2023 (11) TMI 607 - HC - VAT and Sales Tax

Revenue cannot issue Section 49(3) show cause notices after failing to challenge successful appeals under Section 48(2)

The Chhattisgarh HC quashed show cause notices issued under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005. The petitioner's appeals were ... Opening of assessment orders - Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005 - HELD THAT:- It would be worthy to mention here that the provisions of the VAT Act of Orrisa and Chhattisgarh are not pari-materia whereas the provisions of VAT Tax of Madhya Pradesh and Chhattisgarh are analogous. In the present case, subsequent to the assessment order dated 29.12.2015; the petitioner preferred the appeals before the Appellate Deputy Commissioner, and those appeals were allowed vide orders dated 03.08.2017, 08.08.2017 and 09.08.2017, respectively. Surprisingly, the revenue did not contest the Appellate Deputy Commissioner's orders for a significant period and vide orders dated 29.01.2019 and 05.11.2018, show cause notices were issued to the petitioner while exercising the power under Section 43(3) of the Act, 2005. However, it is worth noting that the orders passed by the Appellate Deputy Commissioner were not challenged before the Tribunal under Section 48(2) of the Act, 2005 and there is no explanation in this regard. Consequently, in the opinion of this Court, the notices issued by respondent No. 2/Commissioner exercising the power under Section 49(3) of the Act, 2005, are legally unsustainable in the eyes of the law. The impugned notices dated 05.11.2018 and 29.01.2019 issued under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005 by respondent No. 2-Commissioner, Commercial Tax, Raipur are hereby quashed - Petition allowed. Issues Involved:1. Validity of the reopening of assessment orders by the Commissioner under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005.2. Finality of orders passed by the Appellate Deputy Commissioner under Section 48(7) of the Act, 2005.3. Authority of the Commissioner to exercise revisional powers over orders passed by the Appellate Deputy Commissioner.Summary:1. Validity of the reopening of assessment orders by the Commissioner under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005:The petitioner challenged the notices issued by the Commissioner under Section 49(3) of the Act, 2005, intending to reopen the assessment orders passed in 2016-17. The petitioner argued that the orders passed by the Appellate Deputy Commissioner on 03.08.2017, 08.08.2017, and 09.08.2017 had attained finality and were not challenged by the Revenue for a considerable period. The Commissioner exercised revisional power after three years, which the petitioner contended was erroneous and prejudicial to the interest of the revenue.2. Finality of orders passed by the Appellate Deputy Commissioner under Section 48(7) of the Act, 2005:The petitioner argued that according to Section 48(7) of the Act, 2005, the orders passed by the Appellate Deputy Commissioner are final, subject to the provisions of sub-section (2) of Section 48 or sub-section (1) of Section 49. The petitioner contended that the Appellate Deputy Commissioner was not subordinate to the Commissioner, and any order passed by the Deputy Commissioner would not be revisable before the Commissioner.3. Authority of the Commissioner to exercise revisional powers over orders passed by the Appellate Deputy Commissioner:The respondent argued that Section 3 of the Act, 2005, deals with Taxing authority and other officers to assist the Commissioner of VAT Tax, including the Appellate Deputy Commissioner. The Commissioner has the authority to review the records of any proceeding under the Act and revise any order passed by an officer appointed under Section 3 if it is prejudicial to the interest of the revenue. The respondent cited the judgment of the Supreme Court in Commissioner of Sales Tax, Orissa v. Halari Store to support their argument.Court's Analysis and Decision:The court noted that the assessment orders were passed on 29.12.2015, and the appeals were decided in favor of the petitioner by the Appellate Deputy Commissioner. The Commissioner exercised revisional power after three years and issued notices to the petitioner. The court observed that the provisions of appeal and revision are different, and while exercising revisional power, the authority has to see the legality of the order, not reassess the entire material.The court referred to the judgment in Goldie Glass Industries, where it was held that the order passed by the Deputy Commissioner of Commercial Tax (Appeal) is final and not amenable to suo-motu revisional powers. The court distinguished the provisions of the VAT Act of Orissa and Chhattisgarh, noting that the provisions of VAT Tax of Madhya Pradesh and Chhattisgarh are analogous.The court concluded that the orders passed by the Appellate Deputy Commissioner were not challenged before the Tribunal under Section 48(2) of the Act, 2005, and there was no explanation for this. Therefore, the notices issued by the Commissioner under Section 49(3) of the Act, 2005, were legally unsustainable.Conclusion:The impugned notices dated 05.11.2018 and 29.01.2019 issued under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005, by the Commissioner were quashed, and the petitions were allowed.