2009 (2) TMI 759 - HC - VAT and Sales Tax

Court rules against reassessment based on audit objection, finds lack of definite information under the Act

Bal Chand Pardeep Kumar Versus State of Punjab and another

Bal Chand Pardeep Kumar Versus State of Punjab and another - [2009] 25 VST 420 (P&H) The High Court of Punjab and Haryana delivered a judgment in 2009 regarding a dealer-petitioner seeking to quash an order passed by the Assessing Authority-cum-Excise and Taxation Officer for reassessing tax liability based on an audit objection. The dealer-petitioner's sales tax assessment for 1991-92 was initially completed in 1993, including an eight percent tax deduction for cotton seed cake. Subsequently, a reassessment notice was issued in 1995, leading to the final reassessment order in 2001. The reassessment increased the tax liability by levying tax under section 4B of the Act on cotton seed oil and cake consigned.The dealer-petitioner argued that reassessment based on an audit objection was improper, especially when the Tribunal judgment at the time of the initial assessment favored the dealer. The Division Bench of the court in a similar case held that reassessment solely on an audit objection basis was not valid. The Additional Advocate-General of Punjab contended that under section 21 of the Act, reassessment could proceed if the tax liability was legally sustainable. The court concluded that the audit objection did not constitute 'definite information' under section 11A of the Act, and reassessment was not warranted. It was emphasized that changes in interpretation post-assessment should not be a basis for reassessment, as this would lead to constant reopening of assessments. As a result, the petition was successful, and the reassessment order was set aside.