TaxTMI 
TaxTMI 
2019 (1) TMI 764
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....ied in any other entries in this Schedule­II" and the applicable rate of tax was 04% VAT and 01% additional tax. The petitioner, accordingly, used to classify Ammonium Nitrate under such Entry. With effect from 01.08.2009, such Entry was deleted and the assessee started classifying the goods under the residuary Entry and discharged corresponding tax liability. Entry­42A of Schedule­II to the VAT Act was included inviting tax at the rate of 04% plus 01% additional tax. Such Entry read as under; Sr. No. Description of Goods Rate of Tax 1 2 3 42A Industrial inputs or agricultural inputs as may be specified by the State Government by notification in the Official Gazette. Four paise in the Rupee 3. In exercise of the powers under the VAT Act, the Government of Gujarat issued the Notification dated 31.03.2006 specifying certain goods as "industrial inputs", which was amended from time to time. The relevant portion of such Notification effective from 15.02.2010 reads as under; Sr. No. Description of Goods Central Excise Heading No. Sub­heading No. Tariff Item No. 252 Ammonium Nitrate ­- - 3102.10.0....
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....ssment for the said period between 01.04.2013 to 31.03.2014, the tax had been assessed at a rate lower than the rate at which it should have been assessed. The petitioner has challenged this Notice in this petition. 9. In Special Civil Application No.3004/2018, the facts are similar as to the previous matter. Here also, the Return filed by the petitioner for the Financial Year 2012­2013 came to be scrutinized. The Assessing Officer passed an order of audit assessment on 27.02.2017 in which he referred to the relevant Entry for the purpose of assessing the petitioner's tax liability on Ammonium Nitrate. He, thereafter, issued the impugned Notice dated 04.02.2018 expressing similar belief that for the period in question, the tax has been assessed at a rate lower than the rate at which it should have been assessed. The petitioner has challenged this Notice in the present petition. 10. Learned counsel for the petitioner raised the following contentions; (A) The Assessing Officer in the original assessment had correctly assessed tax at the rate of 05% in view of Sr. No.252 in Entry­42A to Schedule­II of the VAT Act. The unstated stand of the Department that si....
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....ds that the Tariff Item No.3102.10.00 in the Central Excise Tariff Act pertains to "Urea" and therefore, the petitioner could not have availed of reduced rate of tax and the product - Ammonium Nitrate would invite tax as per the Residuary Entry at a higher rate. 14. In the present group of petitions, we are concerned with the jurisdiction of the assessing authority to re­examine this issue. In Special Civil Application No.3002/2018, we are concerned with the contours of the powers of the Assessing Officer under sub­section 8A of Section 34 of the VAT Act. In the other two petitions, we would be examining the scope of his jurisdiction u/s.35 of the VAT Act. 15. Chapter ­V of the VAT Act pertains to "Returns, Payment of Tax, Assessment, Recovery of Tax and Refund". This Chapter contains detailed provisions envisaging the filing of Return of every registered dealer, assessment of such Return, scrutiny, re­assessment, refund and collection of tax. Sub­section (1) of Section­32 requires every registered dealer to furnish correct and complete Return of the goods in respect of his business and the transactions thereof, in the prescribed format, within the pre....
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.... (6) If any dealer (a) has not furnished returns in respect of any period by the prescribed date; (b) has furnished incomplete or incorrect returns for any period; (c) has failed to comply with the terms of notice issued under sub­section (2). (d) has failed to maintain books of accounts in accordance with the provisions of this Act or rules made thereunder or has not regularly employed any method of accounting the Commissioner shall assess to the best of his judgment the amount of tax due from him. (7) If the Commissioner is satisfied that the dealer, in order to evade or avoid payment of tax, (a) has failed to furnish, without reasonable cause, returns in respect of any period or the self­ assessment by the prescribed date; (b) has furnished incomplete or incorrect returns for any period; (c) has availed tax credit for which he is not eligible; (d) has employed such method of accounting which does not enable the Commissioner to assess the tax due from him; or (e) has knowingly furnished false or incorrect self assessment; he shall, after giving the dealer an opportunity....
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....ssessment proceedings under this sub­section shall be without prejudice to the assessment proceedings in respect of the said period or periods under any other provisions of this Act by any authority who otherwise has the jurisdiction to assess such dealer in respect of other transactions of sale or purchase or any other claim. (c) The assessment under this sub­section shall be made separately in respect of the transaction or claim relating to the said period or periods to the best of the judgment of the prescribed authority where necessary and irrespective of any assessment made under this sub­section, the dealer may be assessed separately under the other provisions of this section in respect of the said period or periods: Provided that, once the dealer is assessed under this sub­section, no tax from such transaction or claim and penalty and interest, if any, shall be levied or demanded from such dealer, at the time of assessment to tax under the other provisions of this section in respect of the said period or periods relating to such transaction or claim. Explanation - For the purpose of this subsection, "prescribed authority", "the said....
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....therein, the Commissioner may serve a notice on the dealer and after giving the dealer an opportunity of being heard and making such inquiry as he considers necessary, proceed to determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover which comes to his notice subsequently and the provisions of this Act shall, so far as may be, apply accordingly. (2) No order shall be made under sub­section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable;" 18. It can, thus, be seen that in terms of subsection (2) of Section 34 of the VAT Act, it is open for the Commissioner, if any of the grounds mentioned therein are present, to serve a notice upon a dealer requiring him to appear on a date and place specified and to produce necessary documents and supporting evidence. Sub­section (6) of Section 34 authorizes the Commissioner to complete best judgment assessment in case a dealer does not cooperate with the scrutiny assessment undertaken by the Commissioner. Subsection (7) of Section 34 empowers the Commissioner to impose penalty under certain circumstances. ....
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....ction which has been subjected to tax under this provision is not subjected to tax again under other provisions. 21. The legislative intent, thus, for introduction of the said sub­section (8A) clearly is to enable the Revenue to bring to tax certain transactions which are noticed in the course of any of the proceedings under the VAT Act. Such proceedings may be for assessment of the dealer for some other Financial Year or may even be appellate or revisional proceedings. If the proceedings in question relate to appellate or revisional proceedings, the authority would place the issue before the concerned authority with a direction to assess the dealer in respect of such transaction or claim. This provision, in essence, enables the Revenue to isolate the instances of tax evasion whenever noticed and to bring to tax, turnover which may have escaped assessment in relation to such transactions without carrying out complete assessment of all transactions of the dealer during the relevant Financial Year. This provision, however, does not and cannot be seen to enable the Assessing Officer to correct an error, which might have been committed in the course of passing the audit assessme....
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....ssessing Officer. We have noticed that the power of reassessment, being peculiar and some what harsh to the dealer, comes with a time limit for its exercise. The powers under sub­section (8A) of Section 34 are not akin to the powers of reassessment u/s.35. Essentially, under sub­section (8A) of Section 34, if the authority, in the course of any proceedings, notices any evasion of tax, he can address to such an issue, without carrying out full assessment and if such authority happens to be either the appellate or the revisional authority, the issue would be placed before the assessing authority. Two things, thus, become abundantly clear. Firstly, the powers under sub­section (8A) of Section 34 are not similar to the powers of re­assessment flowing from Section 35 of the VAT Act and secondly, such powers cannot be exercised when audit assessment has already been completed in case of a dealer with respect to a certain period. Any other view will make the limitation period provided in Section 35(1) of the VAT Act substantially, if not, completely redundant. Under the said provision, a completed assessment can be re­opened only within five years. No such time limit i....
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....s 01% additional tax. He was aware and conscious about the Entry in which such tax was prescribed. He has, thus, formed a definite opinion on the rate at which the petitioner should be taxed. His opinion may have been erroneous. It cannot be said that he formed no opinion. If the Department held a belief that such opinion was incorrect, there were measures available to rectify such an error. Exercise of powers u/s.35 of the VAT Act was not one of them. 26. Perusal of the provision of sub­section (1) of Section 35 of the VAT Act would demonstrate that unlike in case of Section 147 of the Income Tax Act, 1961, it does not make any distinction between a notice of re­assessment within and beyond 04 years. It permits re­assessment of turnover that has escaped assessment, whether the escapement is on account of any failure on the part of the assessee to disclose truly and fully all material facts or otherwise. However, the concept of change of opinion would certainly apply. 27. In case of Commissioner of Income Tax v. Kelvinator India Ltd. & others reported in [2010] 320 ITR 561 (SC), the Supreme Court, in the context of the provision of Section 147 of the Income Tax Ac....