year. The details are shown below: Item Your claim for deduction Deduction Labour charges ₹ 7,09,88,858 ₹ 5,66,23,072 Other charges ₹ 4,40,79,562 ₹ 4,30,00,000 However, as per provisions of section 8(3)(iv)(h) of the AGST Act, 1993, the percentum of deduction allowable should not be more than 25 per cent. and rate of tax leviable is eight per cent. Since the amount of deduction allowed in the assessment is more than 25 per cent., as observed, the assessment is erroneous and is liable for rectification, as the mistake is apparent from records, under section 37 of the concerned Act. You are, however, given an opportunity to put forward your explanation, if any writing before the undersigned at his office positively on June 8, 2009 failing which action shall be taken as contemplated. (P. Baruah), Assistant Commissioner of Taxes, Tezpur." For reasons not categorically specified, the matter did not proceed and no action whatsoever was taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-company had earlier availed of a month's time for doing the same and, therefore, no further extension would be entertained. The exchange of letters came to a halt with the letter dated October 9, 2010 of the petitioner-company whereby the DCT was informed that it had already attended two hearing along with relevant documents. However, it was stated, that due to unavoidable circumstances it would not be able to attend the next hearing on October 11, 2010. Request was made for extension of time by another month. On June 17, 2011 a show-cause notice was issued under the hand of the DCT towards suo motu revision of the assessment order dated July 5, 2007 for the year 2004-05 under the provisions of the Act. The revisional authority, i.e., the DCT observed that examination of the proceedings of the assessment order dated July 5, 2007 disclosed that the same is erroneous in so far as it is prejudicial to the interest of the Revenue. Facts and grounds cited in the said show-cause notice are as under: "(i) The assessing officer although found that the deduction claimed on count of labour and other charges in return/accounts filed by you for the year 2004-5 was on the higher si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a short levy of principal tax amounting to ₹ 43,14,189 as shown below: 1. Gross works contract receipt Rs. 18,58,80,878 2. Less: admissible of tax supported declared goods Rs. 7,44,850 3. Less: admissible deduction on count and other charges at 25% of (1-2) above Rs. 4,62,84,007 4. Less: admissible deduction under section 8(3)(vi) Rs. 1,12,30,678 5. Currently determined N. T. O. Rs. 12,76,21,343 6. Currently leviable tax and sales tax at 8.8% Rs. 1,12,30,678 7. Tax to be actually levied in the assessment order dated July 5, 2007 Rs. 59,16,489 8. Short levy of tax taking place (6-7) of above Rs. 43,14,189." The petitioner-company was asked to show-cause by June 24, 2011 as to why corrective order under section 36(1) of the Act read withsection 109(2)(b) of the Assam Value Added Tax Act, 2003 should not be passed modifying the original assessment order dated July 5, 2007 and enhancing the demand of payable tax/interest, etc. In its reply dated July 5, 2011, the petitioner-company reiterated its earlier stand by making reference to the letters earlier exchanged by and between the parties. Preliminary submissions were made, both in law and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-05 on July 5, 2007 by the Assistant Commissioner of Taxes, Tezpur, under whose jurisdiction the dealer was initially registered. The case record was, however transferred to Guwahati Unit-B as the dealer's business shifted to a place under its jurisdiction. In course of later scrutiny of original assessment order asked July 5, 2007 and also the return filed by the dealer, it came to the notice of the dealer that the original assessment order was erroneous in so form as it was prejudicial to the interest of revenue upon following facts and grounds: (1) The assessing officer although found that the deduction claimed on count of labour and other charges in return/accounts filed by the dealer for the year 2004-05 was on the higher side within the meaning of rule 14(1) (b) of the erstwhile AGST Rules, he did not restrict the allowable deduction within the let out in the said rule 14(1)(b). (2) The returns filed by the dealer including the 'consolidated revised' return for the year also appeared to be afinito defective and incomplete in on as much as the details of purchase or stock of goods involved in works contract were not declared in column F of annexure I appended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges for execution of the works; (b) amount paid to a sub-contractor for labour and services; (c) charges for planning, designing and architect's fees; (d) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) cost of consumables such as water, electricity, fuel, etc., used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract; (f) cost of establishment of the contractor to the extent it is relatable to supply of labour and services; (g) other similar expenses relatable to supply of labour and services; (h) profit earned by the contractor to the extent it is relatable to supply of labour and services. The amounts deductible under these heads will have to be determined in the light of the facts of a particular case on the basis of the materials produced by the contractor. (iii) In cases where the contractor does not maintain proper accounts or the accounts maintained by him are not found worthy of credence it would be permissible for the State Legislature to prescribe a formula for determining the charges for labour and services by fixing a particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper document, deduction ofRs. 7,44,850 is found straightway allowable at 25 per cent. of the remaining works contract receipt of ₹ 18,51,36,028 after deduction of value of declared goods of ₹ 7,44,850 from the gross receipt of ₹ 18,58,80,878. Therefore, the assessing officer is directed to revise the assessment order as below: G. T. O detd Rs. 18,58,80,878 . . .(1) Less : Sale price of declared goods purchased locally within the State Rs. 7,44,850 . . . (2) Less at 25% of (1-2) above Rs. 4,62,84,007 Less under section 8(3)(vi) Rs. 1,12,30,678 N. T. O. Rs. 12,76,21,343 Tax assessed at 8.8% Rs. 1,12,30,678 Less : Credit to tax payment allowed as per original assessment order Rs. 69,10,217 Tax paid vide challans dated October 12, 2009 (part-amount) subsequently original assessment order dated July 5, 2007 Rs. 6,272 Balance payable principal tax Rs. 43,14,189 Interest on Rs. 43,20,461 From 1.5.5 to 11.10.2009 at 24% p.a. Rs. 46,05,600 Interest on Rs. 43,14,189 From 12.10.09 to 10.7.2011 at 24% p.a. Rs. 17,86,078 Total interest levied Rs. 63,91,678 Total payable Rs. 1,07,05,867 Issue fresh demand notice after cancellin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment of tax or penalty or cancelling such order and directing that a fresh order should be made: Provided that no order under this sub-section shall be made after the expiry of eight years from the end of the financial year in which the order sought to be revised was made. Explanation: The provisions of this sub-section shall apply, notwithstanding that the order sought to be revised has been made the subject of any proceeding by way of appeal, in respect of matters not actually considered and decided in such proceedings." Arguments advanced by Dr. A. K. Saraf, learned senior counsel for the petitioner-company, may now be noticed. He opens by saying that rectification of mistakes in an assessment order is a power vested with the assessing authority and the DCT cannot encroach upon the same. It is contended that the purport of the notices issued by the assessing authority on May 26, 2009 and that of the DCT on June 17, 2011 are one and the same. The additional grounds mentioned in the notice dated June 17, 2011 of the DCT only qualifies the content and purport of the notice issued by the assessing authority. In fact, no new materials or grounds have been assigned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdictional errors, else there would be no distinction in the corrective power conferred upon different authorities by the statute for application in different situations. It is contended that intermingling of powers would only result in confusion and uncertainty, a situation not contemplated by the Act. On the facts of the present case, it is submitted that if rectification of the assessment, as sought to be done, did not fall within the purview of section 37 of the Act, it was a case under section 18 of the Act, permitting an enquiry where the assessing officer had reason to believe that any exemption or deduction has been wrongly allowed or allowed in excess to a dealer. To permit exercise of suo motu revisional powers under section 36, in the facts of the case, would be to permit the revisional authority to trench upon the powers of the primary authority under section 18 of the Act, that too, beyond the period of limitation as prescribed under the said section 18. To reinforce his arguments on the distinct powers conferred on different authorities by the statute, Dr. Saraf also places reliance in Commissioner of Income-tax v. Amitabh Bachchan reported in [2016] 384 ITR 200 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicability of section 37 of the Act. It is a case involving correction of an error which has evidently occasioned loss of revenue. It is submitted that omission to avail the corrective powers under sections 18 and 37 of the Act cannot denude exercise of powers under section 36 in the facts and circumstances of the present case. In this regard, reliance is placed in Eastern Enterprises v. State of Assam, rendered by a Single Bench of this court and reported in [2007] 7 VST 417 (Gauhati); [2005] 2 GLT 35. Further submission is that the original assessment order is ex-facie erroneous insofar as it is prejudicial to the interest of the Revenue and the proceeding that had been initiated by the assessing authority for rectification got lost in the way. No conclusion was reached and the apparent error in the assessment order and prejudice caused to the interest of Revenue remained inconclusive. The provisions under the Act do not vest in the Revenue any specific power to question an order of assessment by means of an appeal. Under the circumstances, the revisional authority after having examined the records and having considered that the original assessment order passed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was allowable under the statute. In this context it must be borne in mind that the Act does not vest in the Revenue any specific power to question an order of assessment by means of an appeal. Corrective order was passed by reverting to the only possible mode available to the revisional authority under section 36(1) of the Act. Recourse to the said provision and satisfaction derived to the existence of the conditions precedent in section 36(1) justifying the impugned order dated July 10, 2011 is the critical issue for determination. In Amitabh Bachchan [2016] 384 ITR 200 (SC); [2016] 11 SCC 748, although the facts in issue was distinct to the present one, the Supreme Court held that the statute which conferred different shades of power on different authorities, the same are to be exercised within the areas specifically delineated by the Act. Trenching of powers is not permissible. The power and jurisdiction of the Revenue to deal with a concluded assessment has to be understood in the context of the provisions of the relevant sections. Applying the ratio to the present case, the provision under section 37 of the Act is not applicable proprio vigore. Power under section 18 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction, another Division Bench in Daga Entrade [2010] 327 ITR 467 (Gauhati) held that the suo motu revisional power under section 263 of Income-tax Act, 1961 (pari materia to section 36 of the AGST Act) need not be confined to orders passed in error of juris diction and interference can be made in a situation where relevant mate rials have been ignored at the time of making of assessment, resulting in an erroneous order. The Full Bench, on an elaborate examination of the facts in issue, held that the expression "jurisdictional error" used in Rajendra Singh [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449 was made in a wider sense and not in a narrow sense. The Full bench also noticed that in Santalal Mehendi Ratta (HUF) [2006] 143 STC 511 (Gauhati); [2002] 1 GLR 197, this court had examined the amplitude of the power of the revisional authority under section 36 of the AGST Act, 1993. In Santalal [2006] 143 STC 511 (Gauhati); [2002] 1 GLR 197 it was held that judicial opinion wasunanimous that the expression as appearing in section 36 must be confined to jurisdictional errors, otherwise, there would be no distinction between the different aspects of the corrective power confer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and allowed in the assessment order dated July 5, 2007 was more than the statutory limit of 25 per cent. The contents of the show-cause notice dated June 17, 2011 issued by the DCT, resulting in the final order dated July 10, 2011, both reproduced above, leaves no room for doubt that the assessing authority while passing theassessment order dated July 5, 2007 had proceeded by resorting to an incorrect application of+ the statutory provisions of the Act, thereby allowing deduction to more than 25 per cent. This act also vindicates absence of due application of mind on the part of the assessing officer. Ex-facie, one both the counts above, the assessment order dated July 5, 2007 is erroneous. For the fact that the Revenue lost tax lawfully payable by the petitioner-company, the said erroneous order certainly was prejudicial to the interests of the Revenue. In the light of the discussions and the reasons alluded to above, we are of the considered opinion that the present is a fit case for exercise of suo motu revisional power by the DCT under section 36(1) of the Act. We find no good grounds to disturb the order of the revisional authority dated July 10, 2011 and to the notice of dem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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