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TMI Blog2019 (8) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... cture and sale of sweetmeats and bakery items. It filed its periodic returns for the relevant tax periods. Also, it filed its annual return on 28.12.2015, in the prescribed manner. In that regard, it has been clarified, though the last date for filing the annual return prescribed under Rule 45(7) of the U.P. Value Added Tax Rules, 2008 (hereinafter referred to as the Rules) was 30.10.2015, the same had been extended up to 31.12.2015. On 19.03.2017, a notice was issued to the assessee under Rule 45(13)(a) of the Rules. It alleged that the annual return filed by the assessee was incomplete. Other defects had also been noted in that notice. The assessee was directed to file its revised return within a period of 15 days, as contemplated under that Rule. 3. The assessee did not file reply to the said notice. In fact, since the notice dated 19 March, 2017 had been first served on the assessee on 20 March, 2017, it was claimed to be an invalid exercise of power since the period contemplated under Section 27(2)(b) of the Act expired on 31 March 2017, before the end of 15 days mandatory time period (that was also granted by the assessing authority to the assessee to file its revised return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions of law. It is being decided at the stage of admission itself with consent of parties. "(i) Whether an assessment on deemed basis had arisen on 31.03.2017 by virtue of Section 27(2)(b) of the U.P. VAT Act, 2008 in absence of any prior notice having been issued to the assessee so as to allow him 15 days' time to submit his revised return in terms of Rule 45(13)(a) of the Rules framed under the aforesaid Act though the Assessing Officer had issued such notice to the assessee on 19.03.2017 served on 20.03.2017 ? (ii) Whether in the alternative the Tribunal was right in not deciding the appeal of the applicant on merits ?" 6. Heard Sri Rakesh Ranjan Agarwal, learned Senior Advocate, assisted by Sri Suyash Agarwal, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel for the revenue. 7. Learned Senior Counsel would submit, the time limit provided under Rule 45(13)(a) of the Rules is mandatory and the same could not be cut short in absence of any enabling provision either under the Act or the Rules. Relying on the provisions of Section 27(1) read with Section 27(2)(b) of the Act, he submits, an order of deemed assessment would come i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redundant. Thus the Assessing Authority is bound to act in conformity with the provisions of Section 27 of the Act read with Rule 45 of the Rules before he may render the deemed assessment procedure (under section 27) subject to or subservient to the regular assessment procedure (under section 28). 11. In other words, the Assessing Authority cannot circumvent the procedure by first issuing a notice contrary to the statutory provisions, and thus, prejudice the assessee by not allowing him sufficient time to revise his return, and thereafter, take benefit of such notice by drawing up regular assessment proceedings. Further emphasis has been laid on the use of the words "stipulated time" under Rule 45(13)(c) of the Rules. Since Rule 45(13)(a) of the Rules contemplates only a single period of time being 15 days, the "stipulated time" referred to in sub-Rule(c) cannot be any different from that period. In any case, it cannot be lesser than 15 days. 12. Opposing the revision, the learned Standing Counsel would submit, under Section 27 of the Act, no order is required to or may be passed by the Assessing Officer. That provision only creates a legal fiction as to the effect of filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of input tax credit shown admissible in such Annexures. (2) For all purposes under this Act and rules made thereunder- (a) Annexures of Consolidated Details submitted by a dealer, shall be deemed to be an assessment order and facts disclosed or figures mentioned in such Annexures shall be deemed part of such assessment order; and (b) last date of the assessment year, succeeding the assessment year in which the date prescribed for submission of such Annexures of Consolidated Details falls, shall be deemed to be the date of such assessment order. 28. Assessment of tax after examination of Records- (1) In following types of cases or dealers, the assessing authority, after detailed examination of books, accounts and documents kept by the dealer in relation to his business and other relevant records, if any, and after making such inquiry as it may deem fit, subject to provision of subsection (9), shall pass an assessment order for an assessment year in the manner provided in this section:- (a) in cases of such dealers as are specified or selected for tax audit by the Commissioner or any other officer, not below the rank of a Joint Commissioner, authorized by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the case may be, disclosed by the dealer, it may assess the amount of tax payable by the dealer on such turnover and determine the amount of input tax credit admissible to the dealer or amount of reverse input tax credit payable by the dealer; and (ii) where assessing authority is of the opinion that turnover of sale or purchase or both, as the case may be, disclosed by the dealer is not worthy of credence, it may determine to the best of its judgment the turnover of sale or purchase or both, as the case may be, and assess the tax payable on such turnover and determine admissible amount of input tax credit and reverse input tax credit payable by the dealer. (3) Before making an assessment under sub-section (2), dealer shall - (i) be required to furnish Annexures of Consolidated Details if he has not already submitted such Annexures; (ii) be given reasonable opportunity of being heard; and (iii) be served with a notice to show cause, where determination of turnover, input tax credit or reverse input tax credit, or assessment of tax, all or any one of them, as the case may be, are to be made to the best of the judgment of the assessing authority. (4) The show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Act and in these rules or not accompanied by required Forms of declaration or certificate, the assessing authority shall serve to the dealer a notice to submit the revised return within 15 days from the date of service of notice. (b) If the assessing authority is satisfied that revised annual return is complete and correct he shall accept the annual return for self assessment and shall inform the dealer accordingly. (c) If dealer fails to submit the revised return within stipulated time, the assessing authority shall proceed for assessment in accordance with provision of section 28." 17. Having heard learned counsel for the parties and having perused the record, under Section 24 of the Act, a taxable dealer is obliged to submit its tax return for different tax periods, as also its annual return. Section 25 of the Act provides for assessment of tax for a tax period i.e. a provisional assessment. Tax period has been defined under Section 2(ak) of the Act, as a period for which a dealer is liable to submit tax return under Section 24 of the Act. Section 26 of the Act provides, every taxable dealer, for each assessment year shall be assessed to tax payable by him and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing his return of turnover. That solitary act needs no contribution or any corresponding or consequential or other act to be performed by the assessing authority. It gestates for one year from the end of the assessment year in which the last date to file that return expired. Upon completion of that period of time the imagination in law springs forth. 15. Thus, by way of first effect or consequence, the assessee becomes bound to discharge the admitted tax liability. Second, he earns a right to claim ITC. Both effects or consequences arise due to passage of prescribed time, solely on account of the return filed by him. That being done, no other or further consequence can ever arise as the legislature did not contemplate or provide for a third effect or consequence of the event of filing return by an assessee. The settled rule of interpretation prohibits any extension beyond the clearly visible legislative field, noted above. Reliance may be placed on that expression of law made by Justice S.R. Das (as his lordship then was), in his dissenting opinion in the Constitution bench decision of the Supreme Court in State of Travancore-Cochin & Ors Vs. Shanmugha Vilas Cashewnut Factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here: the dealer may not have submitted his annexures of consolidated details or revised annexures of consolidated details of turnover and tax within the time prescribed or extended time or; if such annexures of consolidated details contain wrong or incorrect particulars or do not accompany the declaration or certificate for exemption or reduction in the rate of tax or; if a dealer has not submitted one or more returns for any tax period during the assessment year or; a provisional assessment order may have been passed in his case under Section 25 of the Act, for any tax period on best judgement basis or; the assessing officer is satisfied that the turnover of sale or purchase or both, as disclosed is not worthy of credence or admitted tax has not been deposited or Input Tax Credit (I.T.C.) has been wrongly claimed or tax payable has been incorrectly shown or; the dealer had prevented or obstructed the conduct of audit, survey, inspection, search or seizure under the Act, he may be subjected to assessment upon examination of record. 21. On the other hand, the assessment of tax of turnover escaped from assessment may arise under Section 29 of the Act, if the assessing officer has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Rules. In that case, the annual return would constitute the self-assessment, of which intimation would be given to the assessee. Thus, Section 27 of the Act read with Rule 45(13)(a) and (b) of the Rules provide for a deemed assessment in case the original return is accepted in entirety or a self-assessment if the revised return is accepted. In either case, no order of assessment would come into existence. In both cases, a legal fiction (with twin consequences discussed above) arises. 25. In fact, only in the event, the assessing officer is not satisfied with the revised return as well, that Rule 45(13)(c) of the Rules states, the Assessing Officer shall proceed to make assessment of tax after examination of record under Section 28 of the Act. It does not and cannot override or restrict the plain applicability of the provisions contained in Section 28(1)(a) and (b) of the Act i.e. the principal legislation. In the first place, it is settled principle that the principal legislation would prevail over the delegated legislation. In Babaji Kondaji Garad v. Nasik Merchants Coop. Bank Ltd., (1984) 2 SCC 50, (paragraph 15 of the report) it was observed - "........................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port - "....... Suffice it to observe that in case of conflict, the provisions of the Act and the provisions of the High Court Rules shall, as far as may be, be harmoniously construed avoiding the conflict, if any, and if the conflict be irreconcilable the provisions contained in the Act being primary legislation shall prevail over the provisions contained in the High Court Rules framed in exercise of delegated power to legislate. No such conflict is noticeable, so far as the present case is concerned. 28. As a result, though the provisions of Section 28(1)(b)(i) and (iv) of the Act and Rule 45(13)(a) of the Rules, do over lap and in either case regular assessment after examination of records may be passed and further in either case that resort may be had upon a detection being made by the assessing officer that the return filed is incomplete or incorrect or contains wrong particulars, the immediate consequence arising upon such detection would be different, depending upon the time when such defect is noticed and/or acted upon by the assessing authority. 29. If that defect or deficiency is noted by the assessing officer within the period prescribed under Section 27(2)(a) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, a limited intervention has been allowed to be made by the assessing officer, to protect the interest of the revenue to compel the assessee to pay correct taxes, without being subjected to full fledged assessment after examination of records. 33. If, an assessee fails to file a revised return in response to a valid notice issued under Rule 45(13)(a) of the Rules, then, by way of a mandatory consequence of its own conduct, such an assessee would invite assessment after examination of records under section 28 of the Act. That position is unambiguously clear from the language of Rule 45(13)(c) of the Rules. Thus no deemed assessment may arise in that case. 34. Also, there may arise cases, where no notice may have been issued by the assessing authority to the assessee to file a revised return or such notice, if issued was invalid, as in this case. Such eventualities would give rise to the legal fiction of deemed assessment at the end of the time period contemplated under section 27(2)(b) of the Act. However, it would remain "subject to" section 28 of the Act for reason of plain statutory intent expressed by use of words "subject to" used in opening part of section 27 as also for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment proceedings initiated under section 28 of the Act must be tested on its own strength i.e. the test of section 28(1)(a) and (b) (i) to (v) of the Act. Seen in that light, the initial notice issued by the assessing officer dated 19.03.2017 is found to be invalid, inasmuch as, the same had been issued without allowing the assessee the mandatory minimum 15 days time period to file its revised return. That time limit was for the benefit of the assessee. Had it filed the revised return within the reduced time, the same would have been a valid revised return and the ground of invalidity in the notice would have stood waived. However, that was not done. 39. Perusal of the notice dated 27.02.2018 reveals it was a fresh notice issued under section 28 of the Act. At that stage, the assessing officer was not satisfied as to the completeness of the disclosure made by the assessee and in that regard, he had observed that the assessee had not complied with the notice issued under Rule 45(13) of the Rules. Even if that recital is considered to be relevant in view of the notice dated 19.03.2017 being found to be invalid, yet, it would not dilute the observation of the assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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