Deemed assessment cannot be reopened on audit objection unless the assessing authority independently records satisfaction under the rules.
A deemed assessment under the Bihar VAT law could not be reopened through a Comptroller and Auditor-General audit objection under section 33 merely because the returns had not been scrutinised by the due date or extended due date. The statutory scheme treated deemed assessment, departmental audit, and reassessment on audit objection as distinct processes, and extending section 33 to cover deemed assessment would amount to impermissible judicial addition to the statute. The reassessment also failed because the assessing authority did not independently examine the objection or record the satisfaction required by rule 25, making the proceeding without jurisdiction. The assessment order and consequential demand were quashed.
Issues: (i) Whether an audit objection by the Comptroller and Auditor-General could validly be initiated under section 33 of the Bihar Value Added Tax Act, 2005 in relation to a deemed assessment arising from returns that had not been scrutinised by the due date or extended due date; (ii) Whether the assessing authority complied with the mandatory requirements of rule 25 of the Bihar Value Added Tax Rules, 2005 before proceeding on the audit objection.
Issue (i): Whether an audit objection by the Comptroller and Auditor-General could validly be initiated under section 33 of the Bihar Value Added Tax Act, 2005 in relation to a deemed assessment arising from returns that had not been scrutinised by the due date or extended due date.
Analysis: The statutory scheme distinguished between scrutiny of returns, departmental audit, and reassessment on a Comptroller and Auditor-General objection. Section 26(1) created deemed assessment on expiry of the due date or extended due date, while section 26(2) and section 31 dealt with departmental audit and reassessment in that context. Section 33, by contrast, applied to assessment or reassessment based on audit objections and did not confer jurisdiction on the Comptroller and Auditor-General to undertake audit of a deemed assessment merely because the returns stood assessed by fiction of law. The Court held that extending the departmental audit power into section 33 would amount to supplying a casus omissus, which was impermissible.
Conclusion: The audit objection under section 33 was not sustainable in law insofar as it was founded on a deemed assessment, and the petitioner succeeded on this issue.
Issue (ii): Whether the assessing authority complied with the mandatory requirements of rule 25 of the Bihar Value Added Tax Rules, 2005 before proceeding on the audit objection.
Analysis: Rule 25 required the authority to apply its mind to the lawfulness of the audit objection and either proceed to reassess after recording satisfaction or, if not satisfied, forward its views to the Commissioner with the original order and objection. The impugned notice and assessment reflected no recorded satisfaction and showed a mechanical acceptance of the audit objection. The assessment order also revealed non-application of mind by invoking the wrong statutory foundation and proceeding without following the mandated procedure.
Conclusion: The assessing authority failed to comply with rule 25, and the reassessment proceeding was invalid.
Final Conclusion: The assessment order and consequential demand were quashed as they arose from an unlawful audit objection and a procedurally defective reassessment process, while the claim of an ex parte order was not accepted.
Ratio Decidendi: Where the statute does not authorise a Comptroller and Auditor-General audit on a deemed assessment, and the assessing authority does not independently satisfy itself about the lawfulness of the objection as mandated by the rules, any reassessment founded on such objection is without jurisdiction and liable to be set aside.
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AI Drafter ✕
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