TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 880
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....licable. 4. Section 34 of the DVAT Act, prescribes limitation period for completing assessment and re-assessment. Section 34(1) of the DVAT Act is reproduced below:- "Section 34: (1) No assessment or re-assessment under section 32 of this Act shall be made by the Commissioner after the expiry of four years from - (a) the date on which the person furnished a return under section 26 or sub-section (1) of section 28 of this Act; or (b) the date on which the Commissioner made an assessment of tax for the tax period, whichever is the earlier: PROVIDED that where the Commissioner has reason to believe that tax was not paid by reason of concealment, omission or failure to disclose full material particulars on the part of the person, the said period shall stand extended to six years." 5. Section 34(1) of the DVAT Act, simply stated stipulates that no assessment or re-assessment under Section 32 should be made by the Commissioner after expiry of four years from the date on which the person has furnished return under Section 26 or under Section 28(1) of the DVAT Act. Sub Clause (b) to Section 34 (1) is not relevant and applicable. The proviso extends the period of limitation to six ye....
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....ere the Commissioner has made an assessment under this section, the Commissioner shall forthwith serve on that person a notice of assessment of the amount of any additional tax due for that tax period. XXXXXXXXXXX Explanation.- A person may, if he disagrees with the notice of assessment, file an objection under section 74 of this Act." Sub section 1 to Section 32 states that default assessment can be made when the return is not furnished by the prescribed date; or incorrect or incomplete return has been furnished or the return furnished does not comply with the requirements of the said Act or for any other reason the Commissioner is not satisfied with the return furnished by the person. Unless the conditions of section 32(1) of DVAT Act are satisfied, default assessment cannot be made and if made will be liable to be struck down/set aside. Sub Section 1 to Section 32 permits and authorises the Commissioner for recording of reasons in writing, assess or re-assess to the best of his judgment the amount of net tax due for a tax period. Sub Section 2 to Section 32 stipulates that the Commissioner, after making default assessment under the Section, shall forthwith serve on that perso....
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.... Rule 12 of the Central Sales Tax (R&T) Rules, 1957, there was an omission on the part of the appellant in this case. Hence, as per proviso to Section 34(1) of the Act, the period of limitation stands extended to six years. We are, therefore, of the considered view that the assessment is not barred by limitation in view of the above provision." 9. The error made by the Tribunal in the impugned order is that they examined and formed the belief that there was 'omission' on the part of the appellant assessee and, therefore, extended period of six years would apply. But, the mandate of the DVAT Act is that it is the Commissioner, who should have formed the said opinion/belief by recording 'reason to believe' regarding concealment, omission or failure on the part of the assessee, resulting in non-payment or short payment of tax. It is stated that in exercise of powers under Section 68 of the DVAT Act, the Commissioner, by issue of a notification, has delegated his powers under Section 32 and 34 of the DVAT Act to the Value Added Tax Officer and Joint Commissioners. We are not required to examine the validity of the said delegation in this appeal as no such question has ....
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....udice. Importantly, we would steer clear from the needless debate on whether and what was the "reason to believe". 11. The expression 'reason to believe' finds reference in Section 147 of the Income Tax Act, 1961, a provision related to opening of an assessment already made under section 143(3) or regular assessment for the first time where notice u/s 143(2) of the said Act was not issued. The aforesaid expression in DVAT Act is, therefore, pari materia and enacted keeping in mind the similar provision under the Income Tax Act. The Supreme Court in S. Ganga Saran and Sons Ltd vs. ITO (1981) 3 SCC 143, observed that expression 'reasons to believe' is stronger than the words 'if the Assessing Officer is satisfied'. A belief must be honest and tested on the ground whether a reasonable person, based upon reasonable grounds, would have formed the said belief. 'Reasons to believe' is not the same as mere suspicion, gossip or rumour. 'Reasons to believe' are not a reason to suspect. Fishing or roving inquiry under the proviso is not permissible. The words 'material facts' was earlier elucidated by the Supreme Court in Calcutta Discount Co. ....
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....age of time, relevant material and evidence tend to disappearance and dissipate. Limitation of four years is by no stretch or consideration, as an exiguous or minimal period. Thus, in cases where there are mistakes, errors or wrong claims have been made, but the full material facts have been disclosed, extended period of limitation for six years would not be applicable. The default assessment in such cases where material facts are disclosed should be made within four years. Once material facts are duly disclosed, conditions stipulated in the proviso to Section 34 (1) of the DVAT Act that there should be concealment, omission or failure to disclose full particulars, would be missing and absent. The extended period of limitation of six years would only apply if there is omission, concealment or failure to disclose material particulars and the said reasons should be recorded in writing to constitute "reasons to believe". Thus and in this manner Sections 32 and 34 (1) operate independently and in their own fields. 14. In the present case, the undisputed position is that the appellant assessee for the 4th quarter relating to tax period 2006-07 had filed his return on 30.04.2007, so the....
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....C' form was Rs. 9,38,815/-, and DVAT 51 was also filed (Date of DVAT 51, is not indicated). The authority, thereafter observed that form value of Rs. 3,00,465/- was consolidated in one form and, therefore, disallowed from the sale in the second and third quarter. Tax demand stood created. Amazingly, the tax demand was created and the default assessment passed was for the fourth quarter. It is not clear from the above reasons, why and for what account, any opinion or belief was formed that there was concealment, omission or failure on the part of the assessee to disclose material facts. What is apparent from the aforesaid is that the full details were filed by the assessee in form DVAT 30 and 51 etc. but on legal interpretation, consolidated 'C' form was not acceptable. This fact has been also noticed by the Tribunal in the impugned reasoning. The fact that the appellant had filed consolidated form was not concealed or omitted. The position that the appellant has relied upon consolidated 'C' form was known to the authority. It was neither concealed nor omitted nor was there any failure. Facts were on record and available. The reasoning/order proceeds as if there ....
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....ant case deposited on 09.05.2011, did not conform to Rule 12(1) of the Central Sales Tax (Registration & Turnover) Rules, 1957. Reference was to the requirement that the appellant assessee should have furnished separate 'C' forms for each quarter of the financial year and not a single form for all the quarters of a financial year. The matter was remanded by the Objection Hearing Authority to the Assessing Officer. It is noticeable that the Objection Hearing Authority did not deal with the contention/challenge to the exercise of jurisdiction after four years, being barred by limitation for want of recording "reasons to believe". The Objection Hearing Authority, cannot record "reason to believe". These, as per the statute, should be recorded by the Commissioner/competent authority and that too, before or at the time of passing of the default assessment order under section 32 of the DVAT Act. The reason is simple that the power conferred must be exercised in the manner prescribed and mandated, especially when it is a jurisdictional pre-condition and requirement. Section 34(1) postulates and prescribes upper time limit for passing of the default assessment order as four years, ....