Assessment vitiated for ignoring tax-rate objection on inter-State mobile phone sales, with limitation plea allowed on remand.

An assessment under CST was held unsustainable where the assessee's specific objection on the applicable tax rate for inter-State sales of mobile phones not covered by C-Forms was not dealt with in the assessment order. The court noted that a material objection raised in reply to the show-cause notice cannot be ignored, and the omission to decide whether the correct rate was 5% or 14.5% vitiated the order. The assessee was also permitted to raise the plea of limitation, and the matter was remitted for fresh consideration of both the earlier and additional objections.

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Issues: (i) whether the assessment order was vitiated by failure to consider the assessee's specific objection on the applicable rate of tax on inter-State sales of mobile phones not covered by C-Forms; (ii) whether the assessee was entitled to raise the plea that the assessment for the relevant period was time-barred and have the matter remitted for fresh consideration.

Issue (i): whether the assessment order was vitiated by failure to consider the assessee's specific objection on the applicable rate of tax on inter-State sales of mobile phones not covered by C-Forms.

Analysis: The assessee had specifically objected that the turnover related to inter-State sales of mobile phones taxable at 5% and had relied on invoices and departmental clarification. The assessment order, however, did not deal with that core contention and proceeded without deciding whether the correct rate was 5% or 14.5%. A material objection having been raised in the objections to the show-cause notice, its omission from consideration rendered the assessment unsustainable.

Conclusion: The assessment order was vitiated on this ground and could not stand.

Issue (ii): whether the assessee was entitled to raise the plea that the assessment for the relevant period was time-barred and have the matter remitted for fresh consideration.

Analysis: The assessee sought permission to urge the additional plea of limitation under the applicable CST Rules while the Revenue also accepted that the matter should go back for reconsideration. In these circumstances, the assessee was permitted to file additional objections, including the plea of limitation, and the assessing authority was directed to reconsider the existing and additional objections and pass a fresh order in accordance with law.

Conclusion: The assessee was permitted to raise the limitation plea and the matter was remitted for fresh assessment.

Final Conclusion: The writ petition succeeded, the impugned assessment was set aside, and the assessment authority was directed to decide the matter afresh after considering both the earlier objections and any additional objections filed within the time granted.

Ratio Decidendi: An assessment order cannot be sustained where a material objection affecting the taxable rate is left undecided, and remand is appropriate to enable fresh adjudication on all objections, including a plea of limitation.

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