2019 (7) TMI 468 - HC - VAT and Sales Tax

Court rules against Deputy Commissioner's attempt to reassess turnover for past years, quashes notices.

RAAJRATNA METAL INDUSTRIES LTD. And 1 other (s) Versus STATE OF GUJARAT And 1 other (s)

RAAJRATNA METAL INDUSTRIES LTD. And 1 other (s) Versus STATE OF GUJARAT And 1 other (s) - [2020] 76 G S.T.R. 64 (Guj) Issues Involved:1. Legality of the notice issued under section 34(8A) of the Gujarat Value Added Tax Act, 2003.2. Jurisdiction of the Deputy Commissioner to reclassify the turnover under a different tax entry.3. Applicability of the non-obstante clause in section 34(8A) of the VAT Act.4. Finality of the previous assessment orders.Detailed Analysis:1. Legality of the notice issued under section 34(8A) of the Gujarat Value Added Tax Act, 2003:The petitioner challenged the notices dated 04/05.09.2018 and 05.09.2018 issued by the Deputy Commissioner of State Tax, Gandhinagar, which sought to reassess the turnover for the years 2012-13 and 2011-12 under section 34(8A) of the VAT Act. The petitioner argued that the notices were without jurisdiction, bad, and illegal because the assessments for those years had already been completed and attained finality.2. Jurisdiction of the Deputy Commissioner to reclassify the turnover under a different tax entry:The petitioner contended that the Assessing Officer had already assessed the turnover of Stainless Steel wires at the rate of 4%+1% additional tax under Entry No.85 of Schedule II to the VAT Act, and this assessment was not challenged or revised within the stipulated time. The impugned notices proposed to reclassify the turnover under residuary Entry No.87, attracting a higher tax rate of 12.5%+2.5% additional tax. The petitioner argued that the Deputy Commissioner did not have the jurisdiction to change the classification by invoking section 34(8A) of the VAT Act.3. Applicability of the non-obstante clause in section 34(8A) of the VAT Act:The respondent, represented by Ms. Maithili Mehta, argued that section 34(8A) contains a non-obstante clause, allowing the Deputy Commissioner to initiate assessment independently of whether the initial assessment was pending or not. The respondent relied on the decision in M/s. Samay Sales, which supported the view that the non-obstante clause empowered the Deputy Commissioner to issue the impugned notices.4. Finality of the previous assessment orders:The court noted that the assessments for the years 2011-12 and 2012-13 were completed, and the orders had attained finality as they were not challenged within the stipulated time. The court held that section 34(8A) could not be invoked to reassess or correct an error in a finalized audit assessment. The provision under section 34(8A) is meant for cases where a certain claim or transaction has not been subjected to audit assessment and some proceedings must be pending to invoke this provision.Conclusion:The court concluded that the Deputy Commissioner could not invoke section 34(8A) to reassess the turnover for the years 2011-12 and 2012-13 as the assessments for these years had attained finality and no proceedings were pending. The court quashed and set aside the impugned notices dated 04/05.09.2018 and 05.09.2018. The petitions were allowed, and the notices were discharged with no order as to costs.