Document Fragment View

Matching Fragments

(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1. These petitions involve the same assessee and  similar   questions   of   law.   However,   some   minor  facts   are   different.   We   may,   therefore,   record  the facts separately.

2. In   Special   Civil   Application   No.3002/2018,  facts are as follows;

  The petitioner is a Partnership Firm and is  engaged in trading of Ammonium Nitrate, for 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,   Entry­18(1)   of  Schedule­II to the VAT Act included "Chemicals of  all types excluding those specified in any other  entries   in   this   Schedule­II"   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.   Entry­42A   of   Schedule­II   to   the   VAT  Act was included inviting tax at the rate of 04%  plus   01%   additional   tax.   Such   Entry   read   as  under;

14. In   the   present   group   of   petitions,   we   are  concerned with the jurisdiction of the assessing  authority   to   re­examine   this   issue.   In   Special  Civil Application No.3002/2018, we are concerned  with the contours of the powers of the Assessing  Officer under sub­section 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. Chapter­V   of   the   VAT   Act   pertains   to  "Returns, Payment of Tax, Assessment, Recovery of  Tax   and   Refund".   This   Chapter   contains   detailed  provisions   envisaging   the   filing   of   Return   of  every   registered   dealer,   assessment   of   such  Return,   scrutiny,   re­assessment,   refund   and  collection of tax. Sub­section (1) of Section­32  requires   every   registered   dealer   to   furnish  correct   and   complete   Return   of   the   goods   in  respect   of   his   business   and   the   transactions  thereof,   in   the   prescribed   format,   within   the  prescribed   time   and   before   the   prescribed  authority. Section 33 of the VAT Act pertains to  Self­assessment. Sub­section (1) thereof requires  a   registered   dealer   to   file   a   Return   of   Self­ assessment in the prescribed form.

21. 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. 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  to enable   the Assessing  Officer   to correct  an error, which might have been committed in the  course of passing the audit assessment order. The  VAT Act provides for proper mechanism in the form  of appeal or revision, as may be available. The  VAT Act also provides for an opportunity to re­ assess   in   case   of   turnover   escaping   assessment  under   certain   circumstances,   as   provided   under  Section   35   of   the   Act,   which,   we   would   refer   a  while later. For the time being, we may express  our opinion that powers under sub­section (8A) of  Section 34 of the VAT Act would be available when  a   certain   claim   or   a   transaction   has   not   been  subjected   to   audit   assessment   under   sub­section  (2) of Section 34 of the VAT Act.

23. Within   the   time   limit   envisaged   in   sub­ section   (2)   of   Section   35   and   on   the   grounds  available   as   mentioned   in   sub­section   (1)  thereof,   it   would   always   be   open   to   the  Commissioner to re­assess a dealer for any period  where the turnover might have escaped assessment.  Such powers, however, cannot be exercised in the  guise   of   carrying   out   assessment   under   sub­ section (8A) of Section 34. Any other view would  give   wholly   arbitrary   powers   to   the   Assessing  Officer.   We   have   noticed   that   the   power   of   re­ assessment, being peculiar and some what harsh to  the   dealer,   comes   with   a   time   limit   for   its  exercise.   The   powers   under   sub­section   (8A)   of  Section   34   are   not   akin   to   the   powers   of   re­ assessment u/s.35. Essentially, under sub­section  (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  sub­section   (8A) of  Section  34  are   not   similar   to   the   powers   of   re­assessment  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 assessment  can be re­opened only within five years. No such  time   limit   is   provided   for   exercising   powers  under   sub­section   (8A)   of   Section   34.   Instances  where   there   may   be   occasion   to   exercise   powers  under   Section   34(8A)   and   under   Section   35(1)  would   over   lap;   though   noticing   escapement   of  turnover chargeable to tax during the pendency of  any proceedings is peculiar to Section 34(8A). To  hold   that   even   if   a   case   where   period   of  limitation   to   re­assess   under   Section   35   has  expired,   the   Department   can   invoke   powers   under  Section 34(8A) would go against the principles of  harmonious   construction   of   the   statutory  provisions. We may recall, this sub­section (8A)  is   part   of   Section   34   which   carries   a   caption  "Audit   assessment".   The   scope   of   this   provision  must   be   seen   in   light   of   the   proceedings   for  audit assessment. Section 35 of the VAT Act, on  the   other   hand,   carries   the   title   "Turnover  escaping assessment". Powers of assessment under  sub­section   (1)   of   Section   35   can   be   exercised  where the dealer has already been assessed under  Sections   32,   33   or   34   of   the   VAT   Act.   Powers  under Section 35 are, thus, in the nature of re­ assessment and can be exercised where the dealer  has   been   subjected   to   audit   assessment   or  otherwise,   as   long   as   the   grounds   mentioned   in  sub­section   (1)   exist   and   such   powers   are  exercised within the time limit prescribed under  sub­section (2).