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TMI Blog2019 (8) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... . were passing on inadmissible CENVAT credit on the cenvatable invoice without physical delivery of goods. The report observed that the period for which the exercise was carried out by the DGCEI pertained to Financial Years 2011-12 and 2012-13 and that this period had become time barred. It was then noted that since the DGCEI had raised serious doubts over the working of the Assessee firm the possibility of evasion of tax by the firm cannot be ruled out. The twin requirements of (i) the Commissioner having to form the requisite reason to believe , and (ii) for such reasons to have a live nexus with the failure to pay tax as a result of the Assessee s concealment, omission or failure to disclose material particulars, is not fulfilled in the present case. It is trite that reason to believe is different from reason to suspect - The statutory requirement is that there must be reason to believe that there has been some omission, concealment or failure by the Assessee to disclose full material particulars. There is nothing in the file noting, much less in the notice dated 29th October, 2017, which suggests that the Commissioner had arrived at a subjective satisfaction that ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 34 (1) of the DVAT Act, the AVATO was under a statutory obligation to frame the assessment for the above period within 4 years from the end of 2011-12. In terms thereof, according to the Petitioner, the limitation period to frame the assessment expired on 31st March 2016. 4. On 11th October 2017 a system-generated notice under Section 59(2) of the DVAT Act was uploaded, proposing to frame assessment for the period 2011-12. The notice was beyond 4 years of the expiry of the period of limitation. According to the Petitioner, the notice failed to indicate any reasons containing the justification for invoking the extended period of limitation for reassessment in terms of the proviso to Section 34 (1) of the DVAT Act. The present writ petition has been filed principally, on the ground that the impugned orders were contrary to the legal requirement in terms of Section 34 (1) (a) read with the proviso thereto of the DVAT Act. 5. On 26th September, 2018 while directing notice to be issued in the Petition, this Court restrained the Respondent from taking coercive action. In response to the notice, a counter-affidavit has been filed by the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mately leading to the passing of the impugned orders of default assessment dated 18th January, 2018, which were framed on the principles of best judgment assessment. 9. In the rejoinder filed to the above counter-affidavit, the Petitioner seeks to distinguish the order of the Supreme Court in Commissioner of Trade and Taxes v. M/s. Ahluwalia Contracts (India) Ltd. (supra) . It is pointed out that the said case was under the Delhi VAT Amnesty Scheme 2013, where a statutory presumption was to be drawn under Clause 8 (1) of the scheme as if no declaration had been filed by the dealer. There, no issue had been raised with respect to assumption of jurisdiction; the issue was only regarding the delegation of powers by the Commissioner to the Addl. Commissioner for exercising powers under the Scheme. 10. It is further pointed out that the Commissioner himself had issued various circulars on 9th June 2011, 13th January, 2008, 2nd February, 2017 and 5th February, 2018 under Section 67 (2) of the DVAT Act about timely completion of assessment proceedings. It is accordingly submitted that combining the CST and DVAT assessments into one assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay make an assessment of tax within one year after the date of any decision of the Appellate Tribunal or court where the assessment is required to be made in consequence of, or to give effect to, the decision of the Appellate Tribunal or court which requires the re-assessment of the person. 14. In the present case, the reopening of the assessment is sought to be done beyond the period of 4 years and before the expiry of 6 years of the assessment period. The jurisdictional requirement for invoking the extended period of 6 years is that the Commissioner should note the reasons to believe that the tax was not paid and that the failure to pay such tax should be on account of concealment, omission or failure by the Assessee to disclose full material particulars . Elaborating on the above expressions this Court in H M Industries (supra) observed as under: 5. Section 34 (1) of the DVAT Act, simply stated stipulates that no assessment or reassessment under section 32 should be made by the Commissioner after expiry of four years from the date on which the person has furnished return under section 26 or under section 28(1) of the DV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written belief would be in consonance with the principle and mandate of good governance, fairness, transparency and would curtail arbitrariness and prejudice. Importantly, we would steer clear from the needless debate on whether and what was the reason to believe . 14. Pertinently, in the proviso to section 34(1), the language of the section postulates that there should be failure, omission or concealment to disclose full material facts. Once, material particulars have been stated or disclosed and were in the knowledge of the authorities but action under section 32 of the VAT Act is not taken within four years, extended period of limitation of six years under the proviso to section 34(1) of the DVAT Act would not be available. This would be a reasonable and correct way to read section 34(1) and the proviso. Normal and prescribed period of limitation for passing of a default assessment order is four years. This is a reasonable and judicious period for the competent authority to act under section 32 of the DVAT Act. Abnormal delay and time gap, between the assessment periods and the date of default assessment orders, can cause prejudice to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent. The notings on file in the present case reveal that the trigger for the reopening of the assessment was the report of the DGCEI according to which Amit Gupta, Director of Progressive Alloys India Pvt. Ltd., along with associated registered dealers viz., M/s. Forward Minerals and Metals Pvt. Ltd., M/s. Unnati Alloys Pvt. Ltd., M/s. Moral Alloys Pvt. Ltd. and M/s. Brilliant Metals Pvt. Ltd. were passing on inadmissible CENVAT credit on the cenvatable invoice without physical delivery of goods. The report observed that the period for which the exercise was carried out by the DGCEI pertained to Financial Years 2011-12 and 2012-13 and that this period had become time barred. It was then noted that since the DGCEI had raised serious doubts over the working of the Assessee firm the possibility of evasion of tax by the firm cannot be ruled out. 18. The above note fails to meet the statutory threshold for the assumption of jurisdiction under the proviso to Section 34 (1) (a) of the DVAT Act for the purpose of reassessment. In other words, the twin requirements of (i) the Commissioner having to form the requisite reason to believe , and (ii) for such reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is the show-cause notice issued by the Central Excise Department and, in the absence of any adjudication under the said Act, no assessment order/reassessment orders could have been passed under the APVAT Act or under the APGST Act solely on the basis of the show-cause notice issued by the Central Excise Department. 22. In the present case, it is noted from the order of the OHA allowing the objections of Brilliant Metals Pvt. Ltd., in whose case also a reassessment was undertaken for 2012-13 on the basis of the very same report of the DGCEI, that in each of the above cases in the proceedings under the Central Excise Act the adjudication orders confirming the wrongful claim of CENVAT credit have been quashed and set aside by the CESTAT and also by the Commissioner (Appeals). The entire basis that those transactions were mere paper transactions was found to be not sustainable. It requires to be noted that the demands of duty and penalty raised by the Central Excise Department had been set aside by the authorities. Therefore, the very basis of the reopening of the assessment in the present cases ceased to exist. 23. As rightly pointed out by M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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