2008 (12) TMI 699 - HC - VAT and Sales Tax

High Court affirms jurisdiction for reassessment under Karnataka VAT Act, emphasizing officer's rank not decisive.

JMC. Projects (India) Ltd. Versus Deputy Commissioner of Commercial Taxes, Bangalore and others

The High Court upheld the jurisdiction of the second respondent to conduct reassessment under section 39 of the Karnataka Value Added Tax Act, rejecting ... Whether non-competent authority is delving into the affairs of the petitioner in respect of the concluded assessment for the years April 2005-March 2006, April 2006-March 2007, April 2007-March 2008, by virtually holding a roving enquiry into the concluded assessment Held that:- No reason to interfere with the impugned notices. It is open to the petitioner to make available the records or books of account or the requirements as intimated to the petitioner under the provisions of the Act by the 'prescribed authority' or the 'competent authority' unless the requirement of the petitioner is one which compels him to act beyond the provisions of the Act. Submission of Sri Sarangan, learned Senior Counsel, that mere change of opinion on the part of any competent authority cannot be a ground for proceeding under section 39 is also not required to be examined as the petitioner was not issued any notice under section 39 of the Act, but the present enquiry appears to be for the satisfaction of the prescribed authority whether the assessment already concluded warrants reassessment or otherwise. It is open to the petitioner to pursue other remedies as and when required and as available in law. Otherwise this writ petition is dismissed. Issues:1. Competence and jurisdiction of the authority to reopen concluded assessments under the Karnataka Value Added Tax Act, 2003.Detailed Analysis:The writ petitioner, a dealer under the Karnataka Value Added Tax Act, raised concerns regarding the competence and jurisdiction of the Commercial Tax Officer Audit-13, DVO-1, Gandhinagar, Bangalore-9, to delve into the concluded assessments for the years April 2005-March 2008. The petitioner argued that the second respondent lacked the authority to conduct a roving enquiry into the assessments finalized by the Deputy Commissioner of Commercial Taxes. The petitioner contended that while there was scope for reassessment under section 39 of the Act, the second respondent, being inferior in rank to the first respondent, did not possess the jurisdiction to reassess. The petitioner sought to quash the notices issued by the second respondent, claiming them to be without jurisdiction.The High Court examined the impugned communications and noted that the second respondent had been conferred jurisdiction for reassessment under section 39 of the Act by the Commissioner of Commercial Taxes. The Court emphasized that the mere act of verifying the correctness of concluded assessments, including requesting the production of books of account, did not amount to an act without jurisdiction or mala fide intent. The Court highlighted that the Act did not mandate a distinction based on the rank of the officer but required the officer to be authorized as a 'prescribed authority' under section 2(24) of the Act.The Court further addressed the argument raised by the petitioner's Senior Counsel regarding the Commissioner authorizing an officer lower in rank for reassessment. The Court rejected this argument, stating that the statutory provisions did not limit the designation of multiple authorities as 'prescribed authority.' The Court emphasized that the petitioner's right was to have an opportunity before finalizing reassessment, and there was no restriction on the Government or the Commissioner in designating the prescribed authority.Ultimately, the Court found no reason to interfere with the impugned notices, allowing the petitioner to provide the necessary records to the prescribed or competent authority as per the Act. The Court dismissed the writ petition, stating that the petitioner could pursue other remedies available in law if required.In conclusion, the judgment clarified the competence and jurisdiction of the authorities under the Karnataka Value Added Tax Act, emphasizing the statutory provisions and the necessity for a fair opportunity for the petitioner in the reassessment process under section 39 of the Act.