2010 (7) TMI 938 - HC - VAT and Sales Tax

Court quashes order lacking legal authority, stresses new evidence for reassessment.

Eljen Promoters N Builders Versus Assistant Commissioner of Commercial Tax (Audit) 2, Mangalore and Another

The court quashed the impugned order as it lacked the authority of law and jurisdiction, emphasizing the necessity for further reassessment to be based on ... Order, dated February 3, 2010 (annexure E) passed by the second respondent challenged on the ground of without the authority of law and without jurisdiction Held that:- As the pre-requirement for making further reassessment is not forthcoming from the impugned order, I have entertained these petitions notwithstanding the availability of the alternative remedy of filing an appeal. In the result, the impugned order is quashed. Further, it is made clear that no opinion whatsoever is expressed on the tax liability of the petitioner. Needless to observe that the prescribed authority can always exercise the power conferred upon it under section 39(2) of the said Act. Issues:1. Challenge to the order passed by the second respondent.2. Validity of the impugned order under the Karnataka Value Added Tax Act, 2003.3. Consideration of additional evidence for further reassessment.4. Maintainability of writ petitions vs. filing an appeal.5. Quashing of the impugned order and the authority's power under section 39(2) of the Act.Analysis:1. The petitioner challenged the order passed by the second respondent, contending that it lacked the authority of law and jurisdiction. The petitioner's counsel argued that the impugned order was based on a wrong assumption and a mere change of opinion without any new evidence coming to light. It was emphasized that the earlier reassessment order was not considered, and there was no change in circumstances warranting the new order.2. The government pleader representing the respondents argued that even if a wrong provision of law was cited, it did not render the order invalid per se. He maintained that the impugned order was passed under section 39(2) of the Karnataka Value Added Tax Act, 2003. However, the court noted that under section 39(2), further reassessment can only be made if new evidence is discovered, which was not evident in the impugned order. The court cited a Supreme Court case to support the principle that a wrong order cannot be rectified later by additional grounds.3. The court highlighted the necessity for any further reassessment to be based on additional evidence, which was not addressed in the impugned order. Referring to a Supreme Court judgment, the court emphasized that reasons for an order must be clear from the beginning and cannot be supplemented later. The absence of details on the additional evidence led to the quashing of the order, despite the availability of an appeal as an alternative remedy.4. Despite the availability of the appeal process, the court entertained the petitions due to the lack of pre-requisites for further reassessment in the impugned order. The court emphasized that public orders must have a clear basis and cannot be validated by later explanations or additional grounds. The impugned order was quashed, with no opinion expressed on the petitioner's tax liability.5. The court ultimately quashed the impugned order, clarifying that it did not express any opinion on the petitioner's tax liability. The authority was reminded of its power under section 39(2) of the Act for potential future actions. No costs were awarded in the judgment.