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TMI Blog2019 (1) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... Subsection (7) of Section 34 empowers the Commissioner to impose penalty under certain circumstances - Subsection (8A) of Section 34, which is of importance to us, was inserted by the Gujarat Value Added Tax (Amendment) Act, 9 of 2013 with effect from 01.04.2013. The Statement of Objects and Reasons for introduction of the said provision provided that the same was added “so as to provide to assess the dealers separately in respect of any period for certain transactions or claims not recorded or recorded in an incorrect manner to evade the tax”. The legislative intent, thus, for introduction of the said subsection (8A) clearly is to enable the Revenue to bring to tax certain transactions which are noticed in the course of any of the proceedings under the VAT Act. Such proceedings may be for assessment of the dealer for some other Financial Year or may even be appellate or revisional proceedings. If the proceedings in question relate to appellate or revisional proceedings, the authority would place the issue before the concerned authority with a direction to assess the dealer in respect of such transaction or claim - powers under subsection (8A) of Section 34 of the VAT Act wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the petitioner has obtained registration under the Gujarat Value Added Tax Act, 2003 ( the VAT Act for short) and the Central Sales Tax Act, 1956 ( the CST Act for short). According to the petitioner, till 31.07.2009, Entry 18(1) of Schedule II to the VAT Act included Chemicals of all types excluding those specified in any other entries in this Schedule II and the applicable rate of tax was 04% VAT and 01% additional tax. The petitioner, accordingly, used to classify Ammonium Nitrate under such Entry. With effect from 01.08.2009, such Entry was deleted and the assessee started classifying the goods under the residuary Entry and discharged corresponding tax liability. Entry 42A of Schedule II to the VAT Act was included inviting tax at the rate of 04% plus 01% additional tax. Such Entry read as under; Sr. No. Description of Goods Rate of Tax 1 2 3 42A Industrial inputs or agricultural inputs as may be specified by the State Government by notification in the Official Gazette. Four paise in the Rupee 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputation of VAT on Ammonium Nitrate. In the operative portion of the order, he referred to the Notification issued by the Government on 15.02.2010 under which Sr. No.252 pertaining to Ammonium Nitrate was added in Entry No.42A to Schedule II of the VAT Act. He, thus, computed the assessee s VAT liability on Ammonium Nitrate at the rate of 04% plus 01% additional tax. 8. The assessing authority, thereafter, issued the impugned Notice dated 02.02.2018 seeking to re assess the petitioner s tax liability by observing that he had reason to believe that in respect of the assessment for the said period between 01.04.2013 to 31.03.2014, the tax had been assessed at a rate lower than the rate at which it should have been assessed. The petitioner has challenged this Notice in this petition. 9. In Special Civil Application No.3004/2018, the facts are similar as to the previous matter. Here also, the Return filed by the petitioner for the Financial Year 2012 2013 came to be scrutinized. The Assessing Officer passed an order of audit assessment on 27.02.2017 in which he referred to the relevant Entry for the purpose of assessing the petitioner s tax liability on Ammonium Nitrate. He, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Ammonium Nitrate. We may only briefly record the origin of the controversy. As noted, with effect from 15.02.2010, Sr. No.252 was added to Entry No.42A to Schedule II of the VAT Act. This Entry carried description of goods Ammonium Nitrate and had a reference to Central Excise Tariff Item No.3102.10.00. The rate of duty prescribed was 04% plus 01% additional tax. It is under this Entry that the petitioner, on its dealings post 15.02.2010, deposited tax at such rate. The Revenue, however, contends that the Tariff Item No.3102.10.00 in the Central Excise Tariff Act pertains to Urea and therefore, the petitioner could not have availed of reduced rate of tax and the product Ammonium Nitrate would invite tax as per the Residuary Entry at a higher rate. 14. In the present group of petitions, we are concerned with the jurisdiction of the assessing authority to re examine this issue. In Special Civil Application No.3002/2018, we are concerned with the contours of the powers of the Assessing Officer under sub section 8A of Section 34 of the VAT Act. In the other two petitions, we would be examining the scope of his jurisdiction u/s.35 of the VAT Act. 15. Chapter V of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er shall assess to the best of his judgment the amount of tax due from him. (5) If the Commissioner is unlawfully prevented from conducting the proceedings under this section, he may assess to the best of his judgment the amount of tax due from the dealer and may further direct that the dealer shall pay, by way of penalty, in addition to the amount of tax so assessed, a sum equal to the tax amount. (6) If any dealer (a) has not furnished returns in respect of any period by the prescribed date; (b) has furnished incomplete or incorrect returns for any period; (c) has failed to comply with the terms of notice issued under sub section (2). (d) has failed to maintain books of accounts in accordance with the provisions of this Act or rules made thereunder or has not regularly employed any method of accounting the Commissioner shall assess to the best of his judgment the amount of tax due from him. (7) If the Commissioner is satisfied that the dealer, in order to evade or avoid payment of tax, (a) has failed to furnish, without reasonable cause, returns in respect of any period or the self assessment by the prescribed date; (b) has furnished incomplete or inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, be deemed to have the requisite jurisdiction and power to assess such dealer in respect of such transaction of sale or purchase or claim, covered by clause (a) and such assessment proceedings shall, for all purposes of this Act, be deemed to have been transferred to such authority. (b) The assessment proceedings under this sub section shall be without prejudice to the assessment proceedings in respect of the said period or periods under any other provisions of this Act by any authority who otherwise has the jurisdiction to assess such dealer in respect of other transactions of sale or purchase or any other claim. (c) The assessment under this sub section shall be made separately in respect of the transaction or claim relating to the said period or periods to the best of the judgment of the prescribed authority where necessary and irrespective of any assessment made under this sub section, the dealer may be assessed separately under the other provisions of this section in respect of the said period or periods: Provided that, once the dealer is assessed under this sub section, no tax from such transaction or claim and penalty and interest, if any, shall be levied or deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessed at a rate lower than the rate at which it is assessable; or (d) wrongly been allowed any deduction therefrom; or (e) wrongly been allowed any tax credit therein, the Commissioner may serve a notice on the dealer and after giving the dealer an opportunity of being heard and making such inquiry as he considers necessary, proceed to determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover which comes to his notice subsequently and the provisions of this Act shall, so far as may be, apply accordingly. (2) No order shall be made under sub section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable; 18. It can, thus, be seen that in terms of subsection (2) of Section 34 of the VAT Act, it is open for the Commissioner, if any of the grounds mentioned therein are present, to serve a notice upon a dealer requiring him to appear on a date and place specified and to produce necessary documents and supporting evidence. Sub section (6) of Section 34 authorizes the Commissioner to complete best judgment assessment in case a dealer does not cooperate with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed for the said period under the other provision of the said Section. Last proviso to this sub section ensures that the transaction which has been subjected to tax under this provision is not subjected to tax again under other provisions. 21. The legislative intent, thus, for introduction of the said sub section (8A) clearly is to enable the Revenue to bring to tax certain transactions which are noticed in the course of any of the proceedings under the VAT Act. Such proceedings may be for assessment of the dealer for some other Financial Year or may even be appellate or revisional proceedings. If the proceedings in question relate to appellate or revisional proceedings, the authority would place the issue before the concerned authority with a direction to assess the dealer in respect of such transaction or claim. This provision, in essence, enables the Revenue to isolate the instances of tax evasion whenever noticed and to bring to tax, turnover which may have escaped assessment in relation to such transactions without carrying out complete assessment of all transactions of the dealer during the relevant Financial Year. This provision, however, does not and cannot be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r subsection (8A) of Section 34. Any other view would give wholly arbitrary powers to the Assessing Officer. We have noticed that the power of reassessment, being peculiar and some what harsh to the dealer, comes with a time limit for its exercise. The powers under sub section (8A) of Section 34 are not akin to the powers of reassessment u/s.35. Essentially, under sub section (8A) of Section 34, if the authority, in the course of any proceedings, notices any evasion of tax, he can address to such an issue, without carrying out full assessment and if such authority happens to be either the appellate or the revisional authority, the issue would be placed before the assessing authority. Two things, thus, become abundantly clear. Firstly, the powers under sub section (8A) of Section 34 are not similar to the powers of re assessment flowing from Section 35 of the VAT Act and secondly, such powers cannot be exercised when audit assessment has already been completed in case of a dealer with respect to a certain period. Any other view will make the limitation period provided in Section 35(1) of the VAT Act substantially, if not, completely redundant. Under the said provision, a completed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrate, the correct rate of tax was 04% plus 01% additional tax. He was aware and conscious about the Entry in which such tax was prescribed. He has, thus, formed a definite opinion on the rate at which the petitioner should be taxed. His opinion may have been erroneous. It cannot be said that he formed no opinion. If the Department held a belief that such opinion was incorrect, there were measures available to rectify such an error. Exercise of powers u/s.35 of the VAT Act was not one of them. 26. Perusal of the provision of sub section (1) of Section 35 of the VAT Act would demonstrate that unlike in case of Section 147 of the Income Tax Act, 1961, it does not make any distinction between a notice of re assessment within and beyond 04 years. It permits re assessment of turnover that has escaped assessment, whether the escapement is on account of any failure on the part of the assessee to disclose truly and fully all material facts or otherwise. However, the concept of change of opinion would certainly apply. 27. In case of Commissioner of Income Tax v. Kelvinator India Ltd. others reported in [2010] 320 ITR 561 (SC), the Supreme Court, in the context of the provision of S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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