TaxTMI 
TaxTMI 
2016 (4) TMI 273
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....tronic goods, home appliances, consumer durables and information technology products etc. It is a registered dealer under the DVAT Act and has been paying value added tax as well as filing return on monthly basis under the DVAT Act and corresponding Delhi Value Added Tax Rules, 2005 ('DVAT Rules'). 3. Inter alia the Petitioner sells TFT/LCD/LED monitors. Under Section 4(1)(b) of the DVAT Act in respect of the goods specified in the III Schedule, 5% tax is leviable on the taxable turnover of a dealer. Entry 41 of the Third Schedule covers IT products including computers, telephones and parts thereof, cellular phones and accessories, etc. Entry 41A deals with the IT products and covers IT products as described in column 2 as covered under the headings or sub-headings mentioned in column 3 of the Central Excise Tariff Act, 1985 ('CET Act'). 4. In the table given below Entry 41A there is an Item at Sl. No. 3 which covers a large range of automatic data processing machines. Specific to the case at hand, it includes "Graphic printer, Plotter, Laser jet printer, key board, Monitor, storage units, floppy disc drive etc." Column 3 gives the central excise tariff heading as 8471. Notes....
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....rmination dated 8th July 2008, the Commissioner DT&T held that since the products in question were not classifiable under Clause (18) of Entry 41-A to the Third Schedule of the DVAT Act and since LCD displays/plasma displays do not find any reference in any of the Schedules, they were unclassified items taxable at the rate of 12.5%. Audit proceedings 9. On the basis of the said determination under Section 84 of the DVAT Act, the Petitioner was subjected to audit proceedings for the period 1st April 2009 to 31st March 2011. In terms of the VAT Audit Team report dated 12th July 2008 for the period of the audit, the Petitioner was engaged in export, import, trading and stock transfer of various electronic goods, refrigerating goods, mobile phones and accessories. The audit report also did not find any discrepancy in the Petitioner's business as well as its books of accounts. 10. On 25th May 2014, the Petitioner received a letter dated 8th March 2014 from the VATO, Ward-202 (KCS-II) seeking certain documents/information. Reference was made to an earlier letter dated 11th February 2014 which according to the Petitioner it did not receive. That letter sought additional informati....
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....d in the counter affidavit 14. The stand of the GNCTD in its counter affidavit, in the first place, is that the Petitioner has an efficacious alternative remedy by filing objections under Section 74 of the DVAT Act before the Objection Hearing Authority (OHA). If not satisfied with the said determination, the Petitioner could file an appeal before the Appellate Tribunal, Value Added Tax ('AT'). It is pointed out that initially the Petitioner was issued notice under Section 59(2) of the DVAT Act on 11th February 2014 and again on 8th March 2014 seeking additional information about the sales details of LCD/LED/TFT Monitors. The said notice also stated that if the Petitioner failed to comply with the said notice, the sales shown in the returns filed would be treated that of LCD/LED/TFT Monitors on the sale of which tax of 12.5% has to be levied. 15. On merits it is submitted by the Respondents that the notice of default assessment/order dated 31st March 2014 passed by the assessing authority was a reasoned one which analysed the information provided by the Petitioner. The determination of Section 84 of the DVAT Act in the case of NEC was in the public domain and well known to al....
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.... to the Third Schedule was 'Monitor' and the LCD/LED/TFT Monitors sold by the Petitioner did fall within the purview of the said Entry and, therefore, were chargeable to tax only at 5%. There was no ambiguity in the Entry for it to have any other meaning. Relying on the decision in Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise, Baroda, Gujarat (1990) 1 SCC 532, Mr. Bagaria submitted that LCD/LED/TFT Monitors did not cease to be Monitors and that unless the DT&T could establish that the Monitors in question can no longer be brought under the existing tariff entries 'resort cannot he headed to the said statutory items'. Reliance was also placed on the decisions in Dunlop India Ltd. v. Union of India 1983 (13) ELT 1566; HPL Chemicals Ltd. v. Commissioner of Central Excise 2006 (197) ELT 324 (SC) and Jain Exports Private Limited v. Union of India 1992 (61) ELT 173 (SC). Relying on the decision in Sun Export Corporation v. Collector of Customs, Bombay 1997 (93) ELT 641 (SC), it was submitted that the interpretation that favours the Assessee must be preferred. 19. It was submitted by Mr Bagaria that the Respondents' plea of the existence of an alternati....
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....made by the Commissioner for the payment by a person of an amount of tax, interest or penalty or other amount in the nature of tax, interest or penalty "except by the making of an assessment for the amount." 25. Sections 31, 32 and 34 of the DVAT Act read thus: "31. Self assessment.- (1) Where a return is furnished by a person as required under section 26 or section 27 of this Act which contains the prescribed information and complies with the requirements of this Act and the rules (a) the Commissioner is taken to have made, on the day on which the return is furnished, an assessment of the tax payable of the amount specified in the return; (b) the return is deemed to be a notice of the assessment and to be under the hand of the Commissioner; and (c) the notice referred to in clause (b) is deemed to have been served on the person on the day on which the Commissioner is deemed to have made the assessment. (2) No assessment shall arise under sub-section (1) of this section, if the Commissioner has already made an assessment of tax in respect of the same tax period under another section of this Act. 32. Default assessment of tax payable.- (1) If any person (a....
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....sion of the Appellate Tribunal or court where the assessment is required to be made in consequence of, or to give effect to, the decision of the Appellate Tribunal or court which requires the re-assessment of the person. 26. Under Section 31(1) of the DVAT Act, once a return is furnished by the registered dealer under Section 26 and 27 of the Act, which is compliant with all the requirements of the DVAT Act and DVAT Rules, then three consequences follow: (a) the Commissioner is taken to have made, on the day on which the return is furnished, an assessment of the tax payable of the amount specified in the return; (b) the return is deemed to be a notice of the assessment and to be under the hand of the Commissioner; and (c) the notice referred to in clause (b) is deemed to have been served on the person on the day on which the Commissioner is deemed to have made the assessment. 27. The word 'assessment', although not defined under the DVAT Act, includes self-assessment. Section 31(1)(a) of the DVAT Act makes this explicit and deems that an assessment is taken to have been made by the Commissioner "on the day on which the return is furnished". 28. Turning next to Sec....
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.... be reckoned from the date of the filing of the return by way of self assessment. The Petitioner has calculated the limitation on the above basis in a tabular form as under: Month & Year Original Return Filed on Four years completed on April 2009 23rd May 2009 22nd May 2013 May 2009 23rd June 2009 22nd June 2013 June 2009 24th July 2009 23rd July 2013 July 2009 21st August 2009 20th August 2013 August 2009 24th September 2009 23rd September 2013 September 2009 23rd October 2009 22nd October 2013 October 2009 25th November 2009 24th November 2013 November 2009 23rd December 2009 22nd December 2013 December 2009 23rd January 2010 22nd January 2014 January 2010 26th February 2010 25th February 2014 February 2010 27th March 2010 26th March 2014 March 2010 24th April 2010 23rd April 2014 33. The DT&T, however, contends that for all of the aforementioned months, the four year period would come to an end only on 31st March 2013 and, therefore, it has time till then to complete the assessment in terms of Section 34(1)(b) of the DVAT Act. 34. The Court is unable to acce....
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....t issued for the remaining months of AY 2009-10 by the impugned notices dated 31st March 2014 are barred by limitation and deserve to be set aside on that ground. Classification of 'Monitors' 38. The Court next proceeds to examine the central issue of whether the monitors sold by the Petitioner fall within the entry 'Monitors' in terms of Item 3 below Entry 41A of the Third Schedule. As already noticed, that Entry does not specify LCD/LED/TFT Monitors. The question that then arises is whether the Entry 'Monitors' is broad enough to cover particular types of monitors or whether such special varieties of monitors should be treated as unclassified and brought under the residuary entry to be taxed at 12.5%. 39. As was cautioned by the Supreme Court in Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise, Baroda, Gujarat (supra), the residuary entry ought not to be lightly resorted to. In that case the Court was concerned with Item 26-AA(iv) of the Central Excise Tariff which talks of 'pipes and tubes (including blanks therefor) all sorts whether rolled, forged etc.' The Appellants there were manufacturing pipe fittings such as elbows, bends....
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....sign it to an orphanage of the residuary clause". 43. In HPL Chemicals Ltd. v. Commissioner of Central Excise (supra), the question was of classification of 'denatured salt'. The Court disagreed with the Department of Excise in that case that the said product was classifiable under the residuary Heading No. 38.23 and not Heading 25.01 of the Central Excise Tariff Act, 1985 which was a specific heading. The Court observed as under: "This apart, classification of goods is a matter relating to chargeability and the burden of proof is squarely upon the Revenue. If the Department intends to classify the goods under a particular heading or sub-heading different from that claimed by the assessee, the Department has to adduce proper evidence and discharge the burden of proof. In the present case the said burden has not been discharged at all by the Revenue. On the one hand, from the trade and market enquiries made by the Department, from the report of the Chemical Examiner, CRCL and from HSN, it is quite clear that the goods are classifiable as "Denatured Salt" falling under Chapter Heading No. 25.01. The Department has not shown that the subject product is not bought or sold or is n....
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....t its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises". 49. This is yet another ground on which the default notices of assessment require to be quashed. Violation of principles of natural justice 50. There is merit in the contention of the Petitioner that the impugned default notices of assessment were also in violation of the principle of natural justice. 51. The notices under Section 59(2) of the DVAT Act issued to the Petitioner asked for additional information in respect of the LCD/LED/TFT Monitors. There was no indication in the said notices regarding any erroneous classification of the monitors as forming the basis for reopening the assessments. There was also no whisper of the determination under Section 84 of the DVAT Act in the case of NEC which, as it transpired, was one of the reasons for reopening the assessments. In other words, the Assessee was not put on notice as to the grounds on which the assessments were sought to be reopened. 52. In similar circumstances, in the context of Section 142 (2A) of the income Tax Act 1961, the Supreme Court in Rajesh Kumar v. Deputy Commissioner of Incom....