2007 (8) TMI 685 - HC - VAT and Sales Tax

Assessing authority bound by appellate orders; Setting aside stay deemed arbitrary

Larsen and Toubro Ltd. Versus Assistant Commissioner (CT), Fast Track II Assessment Circle, Chennai and another

The court held that the assessing authority is bound by the orders of the appellate authority. Setting aside the stay order was deemed arbitrary and an ... Authority of assessing authority - Held that:- As it is clear the assessing authority is bound by the orders of the appellate authority. The order of the first respondent, viz. The Assistant Commissioner (CT), Fast Track II, Assessment Circle, dated July 30, 2007, setting aside the stay granted by the first appellate authority and declaring the same as illegal is nothing but an arbitrary exercise of power, excess of jurisdiction and it is not sustainable in law. If the assessing authority had any doubts regarding the determination of tax liability and payment of disputed tax, he can always bring it to the notice of the departmental representative to represent on his behalf before the appellate authority and he cannot straight away set aside the order of the first appellate authority. The impugned order of the assessing authority is nothing but a transgression on the powers of the appellate authority and it is liable to be set aside and accordingly, it is set aside. Issues Involved:1. Assessment Order and Tax Liability2. Rectification Petition3. Stay Petition and Interim Stay4. Authority and Jurisdiction of Assessing Officer vs. Appellate AuthorityDetailed Analysis:1. Assessment Order and Tax LiabilityThe petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, 1959, engaged in commercial construction and works contract, filed returns for the assessment year 1999-2000 with a turnover of Rs. 2,89,25,35,384. The assessing officer determined the taxable turnover at Rs. 2,98,25,55,972, disallowed claims regarding inter-State works contract, RMC freight and pumping charges, sales in the course of import, and other issues, resulting in a tax liability of Rs. 37,01,68,497 and additional tax of Rs. 6,79,44,165. Penalties under section 12(3)(b) of the TNGST Act and the Tamil Nadu Additional Sales Tax Act, 1970, were also levied.2. Rectification PetitionThe petitioner filed a rectification petition under section 55 of the TNGST Act to correct errors apparent on the face of the record, particularly regarding the tax and additional tax already paid. The assessing authority passed a rectification order on May 17, 2007, acknowledging that the petitioner had already paid Rs. 36,49,09,092 of the total tax assessed and Rs. 5,61,26,839 of the additional tax, leaving a balance of Rs. 52,59,405 and Rs. 1,18,17,326, respectively. There was no change in the merits of the assessment order.3. Stay Petition and Interim StayPending appeal, the petitioner filed a stay petition under section 31(5) of the TNGST Act. The Appellate Assistant Commissioner granted an interim stay, noting that the petitioner had already paid more than 50% of the disputed tax and additional tax. The stay covered the balance disputed tax, additional tax, and penalties, totaling Rs. 2,85,69,429, with a condition to furnish a bank guarantee or valid security by August 9, 2007.4. Authority and Jurisdiction of Assessing Officer vs. Appellate AuthorityThe Assistant Commissioner (CT), Fast Track II Assessment Circle, declared the stay order granted by the Appellate Assistant Commissioner as null and void, citing the TNGST Act's requirement for 12.5% payment of disputed tax and 100% of admitted tax as a pre-requisite for appeal. The petitioner argued that the assessing officer had no authority to override the appellate authority's stay order, which is binding unless suspended by a competent court. The Supreme Court in Union of India v. Kamlakshi Finance Corporation Ltd. emphasized the binding nature of higher appellate authorities' orders on subordinate authorities, and the necessity of judicial discipline to avoid undue harassment and chaos in tax administration.ConclusionThe court concluded that the assessing authority is bound by the orders of the appellate authority. The Assistant Commissioner's action of setting aside the stay order was deemed an arbitrary exercise of power and excess of jurisdiction. The impugned order was set aside, and the writ petition was allowed. The court reiterated that the assessing officer should follow the appellate authority's directions and could seek remedies through higher administrative channels if needed. The writ petition was allowed with no costs, and the connected miscellaneous petition was closed.