TaxTMI 
TaxTMI 
2017 (4) TMI 1321
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....sment 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 useful to reproduce the said Notice dated May 26....
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....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 affair. Request was made for grant of 4 (four) weeks time enabling compilation of the data/d....
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....ost 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 note of discrepancy while allowing the deduction on count of labour and other charges. (v) The first assessing auth....
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....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 sheet (See rule 29) Name of the dealer : M/S Gammon India Ltd. Address : Sadilapur, Jalukbari, Guwahati. Registration No. : TEZ/GST/383A, 383B and 383C. Period : 2004-05. Assessment mad....
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....lishment 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 which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of the goods in the works and not the cost of acquisition of the goods by the contractor. . . . (ii) The value of the goods involved in the execu....
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....uch 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 might to be raised against vires of the statutory provisions in his reply dated is found not maintainable. I therefore set aside the original assessment order dated July 5, 2007 by exercise of power conferred upon me by section 36(1) of the erstwhile AGST Act, 1993 re....
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....; (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 deemed to be the assessment of the revisional authority as a part of his revisional order. Aggrieved, the present writ petition is laid. As the determination of the present case rests on the scope and ambit of the suo motu power vesting on the revisional authority under section 36(1) of the Act, it would be prudent to begin with by reproducing the same: "36. Revision of order by the Commissioner.-(1) The Commissioner may ....
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.... 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 Santalal [2006] 143 STC 511 (Gauhati); [2002] 1 GLR 197, the Single Bench of this court held that where an order of assessment had been passed within the limits of the jurisdiction of the assessing authority, even if considered to be wrong by the revisional authority, the same would not attract the exercise of suo motu revisional powers. Taking it further from the said judgment, Dr. Saraf contends that even if the revisional aut....
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....onal 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 the order that the assessment made be deemed to be the assessment of the revisional authority, are assailed as being illegal and contrary to law. Mr. D. Saikia, learned Advocate General (Acting), Assam, makes limited submissions on facts and more on points of law. Mr. Saikia contends that neither the revisional authority had exceeded his jurisdiction nor the Board of Revenue erred in reaching its decision. Subject to compli....
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....uhati) [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 rectifying any arithmetical mistake or other mistake of a factual nature apparent from the record of the case, the said proceeding was cut short. Apparently, the short-coming in the assessment order dated July 5, 2007 was in respect of the percentum of deduction allowed in excess, contrary to the provisions under section 8(3)(iv)(b) of the Act. The exercise so contemplated was not certainly one falling under section 37 of the Ac....
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....s 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 officer, the Revenue is losing tax lawfully payable by a dealer or person, it will certainly be prejudicial to the interest of the Revenue. On this, we take strength from the case in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC); [2000] 2 SCC 718. Two Division Bench decisions of this court, in Rajendra Singh [1990] 79 STC 10 (Gauhati); [1990] 1 GLR 449 and in Commissioner of Income-tax v. Daga Entrade P. Ltd. reported in [2010] ....
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....n 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 under section 263 of the Income-tax Act, 1961 (pari-materia to section 36) can be exercised when- ever it is found that the order of assessment was erroneous and prejudicial to the interest of Revenue, so much so, that it was passed on wrong assumption of facts, on incorrect application of law, without due application of mind or without following the principles of natural justice. These facets are not beyond the scope of the revisional p....