TaxTMI 
TaxTMI 
2017 (2) TMI 82
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....r the provisions of the Haryana Value Added Tax Act, 2003 (for short, 'the Act'). The assessment of the petitioner for the year 2011-12 was framed vide order dated 15.5.2013. Notice under Section 34 of the Act for revision of the assessment order was issued on 4.6.2015. The revisional authority passed the order on 3.7.2015. The revisional order has been challenged, inter-alia, on the ground that the same is without jurisdiction. CWP No. 23671 of 2015 3. Assessment of the petitioner for the year 2010-11 was framed vide order dated 30.4.2012 while accepting the returns filed by the petitioner. Notice under Section 34 of the Act for revision of the assessment order was issued on 14.5.2005. The same was challenged by filing CWP No. 37858 of 2015, which was disposed of on 29.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed order on 21.8.2015 and served upon the petitioner on 7.10.2015. In the writ petition, challenge has been made to the aforesaid order being in violation of the provisions of the Act. CWP No. 23721 of 2015 ....
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....tice under Section 34 of the Act for revision of the asssessment order was issued on 13.8.2015. The same was challenged by filing CWP No. 18119 of 2015, which was disposed of on 14.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed order on 6.11.2015 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction. CWP No. 25848 of 2015 9. Assessment of the petitioner for the year 2006-07 was framed vide order dated 4.3.2010, while accepting the returns filed by the petitioner. Notice under Section 34 of the Act for revision of the order was issued on 13.8.2015. The same was challenged by filing CWP No. 17766 of 2015, which was disposed of on 14.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 9.11.0215 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without....
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....ispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 16.11.2015 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction. CWP No. 27032 of 2015 14. Assessment of the petitioner for the year 2007-08 was framed vide order dated 31.12.2009, while accepting the returns filed by the petitioner. Notice under Section 34 of the Act dated nil was issued for revision of the assessment order, which was served upon the petitioner on 7.9.2015. The same was challenged by filing CWP No. 19417 of 2015, which was disposed of on 14.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 16.11.2015 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction. CWP No. 27448 of 2015 15. Assessment of the petitioner for the year 2009-10 was framed vide order dated 26.2.2013, while accepting ....
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....petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 20.10.2015 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction and vires of Explanation (i) to Section 2(1) (zg) of the Act. CWP No. 788 of 2016 19. Assessment of the petitioner for the year 2007-08 was framed vide order dated 26.11.2009, while accepting the returns filed by the petitioner. Notice under Section 34 of the Act for revision of the assessment order was issued on 13.8.2015. The same was challenged by filing CWP No. 17752 of 2015, which was disposed of on 14.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 9.11.2015 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction and vires of Explanation (i) to Section 2(1) (zg) of the Act. Quashing of exception to second proviso to Section 34 of the Act has also been prayed for. CWP No. 7....
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....e assessment order was issued on 23.6.2015. The same was challenged by filing CWP No. 14586 of 2015, which was disposed of on 14.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 20.10.2015 dismissing the objections. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction and vires of Explanation (i) to Section 2(1) (zg) of the Act. CWP No. 3748 of 2016 24. Assessment of the petitioner for the year 2010-11 was framed vide order dated 18.4.2012, while accepting the returns filed by the petitioner. Notice under Section 34 of the Act for revision of the assessment order was issued on 13.2.2014. The same was challenged by filing CWP No. 17755 of 2015, which was disposed of on 14.9.2015 directing the authority to dispose of the objections raised by the petitioner for initiation of revisional proceedings before taking further action in the matter. The revisional authority passed the order on 16.11.2015 dismissing the objections. In the writ petition, challenge has been made to the af....
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....g the returns filed by the petitioner. Notice under Section 34 of the Act for revision of the assessment order was issued on 24.6.2015. Objections were filed by the petitioner on 7.7.2015. The revisional authority dismissed the objections of the petitioner vide order dated 30.11.2015. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction and vires of Explanation (i) to Section 2(1)(zg) of the Act. CWP No. 18377 of 2016 29. Assessment of the petitioner for the year 2006-07 was framed vide order dated 30.3.2009, while accepting the returns filed by the petitioner. Notice under Section 34 of the Act for revision of the assessment order was issued on 28.12.2015. The same was challenged by filing CWP No. 6795 of 2015. The revisional authority dismissed the objections of the petitioner vide order dated 12.4.2016. Thereafter, the petitioner withdrew the writ petition on 25.4.2016 with liberty to challenge the order disposing of the preliminary objection. In the writ petition, challenge has been made to the aforesaid order being without jurisdiction and vires of Explanation (i) to Section 2(1)(zg) of the Act. ARGUMENTS ON BEHALF OF THE PETITION....
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....nd not beyond that. Even change of opinion is no ground for exercise of revisional jurisdiction. In some of the notices, judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) has been mentioned, which was delivered much prior to the framing of assessment, still extended period is sought to be invoked. 33. In support of the plea, reliance was placed upon Collector of Central Excise v. H. M. M. Limited, 1995(76) ELT 497 (SC); Kaur & Singh v. Collector of Central Excise, New Delhi, 1997 (94) ELT 289 (SC); Aban Loyd Chiles Offshore Ltd. v. Commr. of Cus., Maharashtra, 2006 (200) ELT 370 (SC); Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur, 2013 (288) ELT 161 (SC). 34. It was further contended that taxability of works contracts with reference to the builders was examined by Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) and it was so admitted and noticed by the Excise & Taxation Commissioner in the circular dated 7.5.2013, where specific words used by him were that the same is still a good law. Merely because subsequently in any judgment, the legal position is reiterated will not give ....
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.... stage of assessment, in the show cause notices issued, the Assessing Authority had referred to the judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra). Meaning thereby he was conscious of the law laid down on the subject, but still at the time of assessment, the same was not referred to in the order passed. In some of the cases, even in the show cause notice under Section 34 of the Act, only judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) was referred to, which was delivered on 5.5.2005, whereas in some of the cases, additionally judgment of Hon'ble the Supreme Court in L&T's 2 nd case (supra) has also been referred to, which merely approved the earlier judgment in K. Raheja Development Corporation's case (supra). In all the cases, the petitioners cannot be said to be at fault. They had filed their returns regularly. The law declared by Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) on 5.5.2005, was already available, which was well within the knowledge of the department, still the assessments were framed ignoring the same, hence, the p....
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....mendment for exercise of power in terms of the conditions laid down in Section 34(1) of the Act. It is in normal circumstances. However, in case the exception as carved out under certain specified conditions is to be invoked, how much should be the reasonable period, as finality has to be accorded to the proceedings under the Act. It cannot be kept alive for infinity. If any of the event as narrated in the exception clause provided in second proviso to Section 34(1) of the Act takes place within the period of limitation provided for taking action for suo-motu revision, the action has to be taken within that period and in those circumstances, extended period of limitation cannot be invoked. If any of the events takes place just close to the expiry of the period of limitation for exercise of revisional jurisdiction, in a given fact situation, reasonableness of the period can be examined. However, in case the period of limitation expired and any of the situations, as enumerated in the exception clause, such as retrospective amendment, order of a Tribunal or declaration of law by Hon'ble the Supreme Court or the High Court takes place thereafter, then what is the reasonable time pe....
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....ssue regarding limitation for taking up cases for revision was also specified. If both the instructions are read together, it was clear therefrom that under normal circumstances, the assessment orders upto the year 2006-07 had attained finality and assessment orders for the year 2007-08 could be revised by March, 2014. In the cases where the assessment orders are prior to year 2007-08, as per the instructions issued by the Excise & Taxation Commissioner, which are binding in nature under Section 56(2) of the Act, limitation to revise that assessment order had already expired, hence, the notices issued or the orders passed for revision of the assessment for those years being without jurisdiction, deserve to be set aside. He further submitted that the validity of the aforesaid circular issued by the department was upheld by this court in CWP No. 5730 of 2014-- CHD Developers Limited, Karnal v. The State of Haryana and others, decided on 22.4.2015. 43. In support of the plea that the instructions issued in exercise of powers conferred under Section 56(2) of the Act are binding on the department, reliance was placed upon a Division Bench judgment of this court in Sonex Auto Industries....
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....ion received does not include only the labour or certain service charges incurred for execution of works contract but includes land cost, external development charges, internal development charges, change of land use charges and various other different types of charges/expenses. These expenses incurred by the dealer which form part of the total cost of the works contract cannot, in any manner, be subjected to levy of VAT on the transfer of property in goods in execution of a works contract. The State Legislature does not have the jurisdiction to levy VAT on transfer of land. In the case of sale of flat in a building, proportionate share of land is also transferred, the value of which is included in total cost. 46. In the alternative, the explanation provides that where such labour and other service charges are not quantifiable, the sale price shall be the cost of goods used in execution of works contract adding margin of profit thereon plus cost of transferring the property in goods and any other expenses incurred in relation thereto till the property is passed on to the contractee. The second part of the explanation includes even the service component for the purpose of taxation ....
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....on, which cannot be taxed. It is also bad in case what is required to be excluded has not been excluded, such as cost of land and other service charges in the present case. In support of the plea, reliance was placed upon L&T's 2 rd case (supra); CHD Developers Limited's case (supra) and Gannon Dunkerley & Co. v. State of Rajasthan, (1993) 88 STC 204 (SC). 49. Learned counsel further submitted that details as to what is to be included and excluded for the purpose of taxation have to be provided either in the Act or at the most in the Rules, if the Act so permits. Mere statement in reply or the stand taken by counsel for the State in court is not sufficient for that purpose. Even administrative instructions also do not cure the mischief. In support of the plea, reliance was placed upon M/s Larsen & Toubro Ltd. v. The State of Bihar and others, (2004) 134 STC 354 (Patna) [hereinafter referred to as L&T's 3 rd case (supra)]; State of Jharkhand and others v. Voltas Ltd., (2007) 7 VST 317 (SC) and Commissioner, Central Excise & Customs, Kerala v. M/s Larsen & Toubro Ltd., (2016) 1 SCC 170 (hereinafter referred to as L&T's 4 th case (supra)]. 50. In case detailed machin....
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.... cost of land forming part of the houses or flats constructed by the developer/builder has to be excluded. Vide circular dated 10.2.2014, clause in the earlier circular was substituted stating that value of the land is also to be added. He further submitted that in the public notice available on the website of the department even today on the subject in question, it is mentioned that value of the land is not to be included for the purpose of taxation in the works contracts. The petitioner was issued notice under Section 34 of the Act on 13.8.2015 not invoking the extended period of limitation, as none of the ingredients, which enables the authority to issue notice for revision beyond the period of limitation has been mentioned in the notice. He further submitted that if the department could have exercised the revisional jurisdiction within the period of limitation, it cannot be permitted to allow the period to lapse and thereafter invoke the exception clause. 53. While referring to Section 34 of the Act, learned counsel for the petitioner submitted that the exception as carved out enabling the authority to exercise suo-motu power beyond the period of limitation is available only i....
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....terms of the order dated 30.9.2014 passed by this court in CP No. 203 of 2013-In the matter of Amalgamation of Sukh Realtors Private Limited and M-Ganga Builders and Construction Pvt. Ltd. and others, as corrected on 10.11.2014. The assessment in the present case is pertaining to the year 2009-10. Show cause notice for assessment was issued under Section 16 of the Act on 19.2.2016 in the name of M/s Sukh Realtors Pvt. Ltd., which already stood dissolved. In reply dated 29.2.2016 submitted by the petitioner, without prejudice, besides raising other pleas, it was submitted that the company, namely, M/s Sukh Realtors Pvt. Ltd., in whose name notice was issued, already stood dissolved, hence, assessment cannot be framed in its name. The particulars of the transferee company were furnished. Other issue raised in the reply was regarding the notice being time-barred. Despite reply filed by the petitioner, assessment was framed on 8.3.2016 in the name of M/s Sukh Realtors Pvt. Ltd., which already stood dissolved on 1.4.2013. The order was served upon the petitioner on 27.6.2016. 57. In support of the argument that no order of assessment could be passed against a non-existent company, refe....
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....re are three exceptions carved out, under which the period of limitation is not applicable. As far as the first exception is concerned, the same has to be an event subsequent to the passing of the order sought to be revised, namely, retrospective change in law. As far as other two exceptions are concerned, namely, on the basis of a decision of the Tribunal or on the basis of law declared by the High Court or the Supreme Court, the order/judgment could be either before the order is sought to be revised or later. There is nothing in the language of the section, which specifies that judgment of the Tribunal, High Court or the Supreme Court has to be subsequent to the order sought to be revised. The object for which the section has been added is to correct the errors committed by the authorities or where the law on the subject had been violated, such as any judgment had not been followed. The moment it comes to the notice of the Commissioner, he can initiate proceedings and limitation of three years (now extended to six years) will not be applicable. No words can be added or declared surpluses in a statute. The judgment of Division Bench of this Court in VATAP No. 172 of 2012-State of ....
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....on clause. Even in the absence of judgment of Hon'ble the Supreme Court in L&T's 2 nd case (supra), the notices could have been issued beyond a period of three years under Section 34 of the Act. Mere non-mentioning of judgment of Hon'ble the Supreme Court in L&T's 2 nd case (supra) in the notices issued to some of the parties will not make any difference. 63. As regards the contents in the notice, it was submitted that notice is not a condition precedent for assumption of jurisdiction. The Act only provides that reasonable opportunity has to be granted before passing an order, which merely implies issuance of notice. The same was given to the assessee. There are no reasons to be recorded or mentioned in the notice, especially regarding invocation of exception clause. A simple notice under Section 34 of the Act by the Commissioner intimating the party that the order is sought to be revised, is sufficient. After the notice is issued, the party can always reply to that and object to the notice raising all possible grounds available to him. In any case, the judgment, on the basis of which the orders are sought to be revised, has been mentioned, hence, none of the notic....
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....mitation of three years was provided, which now stands substituted with six years. However, for invocation of the exception clause under certain specified conditions, there is no period of limitation. In those eventualities, no time can be read in the provision. He further submitted that the department can issue notice at any time, as no prejudice as such is going to be caused to an assesee. Even if he is unable to produce the books of accounts, on the basis of proposition of law, order can be revised merely after seeing the returns or order of assessment. On a query of the court, as to what are the instructions of the department for preservation of records in office, he could not specifically answer. He further submitted that even if there is some delay in issuance of notice invoking any of the events in the exception clause, the reasons are not required to be given in the notice. The same have to form part of the order after considering the reply by the assessee. In the present case, the delay is well explained as the earlier judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) was pending reconsideration before a larger Bench in L&T&#....
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.....e.f. 20.3.2009, in fact, no Rules were required. The necessity arose only after the amendment was carried out, which enabled the Government to provide for certain formulae for calculation of the sale price in the absence of quantifiable data. For the period prior to 20.3.2009, at this stage, there is no need to go into the validity thereof for the reason that admittedly, the petitioners have their books of accounts, which were maintained in normal course of business and from that taxable turnover can be determined and the case will not fall in second category, which shall be applicable only where quantifiable data of labour and service charges is not available. Whatever deductions are to be provided in terms of the law laid down by Hon'ble the Supreme Court or this Court will be taken care of by the authorities under the Act. 70. While referring to the judgment of Hon'ble the Supreme Court in Gannon Dunkerley and Co.'s case (supra), it was submitted that Hon'ble the Supreme Court has clearly defined as to the kind of deductions, which are available for assessing the value of goods, property in which is passed on in a works contract. The assessment of the petitione....
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....s case (supra). There were two eventualities possible in L&T's 2 nd case (supra), where the matter was referred for reconsideration-- one is reiteration of the same view and second is taking a different view. In these circumstances, the department was not going to gain anything by keeping the matter pending. No insurmountable difficulties have been pointed out by the State either in the notice or in the order passed explaining the reasons why the notice has been issued so late after the cause of action arose. 73. In the exception clause, three eventualities have been mentioned, namely, retrospective amendment of law, order passed by the Tribunal or law declared by the High Court or Hon'ble the Supreme Court. The provision has to be given purposive interpretation. Once it is admitted by the State that amendment in law has to be subsequent to the passing of the order by the assessing authority, the other two eventualities have also to be later in time if exception clause is to be invoked. However, if on account of any error the assessing authority has failed to take note of the existing law and the period of limitation is still available, the order could be revised during th....
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....tax, hence, the department cannot be granted liberty to issue notice at any time. 78. Mr. Sandeep Goyal, learned counsel for the petitioner submitted that in terms of Section 56(2) of the Act, the circulars issued by the department are binding on the authorities under the Act, except the appellate authority. The reasonable period for invoking revisional jurisdiction would start from 5.5.2005 when the judgment in K. Raheja Development Corporation's case (supra) was delivered by Hon'ble the Supreme Court. 79. The judgment of this court in M/s Haryana State Warehousing Corporation's case (supra) is distinguishable on facts as in that case, this court permitted invocation of extended period of limitation on the basis of a judgment delivered by the High Court. In that case, the assessment was framed on 15.3.2007. Copy was supplied to the assessee on 25.7.2007. The revisional jurisdiction was sought to be exercised in view of the judgment of this court delivered subsequent to the passing of the assessment order in M/s Food Corporation of India v. State of Punjab, (2009) 33 PHT 632 (P&H) on 19.3.2009. The contention raised by the assessee was that the department always had t....
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....tion, call for the record of any case pending before, or disposed of by, any taxing authority for the purposes of satisfying himself as to the legality or to the propriety of any proceeding or of any order made therein which is prejudicial to the interests of the State and may, after giving the persons concerned a reasonable opportunity of being heard, pass such order in relation thereto as he may think fit: Provided that no order passed by a taxing authority shall be revised on an issue which on appeal or in any other proceeding from such order is pending before, or has been settled by, an appellate authority or the High Court or the Supreme Court, as the case may be: Provided further that no order shall be revised after the expiry of a period of three years from the date of the supply of the copy of such order to the assessee except where the order is revised as a result of retrospective change in law or on the basis of a decision of the Tribunal in a similar case or on the basis of law declared by the High Court or the Supreme Court. (2) The State Government may, by notification in the Official Gazette, confer on any officer not below the rank of Deputy Excise and Taxation ....
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.... declared ? 88. Article 141 of the Constitution of India uses the phrase "law declared by the Supreme Court". It has been defined to mean law made while interpreting the statutes or the Constitution. It was held to be part of the judicial process. 89. The issue was considered by Hon'ble the Supreme Court in C. Golak Nath's case (supra) opining that to declare is to announce opinion. Interpretation, ascertainment and evolution are parts of the process, while that interpreted, ascertained or evolved is declared as law. The relevant lines therefrom are extracted below: "51....... Article 141 says that the law declared by the Supreme Court shall be binding on all courts; and Article 142 enables it in the exercise of its jurisdiction to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. These articles are designedly made comprehensive to enable the Supreme Court to declare law and to give such directions or pass such orders as are necessary to do complete justice. The expression "declared" is wider than the words "found or made". To declare is to announce opinion. Indeed, the later involves the process, wh....
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.... extracted below: "7. It was contended before us that the question whether on the ground of absence of reasons, the award is bad per se, is pending consideration by a Constitution Bench of this Court in C.A. Nos. 3137-39 of 1985, 3145 of 1985 -Jaipur Development Authority v. Firm Chhokhamal Contractor. It was, hence, urged that this should await adjudication on this point by the Constitution Bench. We are unable to accept this contention. In our opinion pendency of this question should not postpone all decisions by this Court. One of the cardinal principles of the administration of justice is to ensure quick disposal of disputes in accordance with law, justice and equity...... 8. The law it stands today is clear that unless there is an error of law apparent on the face of the award, the award cannot be challenged merely on the ground of absence of reasons. This is settled law by a long series of decisions. Interests of justice and administration of justice would not be served by keeping at bay final adjudication of the controversy in this case on the plea that the question whether an unreasoned award is bad or not, is pending adjudication by a larger bench. There have been a larg....
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....d by a larger Bench. Relevant paragraph thereof is extracted below: "56. In view of the above referred observations of the Apex Court and the Division benches of this Court, it is evident that justice between the parties should not be kept in suspended animation in view of pendency of reference for decision before the larger Bench. Similarly, the decision of the Apex Court referred to the larger Bench does not make the law already laid down by the Apex Court not binding on the High Court till the authoritative pronouncement is delivered by the larger Bench of the Apex Court. In the instant case, the land acquisition proceedings were initiated much prior to 2005 and the award came to be passed by the Special Land Acquisition Officer on 20.6.2008. There is no challenge to the land acquisition procedure adopted by the Authorities nor validity of the award is questioned except on the ground of applicability of provisions of Section 11-A of the Land Acquisition Act. The Apex Court in the case of Sant Joginder Singh has already declared the law on the subject by holding that Section 11-A of the Land Acquisition Act is not applicable to the proceedings under the MRTP Act. In the subseque....
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....to follow having regard to the mandate of Article 141 of the Constitution. The mere fact that the matter has been referred to a larger Bench does not denude the decision of its authority as a binding precedent......." [Emphasis supplied] Similar was the view taken by Hon'ble the Supreme Court in State of Maharashtra and another v. Sarva Shramik Sangh, Sangli and others, (2013) 16 SCC 16. Finding 96. In view of our aforesaid discussions, it can safely be opined that judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) was a binding precedent declaring the law at that time on the subject to be followed by all courts and authorities below and action could have been taken by the authorities on the basis thereof, if considered appropriate. - ISSUE NO. (2) Whether extended period of limitation for exercise of revisional jurisdiction will apply even in cases where the period provided in the Act prior to the amendment had already expired ? 97. The State issued Ordinance on 3.8.2015, seeking to amend Section 34 of the Act by enlarging the period during which power of suomotu revision could be exercised. The Ordinance was replaced b....
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....ubt whatsoever that a period of limitation being procedural or adjectival law would ordinarily be retrospective in nature. This, however, is with one proviso super added which is that the claim made under the amended provision should not itself have been a dead claim in the sense that it was time barred before an Amending Act with a larger period of limitation comes into force....." [Emphasis supplied] 100. The issue was subsequently considered by Hon'ble the Supreme Court in M/s Shreyans Indus. Ltd.'s case (supra), where a judgment of this court dealing with similar proposition of law was upheld. In that case, normal period for framing assessment, as provided for in Section 11(10) of the Punjab General Sales Tax Act, 1948 was three years, however, the Commissioner was empowered to extend that period further after recording reasons in writing. The issue which arose for consideration before the court was whether any extension for framing the assessment could be granted by the Commissioner after the expiry of period of three years, as provided for in the Act. The view expressed by this court was that after expiry of period of limitation for framing the assessment, the righ....
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....amendment suggested that it was with retrospective effect, hence, it was given its true meaning. The facts of the case in hand are different. There are later judgments of Hon'ble the Supreme Court in Uttam Steel Ltd.'s case (supra) and M/s Shreyans Indus Ltd.,'s case (supra). Finding 102. In view of our aforesaid discussions, it can safely be opined that extended period for exercise of revisional jurisdiction will be applicable only in cases where period prescribed prior to the amendment had not expired and not where the period had earlier expired as the amendment cannot put life to a dead claim. ISSUE NO. (3) Whether a show cause notice issued to exercise revisional jurisdiction is bad as it is lacking in basic facts to invoke exception clause and extended period of limitation ? 103. The petitioners in the bunch of petitions have also sought to challenge validity of the show cause notices issued to the petitioners invoking jurisdiction to revise orders of assessment, primarily taking the plea that basic ingredients required for invoking the jurisdiction were missing in the notices. Special reference was made to invocation of extended period of limitation. It wa....
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....nding or have been disposed of by an appellate authority, High Court or the Supreme Court. Second proviso to Section 34(1) of the Act provides that no order shall be revised after the expiry of three years from the date of supply of copy of the order of assessment, sought to be revised. This is the normal period of limitation. However, the limitation is not applicable in three eventualities, namely, (i) where there is a retrospective change in law; (ii) any decision of the Tribunal in a similar case; and (iii) on the basis of law declared by the High Court or the Supreme Court. 108. It is the conceded position by learned counsel for the State that to enable the Commissioner to invoke revisional jurisdiction after expiry of normal period, retrospective change in law has to be after the order had been passed by the assessing authority. However, with reference to the order passed by the Tribhunal or the judgments of High Court or the Supreme Court, the contention was that these can be even prior to the order passed by the assessing authority. Meaning thereby, the assessing authority at the stage of passing of assessment order had ignored certain binding precedents by the Tribunal or ....
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....rtment would be at liberty to invoke the same at any time, without there being any distinction. 110. The law on the subject was laid down by Hon'ble the Supreme Court vide judgment delivered on 5.5.2005 in K. Raheja Development Corporation's case (supra), much prior to the assessment years involved herein. The details regarding assessment order; date on which order of assessment was passed; date of supply of copy of assessment order (wherever available); date on which normal period of limitation for revision had expired; date of issuance of notice under Section 34(1) of the Act; date on which the order was passed by the revisional authority finally or deciding the preliminary objection are given as under. The aforesaid information was furnished by the State in the form of a table attached as Annexure R-1/3 with reply in CWP No. 25336 of 2015. 111. Though any order passed by the Tribunal will not be a binding precedent for this court, however, it can certainly be referred to in the light of the fact that a view was taken by the Full Member Tribunal and the same was accepted by the State by not taking any proceeding further. However, it can be ignored if against settled pri....
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....14. Relevant provisions of Sections 56(2)(3) and (4) of the Act are reproduced hereunder: " 56. Tax administration. xx xx xx (2) The State Government or the Commissioner may, from time to time, issue such orders, instructions and directions to all such persons who are employed in the administration of this Act as the State Government or the Commissioner may deem fit for such administration and all such persons shall observe and follow such orders, instructions and directions of the State Government and the Commissioner: PROVIDED that no such orders, instructions or directions shall be issued so as to interfere with the discretion of any appellate authority in the exercise of its appellate functions. (3) The State Government may, if it considers it necessary or expedient so to do, for the purpose of maintaining uniformity in the levy, assessment and collection of tax or for the removal of any doubt, suo motu, or on an application made to it in the prescribed form and manner on payment of the prescribed fee by a dealer or a body of dealers, issue an order clarifying any point relating to levy, assessment and collection of tax and all persons employed in the administration of th....
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....mental officers in determining the gross turnover and deductions allowable therefrom and consideration liable to tax in civil works contract cases, especially in case of builders and developers of flats and buildings. It has led to lack of uniformity in assessment of tax in such cases and has also resulted into avoidable disputes. The matter has been examined and it has been considered necessary that suitable instructions should be issued in this regard correct assessment and recovery of tax in these cases. Accordingly, the following instructions are being issued: 1. Assessment of tax in case of building contracts (Agreement for sale of constructed building): 1.1 It has been noticed that several builders and developers enter into agreements with prospective buyers for sale of constructed flats/apartments or other buildings and claim that their transaction of sale of constructed buildings do not amount to transfer of property in goods involved in the execution of a works contract. However, such claim is contrary to the provisions of the Haryana Value Added Tax Act, 2003 (in short, "HVAT Act") because the "sale" as defined under clause (ii) of Section 2(1)(ze) of the HVAT Act incl....
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....ssing the orders, fresh instructions were issued on 4.6.2013. Para No. 1 of the aforesaid instructions provided for period of limitation to be observed by the authorities with reference to Section 15 of the Act providing for regular assessment, Section 16 of the Act provides for re-assessment of unregistered dealers, whereas Section 17 thereof provides for re-assessment. The dates were specifically provided till such time the action can be taken or has to be finalised. The issue regarding exercise of revisional power under Section 34 of the Act was also specifically dealt with in the instructions in para No. 1.5 thereof. It was mentioned therein that assessment orders for the years 2007-08 can be revised by March, 2014, the normal period of limitation being three years. Relevant part thereof is extracted below: "1.5 Revision is provided under Section 34 of the Act. It contains that no order shall be revised after the expiry of a period of 3 years from the date of supply of the copy of such order to the assessee. This implies that under normal circumstances assessment orders upto the AY 2006-07 have attained finality. Assessment orders for the AY 2007-08 can be revised by March, 20....
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....ue as regards exercise of revisional jurisdiction by invoking exception clause has been dealt with in the present case, hence, to that extent it cannot be opined that action of the authorities below the Commissioner are in any way contrary to the instructions issued by the department. 123. However, one fact is clearly established from the instructions, i.e., acceptance of the fact that judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) was the law of the land and should be meticulously followed by all the authorities. To this extent, the instructions were in consonance with the settled position. Finding 124. Any instructions issued by the Department are binding on the departmental authorities except on the issue where any judgment to the contrary exists. These are not binding on the court. A circular which is contrary to statutory provisions has no existence in law. ISSUE NO. (6) Whether explanation (i) to Section 2(1)(zg) of the Act is ultra vires ? 125. The issue regarding vires of explanation (i) to Section 2(1)(zg) of the Act was considered by a Division Bench of this Court in CHD Developers Limited's case (supra), whe....
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....for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof and the expression "purchase price" shall be construed accordingly; Explanation.- (i) In relation to the transfer of property in goods (whether as goods or in some other form) involved in execution of a works contract, 'sale price' shall mean such amount as is arrived at by deducting from the amount of valuable consideration paid or payable to a person for the execution of such works contract, the amount representing labour and other service charges incurred for such execution, and where such labour and other service charges are no quantifiable, the amount of such charges shall be calculated at such percentage as may be prescribed. xx xx xx" 6. Determination of taxable turnover (1) Subject to the provisions of sub-section (2), in determining the taxable turnover of a dealer for the purposes of this Act, the following deductions shall be made from his gross turnover, namely:- (a....
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....onwards is extracted below: "Upto 19.3.2009 From 20.3.2009 onwards zg) "sale price" means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof and the expression "purchase price" shall be construed accordingly; (zg) "sale price" means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof and the expression "purchase price" shall be construed accordingly; Explanation.- Explanation.- (i) In relation to the transfer of property in goods (whether as goods or in some other form) involved in execution of a works contract, 'sale price' shall mean such amount as is arrived at by deducting from the amount of valuable ....
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....arried out vide Finance Act, 1995. Section 65(105) of the Finance Act, 1994 defined taxable service. Clause (zzzh) thereof provides that service provided to any person, by any other person, in relation to construction of a complex, will be a taxable service. It was added in the year 2004. Section 67 of the Finance Act, 1994 provides for valuation of taxable services for charging service tax. It provides that value of any taxable service shall be the gross amount charged by the service provider for such service rendered by him. The provisions of the Finance Act, 1994 were amended vide Finance Act, 2007. Section 65(105)(zzzza) was added. It provides for levy of service tax in relation to execution of works contract. Works contract was also defined. Section 67 of the Finance Act, 1994 was also amended. It provides that in case where the provision for service is under consideration, which is not ascertainable, it shall be the amount as may be determined in the prescribed manner. Subsequent thereto, in Service Tax (Determination of Value) Rules, 2006, Rule 2-A was added. It provided for determination of value of service tax in execution of a works contract. The judgment of Hon'ble t....
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.... tax can only be on that portion of works contracts which contain a service element which is to be derived from the gross amount charged for the works contract less the value of property in goods transferred in the execution of the works contract. This not having been done by the Finance Act, 1994, it is clear that any charge to tax under the five heads in Section 65(105) noticed above would only be of service contracts simpliciter and not composite indivisible works contracts. 15. At this stage, it is important to note the scheme of taxation under our Constitution. In the lists contained in the 7th Schedule to the Constitution, taxation entries are to be found only in lists I and II. This is for the reason that in our Constitutional scheme, taxation powers of the Centre and the States are mutually exclusive. There is no concurrent power of taxation. This being the case, the moment the levy contained in a taxing statute transgresses into a prohibited exclusive field, it is liable to be struck down. In the present case, the dichotomy is between sales tax leviable by the States and service tax leviable by the Centre. When it comes to composite indivisible works contracts, such contr....
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.... it to intrude upon this field." [Emphasis supplied] 132. Examining the provisions of the Finance Act, 1994, as amended vide Finance Act, 2006, with reference to levy of tax on the works contract, it was opined that for the first time with amendment in the Finance Act, 2006, provisions were made for ascertaining the amount of service component in a works contract. Relevant paras thereof are extracted below: "23. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts . This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmista....
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....vague, it would not be open to the assessing authority to arbitrarily assess to tax the subject. Various judgments of this Court have been referred to in the following passages from Heinz India (P) Ltd. v. State of U.P., (2012) 5 SCC 443. This Court said:- "15. This Court has in a long line of decisions rendered from time to time, emphasised the importance of machinery provisions for assessment of taxes and fees recoverable under a taxing statute. In one of the earlier decisions on the subject a Constitution Bench of this Court in K.T. Moopil Nair v. State of Kerala [AIR 1961 SC 552] examined the constitutional validity of the Travancore-Cochin Land Tax Act (15 of 1955). While recognising what is now well-settled principle of law that a taxing statute is not wholly immune from attack on the ground that it infringes the equality clause in Article 14, this Court found that the enactment in question was violative of Article 14 of the Constitution for inequality was writ large on the Act and inherent in the very provisions under the taxing section thereof. Having said so, this Court also noticed that the Act was silent as to the machinery and the procedure to be followed in making th....
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....aking the view that in substance the taxing statute is a cloak adopted by the legislature for achieving its confiscatory purpose. 18. In Jagannath Baksh Singh v. State of U.P. [AIR 1962 SC 1563] this Court was examining the constitutional validity of the U.P. Large Land Holdings Tax Act (31 of 1957). Dealing with the argument that the Act did not make a specific provision about the machinery for assessment or recovery of tax, this Court held: (AIR pp. 1570-71, para 17) "17. ... if a taxing statute makes no specific provision about the machinery to recover tax and the procedure to make the assessment of the tax and leaves it entirely to the executive to devise such machinery as it thinks fit and to prescribe such procedure as appears to it to be fair, an occasion may arise for the courts to consider whether the failure to provide for a machinery and to prescribe a procedure does not tend to make the imposition of the tax an unreasonable restriction within the meaning of Article 19(5). An imposition of tax which in the absence of a prescribed machinery and the prescribed procedure would partake of the character of a purely administrative affair can, in a proper sense, be challeng....
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.... of machinery provisions for assessment/recovery of the tax levied under an enactment, which has the effect of making the entire process of assessment and recovery of tax and adjudication of disputes relating thereto administrative in character, is open to challenge before a writ court in appropriate proceedings. Whether or not the enactment levying the tax makes a machinery provision either by itself or in terms of the Rules that may be framed under it is, however, a matter that would have to be examined in each case." 34. In a recent judgment by one of us, namely, Shabina Abraham & Ors. v. Collector of Central Excise & Customs, judgment dated 29th July, 2015, in Civil Appeal No.5802 of 2005, this Court held:- "27. It is clear on a reading of the aforesaid paragraph that what revenue is asking us to do is to stretch the machinery provisions of the Central Excise and Salt Act, 1944 on the basis of surmises and conjectures. This we are afraid is not possible. Before leaving the judgment in Murarilal's case (supra), we wish to add that so far as partnership firms are concerned, the Income Tax Act contains a specific provision in Section 189(1) which introduces a fiction qua dissol....
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....on 21 of the Bihar Finance Act, 1981, as amended states: "21.Taxable turnover.-(1) For the purpose of this part the taxable turnover of the dealer shall be that part of his gross turnover which remains after deducting therefrom- (a)(i) in the case of the works contract the amount of labour and any other charges in the manner and to the extent prescribed;" 10. Rule 13-A of the Bihar Sales Tax Rules which was also amended by a notification dated 1-2-2000 reads as follows: "13-A.Deduction in case of works contract on account of labour charges.-If the dealer fails to produce any account or the accounts produced are unreliable deduction under sub-clause (i) of clause (a) of subsection (1) of Section 21 on account of labour charges in case of works contract from gross turnover shall be equal to the following percentages..." 11. The aforesaid provisions have been adopted by the State of Jharkhand vide notification dated 15- 12-2000 and thus are applicable in the State of Jharkhand. 12. Interpretation of the amended Section 21(1) and the newly substituted Rule 13-A fell for consideration of a Division Bench of the Patna High Court in Larsen & Toubro Ltd. v. State of Bihar [(2004)....
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....ion and particularly the ratio laid down in conclusion Nos. 1, 2, 3, 6 and 7 of the decision in Gannon Dunkerley's case [1993] 88 STC 204 supra; and also reiterated by the apex Court in the second Builders Association of India case [1993] 88 STC 248 (SC); [1992] 2 MTCR 542. In the light of the above, we see no merit in the stand taken for the respondents relying upon the decisions reported in [1957] 8 STC 561 (SC) (A. V. Fernandez v. State of Kerala) and [1969] 23 STC 447 (Mad.) (Kumarasamy Pathar v. State of Madras) that the omission to exclude certain items relating to non-taxable turnovers is of no consequence and does not affect or undermine the validity of the impugned proceedings. Consequently, applying the ratio of the above decisions, we hereby strike down rules 6-A and 6-B as illegal and unconstitutional, besides being violative of sections 3 to 6, 14 and 15 of the Central Sales Tax Act and consequently unenforceable. 33. The provisions of section 3-B merely levied the tax on the transfer of property in goods involved in the execution of the works contract. The assessment, determination of liability and recovery had to be under the provisions of the Act read with the....
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....cturing goods. Construction of a complex essentially has three broad components, namely, land on which complex is constructed; (ii) goods which are used in construction; and (iii) various activities which are undertaken by the builder directly or through other contractors. The title of the unit (immoveable property) does not pass on to the prospective buyer at the stage of booking. No service tax is leviable for sale of a completed building as it would amount to sale of immoveable property. Examining the provisions of the Finance Act, 1994 and the relevant rules framed thereunder, the court found that there were no machinery provisions for ascertaining the service element involved in the composite contract. To ascertain levy of service tax on services, it is essential that machinery provisions provide for a mechanism for ascertaining the measure of tax, i.e., value of services which can be charged to service tax. Rule 2A of the Service Tax (Determination of Value) Rules, 2006 providing for determination of value of taxable services involved in the execution of works contract provided that such value shall be the gross amount charged for the works contract less the value of transfer....
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.... of statutory machinery provisions to ascertain the value of services involved in a composite contract. xx xx xx 55. In view of the above, we negate the challenge to insertion of clause (zzzzu) in sub-section 105 of Section 65 of the Act. However, we accept the Petitioners contention that no service tax under section 66 of the Act read with Section 65(105)(zzzh) of the Act could be charged in respect of composite contracts such as the ones entered into by the petitioners with the builder. The impugned explanation to the extent that it seeks to include composite contracts for purchase of units in a complex within the scope of taxable service is set aside." 138. The assessment years involved in the present bunch of petitions are from 2005-06 to 2011-12. 139. A combined reading of the provisions of the Act and the Rules, as added w.e.f. 17.5.2010, provides for the manner of calculation of taxable turnover. Prior to 17.5.2010, there were no machinery provisions in the Act or the Rules to calculate taxable turnover ensuring that only value of goods used in the works contracts are taxed. The issue was considered in the earlier round of litigation including Rule 25(2) of the Rules. Ce....
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....s was that to challenge the vires of the Rules, separate petitions have been filed, which are pending. Finding 141. For the period upto 16.5.2010, there were no Rules or instructions on the subject, to provide for manner of calculation of taxable turnover. In the absence of the machinery provisions specifying the details, though the levy as such cannot be disputed but it has become unenforceable upto 16.5.2010. 142. From 17.5.2010 onwards, there being Rules in existence, having been amended in terms of judgment of this Court in CHD Developers' case (supra) and observations made therein, we do not find that the levy cannot be sustained. ISSUE NO. (8) Whether assessment could be framed in the name of a company which stood merged in another company and lost its entity by operation of law ? 143. In Saraswati Industrial Syndicate Ltd.'s case (supra), Hon'ble the Supreme Court, while considering the issue regarding existence of a company after it is dissolved having been merged in another company on account of re-construction or amalgamation, opined that after the amalgamation on the basis of the order passed by the High Court, the transferor-company ceases to exist ....
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....n existing entity on that day. In such proceedings and assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the Appellant would be of no effect as there is no estoppel against law." Finding 145. The issue is answered in negative. It is held that no assessment can be framed against a company, which stood dissolved after its merger with another company. As fairly stated by learned counsel for the State, the assessment order dated 8.3.2016 (Annexure P-8), passed against M/s Sukh Realtors Pvt. Ltd., the company which already stood dissolved after merger with M/s S. S. Group Pvt. Ltd., is set aside. There is no question of grant of specific liberty to the department to pass any fresh order, as if the law permits, it can always take action. RELIEF 146. For the reasons mentioned above, the legal issues, as framed in para No. 81 of the judgment, are answered as under: (1) The judgment of Hon'ble the Supreme Court in K. Raheja Development Corporation's case (supra) was a binding precedent declaring the law at that time on the subject to be followed by all courts and authorities belo....