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TMI Blog2023 (10) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... power under Section 36(5) which are adversarial to the interest of the dealer/assessee violates the principles of natural justice. This Court further finds it very pertinent that Sub-Section (5) of Section 36 only empowers the Prescribed Authority to either confirm the self-assessment under Section 35 or set aside the self-assessment made under Section 35 and assess the tax amount from the dealer or assess the amount of tax due from the dealer if no assessment has been made under Section 35. Therefore, as per Section 36(5), what can be assessed by the Prescribed Authority other than confirming the self-assessment is only the amount of tax due and nothing more. This Court had decided that the impugned assessment orders dated 21.12.2017, 21.12.2017 and 24.06.2019 are bad in law and stands vitiated for non-compliance of notice. However, this Court further finds it relevant to take note of the second submission made by the learned counsel appearing on behalf of the Petitioner wherein it was mentioned that the assessment orders both dated 21.12.2017 for the Assessment Year 2012-13 and 2013-14 respectively are also bad in law in view of the provisions of Section 39 of the Act of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2013-2014 before the Respondent No. 4 i.e. the Superintendent of Taxes, Unit-C, Guwahati. 4. It has been stated in the writ petition that pursuant to the filing of the return by the Petitioner, the Respondent No. 4 completed scrutiny assessment of the same under Section 33 of the Assam Value Added Tax Act, 2003 (for short the Act of 2003 ) wherein it was determined by the Respondent No. 4 that the Petitioner was liable to pay interest of 286 and penalty of Rs. 2,000/-. On the basis of the same, the Petitioner paid a sum of Rs.2,286/- vide Challan No.117 dated 04.01.2016. The further case of the Petitioner is that on 11.05.2017, the Respondent No. 4 had issued a notice under Section 36 of the Act of 2003 to the Petitioner. The contents of the said notice are relevant for the purpose of instant dispute. The said notice which was enclosed as Annexure-E to the writ petition is in Form-20. In the said notice, the Respondent No. 4 informed the Petitioner as regards the period from 2012-13 to 2014-15 and that his return has been selected for audit assessment under Sub-Section (1) of Section 36 of the Act of 2003 and it has become necessary to make an assessment under Sub-Section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent No. 4 had not allowed any Input Tax Credit to the Petitioner on the purchases made by the Petitioner. WP(C)/5219/2021 7. The instant writ petition relates to the financial year 2014-15. For the sake of brevity and to avoid prolixity, this Court is not repeating the facts which are similar to the facts which have already been mentioned while dealing with the facts in WP(C) No. 5223/2021. However, the relevant facts for the purpose of the instant case are that the Petitioner submitted its return in the prescribed format i.e. in Form-14 in respect to the sales and purchase in the financial year 2014-15 before the Respondent No. 4. Subsequent to the filing of the return for the financial year 2014-15, the Respondent No. 4 completed scrutiny assessment of the same under Section 33 of the Act of 2003 wherein it was determined by the Respondent No. 4 that the Petitioner had paid an excess tax of Rs. 25/- only and the Petitioner was liable to pay interest of Rs. 670/- and penalty of Rs. 2,000/-. Accordingly, the Petitioner was directed to pay an amount of Rs. 2,670/- which was duly paid by the Petitioner on 08.06.2016 vide challan No. 117. 8. As already stated hereinab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 2012-13 to 2014- 15. For the sake of brevity as well as to avoid prolixity, this Court is not repeating the contents of the said notice. Be that as it may, the Petitioner through his son as well as the authorized representatives produced all the relevant invoices/books of accounts/registers in respect of the return filed by the Petitioner for the Assessment Year 2012-13 to the satisfaction of the Respondent No. 4. 11. During the end of August, 2019 the Petitioner received a demand notice dated 21.12.2017 from the Respondent No. 4 which was issued on 10.08.2019 whereby the Petitioner was informed that the Respondent No. 4 had raised the demand to the extent of Rs.23,480/- in respect of the return filed for the Assessment Year 2012-13 out of which the balance tax payable was assessed at Rs.18,480/- and the penalty payable was assessed at Rs.5,000/-. The Petitioner thereupon applied for the certified copy of the assessment order dated 21.12.2017. The said certified copy was furnished to the Petitioner on 20.09.2021. It is the case of the Petitioner that vide the assessment order dated 21.12.2017, the Respondent No. 4 had enhanced the turnover of the Petitioner with his best ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of notice upon the Petitioners as it is the mandate of proviso to Section 36(5) that the Assessing Authority cannot rely on any evidence collected by him without affording a reasonable opportunity of being heard before any adverse inference is drawn. The learned counsel further explained the powers under Section 36(5) to make assessment and under Section 37 of the Act of 2003. The learned counsel submitted that as the Petitioner had submitted his return and the scrutiny assessment were already done, Clause (a) and (c) of Section 36(5) would not be applicable. As regards Clause (b) of Section 36(5), it is the submission of the learned counsel for the Petitioner that the assessment to be made is only the amount of tax due from the dealer by setting aside the self assessment made under Section 35 of the Act of 2003. The learned counsel submitted that while in Section 36(5)(b) of the Act of 2003, the assessment would be in respect of the amount of tax due from the dealer but in Section 37, the best assessment is carried out of the assessee as would be apparent from a perusal of Section 37(1) itself. The learned counsel drew the attention to the impugned assessment orders for the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed under Section 39 of the Act of 2003. In that regard, the learned counsel has drawn the attention of this Court to two judgments of the Supreme Court in the case of Assistant Transport Commissioner, Lucknow Vs. Nand Singh reported in (1979) 4 SCC 19 and State of Andhra Pradesh Vs. M. Ramakishtaiah and Company: Khetmal Parekh reported in 1994 (93) STC 406. 17. Mr. B. Choudhury, the learned Standing counsel for the Finance and Taxation Department submitted that in the notice dated 11.05.2017, it was duly mentioned that if the Petitioner failed to appear and produce the evidence, the Petitioner would render itself liable to be assessed to the best of the judgment of the Assessing Authority without further giving notice to the Petitioner. Under such circumstances, it is the submission of the learned Standing counsel of the Finance and Taxation Department that no further notice was required as contemplated under Section 37(1) of the Act of 2003. On the question of limitation, it was mentioned that the assessment orders for the period ending 2012-13 and 2013-14 were duly passed on 21.12.2017 however, the records does not reflect as to why there was no notice issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of payment of due amount of tax and interest as directed. 20. Section 34 relates to Provisional Assessment. The Provisional Assessment can be made by the Prescribed Authority for the period of default to the best of his judgment in circumstances when a dealer fails to furnish a tax return before the due date or if the tax return furnished by the dealer appears to the Prescribed Authority to be incorrect and incomplete or if the dealer fails to furnish a correct and complete return with evidence of the payment of tax and interest, if any, under Sub-Section (2) of Section 33 of the Act of 2003. It is a mandate under Section 34 that prior to initiating any proceedings for provisional assessment, the dealer has to be given a reasonable opportunity of being heard. It is however relevant to take note of that in terms with Sub- Section (4) of Section 34, the power conferred upon the Prescribed Authority under Section 34 shall not prevent the Prescribed Authority from making an audit assessment under Section 36 or best judgment assessment under Section 37 and any tax, interest or penalty paid against provisional assessment shall be adjusted against tax, interest and penalty payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elies in support of his returns including tax invoice, if any, or to produce such evidence as specified in the notice. For this purpose, the Prescribed Authority may also undertake tax audit of stock-intrade of the dealer. (2) The dealer shall provide full co-operation and assistance to the Prescribed Authority to conduct the proceedings under this section at his business premises. (3) If the proceedings under this section are to be conducted at the business premises of the dealer and it is found that the dealer or his authorized representative is not available or is not functioning from such premises, the Prescribed Authority shall assess to the best of his judgment the amount of tax due from him. (4) If the Prescribed Authority is prevented by the dealer from conducting the proceedings under this section, the Prescribed Authority may demand, a sum not exceeding the amount of tax so assessed, by way of penalty. (5) The Prescribed Authority shall, after considering all the evidence produced in course of the proceedings or collected by him either- (a) confirm the self assessment under section 35; or (b) set aside the self assessment under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TICE UNDER SECTION 36 OF THE ASSAM VALUE ADDED TAX ACT, 2003 To Name Shri/M/s Vishal Udyog Address Solapara Guwahati __________________ TIN No.18770028579 Whereas the returns(s) filed by you for the period from 2012-13 to 2014-15 has/have been selected for audit assessment under sub-section (1) of section 36 of the Assam Value Added Tax Act, 2003 and it has become necessary to make an assessment under sub-section (5) of that section in respect of the above mentioned period. So, you are hereby required to (i) appear in person or through an authorized agent; and (ii) produce evidence or have it produced in support of the returns; (iii) produce or cause to be produced accounts, registers, invoices or other documents which you are required to maintain and furnish declarations and certificates you are required to furnish under the Assam Value Added Tax Act, 2003 or the rules made thereunder relating to the aforesaid period along with any other relevant evidence on which you may wish to rely in support of the returns filed by you or any objection which you may wish to raise in relation to these proceedings at Unit-C (Place) Guwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, a perusal of said Section stipulates that issuance of a notice in Form-20 in respect to those categories coming within the ambit of Sub-Rule (1) of Rule 22 and subject to the stipulations contained in Clauses (a) to (d) of Sub-Section (1) of Section 36. The notice which would be issued in Form-20 shall specify the date and place which may be in the business premises or at a place specified in the notice, to either attend and produce or cause to be produced the books of accounts and all evidence on which the dealer relies in support of his returns including tax invoice, if any, or to produce such evidence as specified in the notice. It is very pertinent herein to mention that while Sub Section (3) of Section 36 empowers the Prescribed Authority to assess to the best of his judgment the amount of tax due from the dealer, Sub-Section (5) of Section 36 only stipulates the power either to confirm the self assessment under Section 35 or to set aside the self assessment under section 35 and assess the amount of tax due from the dealer or assess the amount of tax due from the dealer, if no assessment has been made under Section 35. 29. This Court further finds it relevant to observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2003 or the rules made thereunder relating to the aforesaid period along with any other relevant evidence on which you may wish to rely in support of the returns filed by you or any objection which you may wish to raise in relation to these proceedings at _______ (Place) _______ (time) _______ (Date). 2. Please take notice that in the event of your failure without sufficient cause to comply with this notice, you will render yourself liable to be assessed to the best of my judgment without further notice to you. Signature____________ Prescribed Authority Seal of Prescribed Authority 31. At this stage, this Court finds it relevant to take note of that there is a marked difference between Form-20 and Form-21. While in Form 20, it has been mentioned that the return filed by an assessee for a particular period have been selected for audit assessment without assigning why but in Form 21, why the notice was issued is mentioned i.e. the conditions stipulated in Sub-Clause (a) to (d) of Section 37(1). Therefore, from a conjoint reading of both the notices i.e. Form-20 and Form-21, it is clear that while issuing a notice for the purpose of an audit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 with that of Clauses (a) to (d) of Sub-Section (1) of Section 37. In the backdrop of the above, let this Court deal with the facts of the instant cases. 34. In respect to the Assessment Years ending 2012-13 and 2014-15, it would be seen that the Respondent No. 4 had determined the turnover or in other words enhanced the turnover and on the basis of which had made the assessment. This power was not available to the Respondent No. 4 under Section 36 of the Act of 2003 though such power was available under Section 37 of the Act of 2003. But in order to take steps to exercise the power under Section 37, notice under Sub-Section (1) of Section 37 has to be issued. Admittedly, there was no notice issued under Sub-Section (1) of Section 37 in respect to the Assessment Year 2012-13 and 2014-15 for which the assessment order dated 21.12.2017 impugned in the WP(C) No. 5299/2021 and the assessment order dated 24.06.2019 which have been impugned in WP(C) No. 5219/2021 are set aside and quashed. 35. Now coming to the assessment order dated 21.12.2017 for the Assessment Year 2013-14, it would be seen that from a perusal of the assessment order, there is no enhancement of the turnover. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 37. From a perusal of the above quoted Section, it would show that the assessments which are carried out under the provisions of Sections 34, 35, 36 and 37 have to be completed within 5 years from the end of the year for which the assessment relates. Both the assessment orders dated 21.12.2017 relates to the period 2012-13 and 2013-14. Under such circumstances, for the Assessment Year 2012-13, the last date for completion of the assessment was 31.03.2018 and for the Assessment Year 2013-14, the last date for completion of the assessment was 31.03.2019. The impugned assessment orders dated 21.12.2017 on the face of it are within the period stipulated in Section 39 of the Act of 2003. But the question which arises is as to whether the noncommunication of the assessment orders to the Petitioner with the prescribed period would render the Assessment Orders for the Assessment Year 2012-13 and 2013-14 fatal? 38. At this stage, this Court further finds it relevant to take note of that though there is no requirement under the provisions of the Act of 2003 for providing a copy of the assessment order to the dealer or the assessee, however, on the basis of the assessment carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... narily and generally speaking, the order would be effective against the person affected by it only when it comes to his knowledge either directly or constructively, otherwise not. On the facts stated in the judgment of the High Court, it is clear that the respondent had no means to know about the order of the Taxation Officer rejecting his prayer until and unless he received his letter on October 29, 1964. Within the meaning of S. 15 of the U. P. Motor Vehicles Taxation Act that was the date of the order which gave the starting point for preferring an appeal within 30 days of that date. 39. In the case of M. Ramakishtaiah and Company (supra), the Supreme Court was dealing with a case whereby the Deputy Commissioner was required to pass the order within four years of the order of assessment. The Deputy Commissioner though had stated that he had passed the order on 06.01.1973 but it was served upon the assessee only on 21.11.1973. Under such circumstances, the assessee raised a contention that the order was in fact made after the expiry of four years but was antedated and therefore it was bad. The Supreme Court in the said judgment observed that the order of the Deputy Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Deputy Commissioner is said to have been made on January 6. 1973, but it was served upon the assessee on November 21, 1973, i.e., precisely 10 months later. There is no explanation from the Deputy Commissioner why it was so delayed. If there had been a proper explanation, it would have been a different matter. But, in the absence of any explanation whatsoever, we must presume that the order was not made on the date it purports to have been made. It could have been made after the expiry of the prescribed four years' period. The civil appeal is accordingly dismissed. No costs. 40. In the instant case, it would be seen that though the period as stipulated under Section 39 ended on 31.03.2018 and 31.03.2019 for the assessment years 2012-13 and 2013-14, but the notice of demands were issued in the month of July and August, 2019. There is no mention by way of affidavit or even from a perusal of the records as to why there was a delay in issuance of the said notice for more than two long years. Under such circumstances, this Court taking into account the judgment of the Supreme Court more particularly in the case of M. Ramakishtaiah and Company (supra) is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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