TaxTMI 
TaxTMI 
2017 (4) TMI 1321
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....assessment made be deemed to be the assessment of the revisional authority as a part of his revisional order. Facts noticed in the following paragraphs are to be essentially traversed, though somewhat arduous. Relevant to the case is that the petitioner-company had submitted its return of turnover for the assessment year 2004-05 before the assessing authority, i.e., the Assistant Commissioner of Taxes, Tezpur along with the audited statement of accounts and the audit report for assessment under section 17(4) of the Act. Pursuant to the order of assessment dated July 5, 2007 the assessing authority issued Notice dated May 26, 2009 directing the petitioner-company to submit explanation as the assessment, upon scrutiny, was found to be erroneous and required rectification under section 37 of the Act, in that, the percentum of deduction allowed in the assessment was more than 25 per cent., as allowable under section 8(3)(iv)(b) of the Act. The proposed rectification was confined to the deductions allowed on account of labour and other charges from the works contract. The petitioner-company submitted explanation with prayer to drop the proceedings for rectification. It would be usefu....
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....e the reason requiring it to produce the books of account once again for the subject period. The matter proceeded with the DCT issuing the letter dated July 23, 2010 citing that the grounds urged by the petitioner-company did not deserve consideration when a tax authority was exercising his statutory powers for safeguarding the interest of revenue of the State. The plea taken by the petitioner-company that assessment proceeding had since stood completed, the same was held to be irrelevant as the present action was for re-verification of the books of account as per law. As regards the plea that the books of account had been shifted to Mumbai, the DCT held that the petitioner-company was obliged to make necessary arrangement for producing the same before the tax authority of Assam as and when made expedient for the purpose of safeguarding revenue. The DCT directed production of the books of account, as sought for earlier, fixing August 2, 2010. The petitioner-company again replied by its letter dated July 30, 2010 that the relevant data/documents called for were six years old and retrieving the same from various godowns at the head office and from different sites was a time consuming....
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....laration on account of following works, which ought to have been included in taxable turnover. (a) Cost of boulder collection from river; (b) Cost of boulder crushing; (c) Cost incurred in carrying boulder and send to worksite; (d) Cost loading, unloading of materials like cement, steel, boulder, chips, etc. (e) Royalty paid for procuring boulder, sand, against back drop of the settled position of law that for the purpose of ascertaining the value of goods which are involved in execution of works contract for the purpose of imposition of tax, the cost of procurement, transportation of goods to place for the purpose of incorporation in works contract has to be added to the taxable turnover, the claim of deduction on count of labour and other charges and allowed in the assessment order dated July 5, 2007 is found further vitiated. (iv) It also appears that you claimed erroneous deduction for the entire establishment cost comprising salary of staff, maintenance of site, over head expenses without making apportionment of such cost relatable to deemed sale of goods/materials while executing the works contract. The first assessing authority altogether failed to take not....
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....esulting in deemed sales had been disclosed and tax was accordingly paid. Reference was made to section 2(34) of the Act, which defines "sale price" as well as to sub-clauses (a) to (c) of sub-rule (1) to rule 14 of the Assam General Sales Tax Rules, 1993, which provides for determination of taxable turnover in case of works contract, as being bad in law in the absence of a statutory mechanism for computing taxable turnover. It was stated that the exercise initiated by the show-cause notice dated June 17, 2011 was without jurisdiction and with- out sanction of law and any demand of tax would be in gross violation of article 265 of the Constitution of India. The assessment made by the DCT in exercise of powers under section 36(1) of the Act read with section 109(2)(b) of the Assam Value Added Tax Act, 2003 concluded with the order dated July 10, 2011. By the said order the original assessment order dated July 5, 2007 was cancelled. A fresh demand notice was issued by the DCT on July 18, 2011. As the order dated July 10, 2011 forms the crux of the case in hand, the same is reproduced for ready reference: "The Assam General Sales Tax Rules, 1993 FORM XA Assessment order sh....
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....like cement, steel, boulder, chips before their incorporation in works contract; (j) Royalty paid for procuring boulder, sand, etc. (4) The dealer also claimed and was allowed in the original assessment order erroneous deduction for the entire establishment cost comprising salary of staff maintenance of work site, overhead expenses without making apportionment of such cost relatable to deemed sale of goods/materials in execution of contract and without adding the same to the taxable turnover . It is also judicially settled that assessable value of materials undergoing deemed sale in course of works contract should be determined according to its value or price at the time of incorporation in works contract, i.e., including all the input cost suffered before incorporation in works contract. In Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 (SC), the Supreme Court of India made following observations: '(i) . . . . Since the taxable event is the transfer of property in goods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods whic....
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....notice vide Memo No. 270 dated June 27, 2011 specifying the facts upon which suo motu revision proceedings has been contemplated. The dealer's representative appeared on June 24, 2011 and prayed for a time of 30 days for furnishing reply to the show-cause notice. Such time was, however, granted only up to July 5, 2011. On the fixed date of July 5, 2011 Sri Subir Pyra, an official of the firm and furnished written submission vide their letter No. Ref. NBBA/26/19694/11, dated 5/7/2011 perusal of the same, however, reveals that the dealer has not furnished any grounds or materials refuting the finding of the Revenue as to the inadmissible claims of deduction on count of labour and other charges made in the return and account by the dealer and erroneously allowed at the time of original assessment of the dealer in his reply dated July 5, 2011 although points out that the total turnover in case of works contract spreading over more than one year can be determined by the value of goods purchases as per provision of sub- clause (a) to sub-rule (1) of rule 14, he has failed to furnish such figure of purchases either in returns or even while submitting his reply. Further the challenges ....
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....lates to AG's Draft Para. 2.The Superintendent of Taxes, B Unit, Circle-99 for information. He is requested to issue fresh demand notice as per order, cancelling the previous assessment order dated July 5,2007. The copy of the fresh demand notice may be send to the undersigned. 3. M/S Gammon India Ltd., Sadilapur, Jalukbari, Guwahati. (A. K. SUTRADHAR), Deputy Commissioner of Taxes, Guwahati Zone-B." The aforesaid order dated July 10, 2011 was initially assailed in W. P. (C) No. 4130 of 2011 but on account of availability of the statutory appeal provided under section 5A of the Act, the same was relegated for availing the alternative remedy. The appeal filed before the Assam Board of Revenue, Guwahati, registered and numbered as Case No. 70 STA/2012 was heard and dismissed vide judgment and order dated May 19, 2014. Interference to the order dated July 10, 2011 was made to the limited extent by deleting the direction given by the revisional authority to the assessing authority to revise the assessment order. The Board held that the assessment so made be deeme....
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....judicial to the interest of Revenue, such power would not invest the revisional authority to initiate enquiry trenching upon the powers which are expressly reserved on other authority under the Act and the Rules. Accor- ding to Dr. Saraf, the power under section 36(1) of the Act can come into play when there is a jurisdictional error in making the assessment or in passing any other order, as distinguished from any other error that may have occurred in the determination of the extent or quantum of liability to tax. In the present case, as contended, there was no jurisdictional error in the order of assessment and, therefore, the DCT was without power and authority to initiate suo motu revision proceeding, far from passing the order dated July 10, 2011. Reliance is placed in Rajendra Singh v. Super- intendent of Taxes reported in [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449. Dr. Saraf also makes reference to the case in Santalal Mehendi Ratta (HUF) v. Commissioner of Taxes reported in [2006] 143 STC 511 (Gauhati); [2002] 1 GLR 197, to say that this court have reiterated what is erroneous and prejudicial to the interest of Revenue enabling exercise of suo motu revisional power. In San....
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....tlined by the Act. The exercise of power under one provision cannot trench upon the power available under another provision of the Act. In the case in hand, as contended, the power exercised by the DCT was apparently the power statutorily conferred on the assessing authority. The exercise of suo motu revisional power under section 36(1) of the Act was illegal and necessarily forbidden. Lastly, no power is vested in the revisional authority to issue fresh order of assessment on its own, save and except, making a direction to the assessing authority to do the needful. In this context, reliance is placed in Shankar Construction Co. v. Additional Commissioner of Commercial Taxes, Belgaum Zone, Belgaum of the Karnataka High Court, reported in [2001] 124 STC 265 (Karn), which has held that it is wholly impermissible for the revisional authority to step into the shoes of the assessing officer and to redo the assessment or pass a fresh assessment order. On the above count, the notice of demand dated July 18, 2011 and that of the order of the Board of Revenue deleting the direction of the revisional authority whereby the assessing authority was made to revise the assessment order as well as....
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....tances when an order can be termed as "erroneous" and what is meant by the phrase "prejudicial to the interests of the Revenue", relies heavily upon the case in Malabar Industrial Co. Ltd. v. Commissioner of Income-tax, Kerala State reported in [2000] 243 ITR 83 (SC); [2000] 2 SCC 718 and in the Full Bench decision of this court in Commissioner of Income- tax, Gauhati-1 v. Jawahar Bhattacharjee reported in [2012] 48 VST 214 (Gauhati) [FB]; [2012] 341 ITR 434 (Gauhati) [FB]. Rival submissions have received our attention and consideration. At the outset we would clarify that the rectification of mistakes in the original assessment order, as put in motion and concluded by the DCT, is definitely not for rectification of any arithmetical error or mistake of a factual nature within the meaning of section 37 of the Act. The proceeding under section 37 that had been initiated by the assessing officer with the notice dated May 26, 2009 did not proceed at all. It appeared to have been abandoned and no reason is found on record. The only plausible explanation would be that having regard to the contours of section 37 with its limited scope for making rectification which is confined to....
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....ts advanced on this point by Dr. Saraf do not hold any water. Indeed, the basic precondition for exercise of jurisdiction under section 36(1) is the conjoint presence of the twin conditions in the concluded orderof assessment, that the same is erroneous and prejudicial to the interest of the Revenue. It is clarified that the present case do not involve any dispute on non-observance of the principles of natural justice. The contours of section 36(1) certainly do not take within its fold the power to correct each and every type of mistake or error caused by the assessing officer. First, it has to be an order rendered by an incorrect assumption of facts or on an incorrect application of law or without applying the principles of natural justice or without application of mind, so as to satisfy the requirement of the order being "erroneous". Second, the phrase "prejudicial to the interest of the Revenue", though not defined in the Act, cannot be given a narrow interpretation. To be borne in mind, the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act, which is a solemn task entrusted to the Revenue. If due to an erroneous order of the assessing o....
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....ot be understood in narrow sense. Reliance was also placed in the Supreme Court decision in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC); [2000] 2 SCC 718, which explained the pre-requisites for exercise of suo motu revisional jurisdiction. The Full Bench held that Rajendra Singh [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449, read as a whole, does not exclude error in assessment order, by ignoring relevant material. The observation made in Rajendra Singh [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449 has to be read in the context of the entire judgment and such observation made during the course of reasoning in the judgment should not be divorced from the context in which it was used. The Full Bench observed that if this principle is kept in mind, no conflict appears in the view taken in Rajendra Singh [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449 and Daga Entrade [2010] 327 ITR 467 (Gauhati). While holding that Daga Entrade [2010] 327 ITR 467 (Gauhati) lays down correct law, it was also held that the same was not in conflict with the earlier order of this court in Rajendra Singh [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449. In conclusion, the Full Bench held that jurisdiction un....