2014 (6) TMI 725 - HC - VAT and Sales Tax

Court dismisses challenge to tax assessment orders citing detailed reasons for reopening assessment and petitioner's participation.

Jaypee Hotel Ltd. Versus State of UP. & Others

The court dismissed the writ petition challenging the validity of tax assessment orders. It held that the reasons for reopening the assessment were ... Reopening of case u/s 21 - Rejection of books of accounts - Best judgment assessment - Change of opinion - Held that:- Reason, on which the approval has been granted, was relevant and sufficient to form the 'belief' that there was escaped assessment. It is not the case of the change of opinion inasmuch as the issue raised in the proceeding, under Section 21 has not been adjudicated in the original assessment. It is settled principle of law that sufficiency of the material cannot be examined in the writ jurisdiction. Learned counsel for the petitioner has also not made any submission in this regard. - So far as challenge to the appellate order of the Joint Commissioner, remanding back the matter to the assessing authority, is concerned, the same cannot be allowed to be challenged under the writ jurisdiction. It was open to the petitioner to file an appeal against the said order before the Tribunal. No prejudice is caused to the petitioner. The petitioner has full opportunity to represent its case on merit before the assessing authority. - Decided against assessee. Issues Involved:1. Validity of the order dated 28.9.2004 passed by the Additional Commissioner, Grade 1, Trade tax, Agra Range, Agra.2. Validity of the part of the order passed by the Joint Commissioner (Appeals), Trade Tax, Agra dated 31.5.2005.3. Whether the order under Section 21(2) has been served upon the petitioner.4. Applicability of the decisions of the Apex Court in the case of N.M. Goel & Company and Rashtriya Ispat Nigam Ltd.5. Whether the petitioner can challenge the order under Section 21(2) after participating in the proceedings.Detailed Analysis:1. Validity of the Order Dated 28.9.2004 by Additional Commissioner:The petitioner argued that the Additional Commissioner did not record reasons for invoking the proviso to Section 21(2) to reopen the assessment beyond the normal limitation period. The court noted that while the proviso does not explicitly require recording reasons, precedent cases (Maniktala Chemicals and S.K. Traders) established that reasons should be recorded, and the assessee should be given an opportunity to respond. The court concluded that the reasons were sufficiently detailed in the notice served to the petitioner, who participated in the proceedings, thus fulfilling the requirement.2. Validity of the Order by Joint Commissioner (Appeals) Dated 31.5.2005:The petitioner challenged the part of the order that remanded the matter to the assessing authority for fresh reassessment. The court held that the petitioner should have appealed to the Tribunal against this order rather than seeking relief under writ jurisdiction. The remand allowed the petitioner to represent its case on merit, causing no prejudice.3. Service of the Order Under Section 21(2):The petitioner claimed that the order under Section 21(2) had not been served. The court found no statutory requirement for serving the order. The petitioner was aware of the proceedings and participated in them, indicating knowledge of the order. The court held that the petitioner could have obtained a certified copy if intended to challenge it.4. Applicability of Apex Court Decisions:The petitioner contended that the decisions in N.M. Goel & Company and Rashtriya Ispat Nigam Ltd. were not applicable. The court did not find merit in this argument, as the principles from these cases were relevant to the assessment of the supply of imported goods to contractors.5. Challenge to the Order After Participation:The court observed that the petitioner participated in the proceedings before the Additional Commissioner and the assessment authority, and filed an appeal against the assessment order. Given the delay of eleven months and the petitioner's engagement in the appellate process, the court ruled that the challenge to the order under Section 21(2) was barred by laches and not bona fide.Conclusion:The court dismissed the writ petition, holding that the approval for reassessment was granted based on recorded reasons, and the petitioner was aware and participated in the proceedings. The petitioner had the opportunity to challenge the appellate order through appropriate channels, and no prejudice was caused by the remand. The court found no illegality in the approval process and no merit in the petitioner's claims.