2023 (5) TMI 427 - HC - VAT and Sales Tax

Review proceedings against Petitioner-company void ab initio; Appellate Authority's remand order improper. Refund penalties.

Steel Authority of India Ltd. Versus The State of Jharkhand, The Additional Commissioner of Commercial Taxes (Appeal), Dhanbad, Joint Commissioner of Commercial Taxes (Appeal), Dhanbad, Deputy Commissioner of Commercial Taxes, Bokaro, Assistant Commissioner of Commercial Taxes, Bokaro Commercial Taxes Officer, Bokaro,

The Court found that the initiation of review proceedings against the Petitioner-company was void ab initio due to the absence of necessary sanction, ... Validity of initiation of review proceedings against the Petitioner-company - absence of requisite sanction being obtained by Commissioner of Commercial Taxes, Jharkhand in terms of the provisions contained under Section 9A(4) of the Bihar Electricity Duty Act, 1948 (as adopted) read with Rules 14(10) and 14(11) of the Bihar Electricity Duty Rules, 1949 - whether the order passed by the Appellate Authority remanding the matter back to the Assessing Authority for de-novo adjudication is required to be interfered with by this Court on the ground that when the very initiation of the proceeding for review was void ab initio and nonest; no jurisdiction could have been conferred by the Appellate Authority to the Assessing Authority by passing order of remand? The case of the Petitioner is that the very initiation of the review proceedings against the Petitioner by its Assessing Officer is contrary to the provisions of Section 9A(4) of the Electricity Duty Act read with Rules 14(10) and 14(11) of the Electricity Duty Rules, as the proceedings have been initiated by the successor in office of the original Assessing Officer without obtaining previous sanction in writing of Commissioner of Commercial Taxes, and, except for the Assessment Year 2016-17, review proceedings have been initiated beyond the period of limitation of twelve months without obtaining sanction of the Commissioner of Commercial Taxes. HELD THAT:- According to Section 9A(4), the prescribed authority, to review an order, would be the officer who has passed the order or its successor in office. Section 9A(4) of the Electricity Duty Act is to be read with Rules 14(10) and 14(11) of the Electricity Duty Rules, which clearly prescribe that for reviewing any order other than the order passed by the Commissioner, sanction of the Commissioner in writing is required and such review cannot be made beyond the period of 12 months from the date of passing of the order sought to be reviewed, and, an order can be reviewed by the officer who is successor in office of the officer who has passed the order sought to be reviewed only with previous sanction of the Commissioner even if the order is sought to be reviewed within a period of twelve months. Aforesaid proposition of law has been authoritatively laid down by the Coordinate Bench of this court in the case of TATA STEEL LIMITED, JAMSHEDPUR, EAST SINGHBHUM VERSUS THE STATE OF JHARKHAND, JOINT COMMISSIONER OF COMMERCIAL TAXES (ADMINISTRATION) , DEPUTY COMMISSIONER OF COMMERCIAL TAXES, COMMERCIAL TAX OFFICER, [2019 (12) TMI 1644 - JHARKHAND HIGH COURT] and the said decision was challenged by the State of Jharkhand before the Hon’ble Apex Court and their S.L.P. has also been dismissed. There is no substance in the contention of the Respondent-State that in the case of Tata Steel Ltd, this Court remanded the matter back to the Assessing Authority for passing fresh review order. On the contrary, a bare perusal of the said order would reveal that penalty orders were set aside and it was merely recorded that this court has not stopped any authority to exercise his powers permitted under the law. It is a trite law that an order, which is bad from its inception itself, cannot be cured by subsequent action. In the present case, before the Appellate Authority, the Judgment of this Court in the case of Tata Steel Ltd. was duly placed on record, but despite the said fact, the Appellate Authority, instead of setting aside the order of review as not sustainable in the eye of law, has remanded the matter back to the Assessing Authority for reconsideration. This cannot be endorsed, as reviewing authority cannot be clothed with jurisdiction which it, otherwise, did not have at the time of initiation of review proceedings. The review orders dated 31.08.2020 and 12.09.2020 as well as the Appellate Orders dated 23.12.2022 in respect of the Period 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 are set aside - Consequently, penalty amount deposited/recovered from the Petitioner-company, if any, is directed to be refunded/adjusted in future bills towards Electricity Duty. Application allowed. Issues Involved:1. Whether initiation of review proceedings was void ab initio and nonest in the absence of requisite sanction.2. Whether the order of remand by the Appellate Authority to the Assessing Authority was valid.Summary:Issue 1: Initiation of Review ProceedingsThe core issue was whether the review proceedings initiated against the Petitioner-company were void ab initio and nonest due to the absence of requisite sanction from the Commissioner of Commercial Taxes, Jharkhand, as mandated by Section 9A(4) of the Bihar Electricity Duty Act, 1948, and Rules 14(10) and 14(11) of the Bihar Electricity Duty Rules, 1949. The Petitioner-company, engaged in manufacturing Iron and Steel, had duly discharged its electricity duty liability for the assessment years 2012-13 to 2016-17. However, an audit objection raised by the Accountant General, Jharkhand, led to the initiation of review proceedings by the Assessing Authority. The Petitioner contended that the review proceedings were initiated without obtaining the necessary sanction from the Commissioner and beyond the twelve-month limitation period, making them void ab initio. The Court agreed with the Petitioner, citing the precedent set in Tata Steel Ltd., Jamshedpur vs. State of Jharkhand, where similar review proceedings were deemed invalid due to the absence of the Commissioner's sanction.Issue 2: Order of Remand by Appellate AuthorityThe Petitioner also challenged the Appellate Authority's order, which remanded the matter back to the Assessing Authority for de-novo adjudication. The Petitioner argued that since the initiation of the review proceedings was void ab initio, the Appellate Authority could not confer jurisdiction upon the Assessing Authority by remanding the matter. The Court concurred, stating that an order void from its inception cannot be cured by subsequent actions. The Appellate Authority should have set aside the review orders rather than remanding the matter. The Court found no merit in the Respondent-State's contention that the remand was justified, emphasizing that the Appellate Authority's action was contrary to the law established in the Tata Steel Ltd. case.Conclusion:The Court set aside the review orders dated 31.08.2020 and 12.09.2020 and the Appellate Orders dated 23.12.2022 for the periods 2012-13 to 2016-17. It directed the refund or adjustment of any penalty amount deposited/recovered from the Petitioner-company. The Court clarified that it had not prevented any authority from exercising its powers as permitted under the law. Consequently, all writ applications and interlocutory applications were allowed with the stated directions and observations.