2019 (2) TMI 1223 - HC - VAT and Sales Tax

Court Validates Suo Motu Revisional Proceedings Under KVAT Act, Emphasizes Fresh Consideration

M.M. Pattanshetty Versus Manjunath Traders, Ankalgi Versus The Commissioner Of Commercial Taxes, Bengaluru

The court upheld the validity of the suo motu revisional proceedings initiated by the Commissioner of Commercial Taxes under Section 64(2) of the KVAT ... Doctrine of merger - Restoration of protective assessment order - revisional order set aside - delay in initiating the revisional proceedings - Held that:- It is emphasized that what had to be considered by the Additional Commissioner of Commercial Taxes was as per the direction issued by the co-ordinate Bench of this Court on remand of the matter. The direction was not to initiate revisional proceedings with regard to a regular Assessment being made. Therefore, the Commissioner of Commercial Taxes, by the impugned order dated 10.11.2014 passed under Section 64(2) of the KVAT Act, has rightly set aside the order dated 31.12.2013 passed by the Additional Commissioner of Commercial Taxes and remanded the matter to him for de nova proceedings under Section 64(1) of the KVAT Act in the light of the observations made in his order. Further, this Court had observed that the revisional authority to reconsider the entire matter afresh in accordance with law, which means that the revisional authority had to consider the regular Assessment Order and to consider the protective order in light of the regular Assessment Order. The revisional authority could not proceed at a tangent and deviate from the directions issued by this Court. The remand was a limited remand to the revisional authority to look into the regular assessment for the purpose of revision and its effect in accordance with law. The protective Assessment Order and the reassessment order were passed in different fields in different spheres. In the circumstances, the revisional authority by order dated 10.11.2014 was justified in setting aside the order passed by the Additional Commissioner of Commercial Taxes on 31.12.2013 and remanding the matter to the said authority for de nova proceedings under Section 64(1) of the KVAT Act. Appeal dismissed - decided against appellant. Issues Involved:1. Validity of the suo motu revisional proceedings initiated by the Commissioner of Commercial Taxes under Section 64(2) of the KVAT Act.2. Whether the revisional proceedings were barred by limitation.3. The impact of the protective assessment order and its relation to the regular assessment order.Issue-wise Detailed Analysis:1. Validity of the suo motu revisional proceedings initiated by the Commissioner of Commercial Taxes under Section 64(2) of the KVAT Act:The appellant challenged the order dated 10.11.2014 passed in suo motu revisional proceedings by the Commissioner of Commercial Taxes. The initial protective assessment order dated 15.03.2007 was contested by the appellant and set aside by the Joint Commissioner of Commercial Taxes on 19.04.2007. However, the Additional Commissioner of Commercial Taxes later restored the protective assessment order on 04.12.2009. This led to a series of appeals and remands, culminating in the Commissioner of Commercial Taxes setting aside the order dated 31.12.2013 and remanding the matter for de novo proceedings under Section 64(1) of the KVAT Act. The court upheld the validity of the suo motu revisional proceedings initiated by the Commissioner, emphasizing that the revisional authority must reconsider the entire matter afresh in accordance with the law.2. Whether the revisional proceedings were barred by limitation:The appellant argued that the revisional proceedings were time-barred as they were not initiated within four years from the date of the regular assessment order dated 17.10.2007. However, the court clarified that the remand by a co-ordinate Bench was for the revisional authority to reconsider the protective assessment order in light of the regular assessment order and not to initiate new revisional proceedings. The court emphasized that the protective assessment order and the regular assessment order operate in different fields and that the limitation for revising the regular assessment order did not arise based on the doctrine of merger. Thus, the court found that the revisional proceedings were not barred by limitation.3. The impact of the protective assessment order and its relation to the regular assessment order:The court noted that the protective assessment order under Section 38(5) of the KVAT Act and the regular assessment order under Section 38(1)(a) of the KVAT Act operate in different fields. The protective assessment is undertaken in special circumstances independent of other assessment sections. The court clarified that the protective assessment order did not merge with the regular assessment order dated 17.10.2007. The court emphasized that the remand was limited to reconsidering the protective assessment order in light of the regular assessment order and not to reassess the regular assessment order itself. The court found no infirmity in the order of the Commissioner of Commercial Taxes, which set aside the earlier order and remanded the matter for fresh proceedings under Section 64(1) of the KVAT Act.Conclusion:The court dismissed the appeal, finding no merit in the appellant's arguments. The substantial question of law was answered against the appellant and in favor of the respondent. The parties were directed to appear before the concerned Additional Commissioner of Commercial Taxes for further proceedings in accordance with the law.