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2021 (7) TMI 389 - HC - VAT and Sales TaxValidity of reassessment order passed u/s 39(2) of the Karnataka Value Added Tax - barred by limitation or not - HELD THAT:- In the instant case, during the Assessment Year 2005-06, the respondent who is a registered dealer under the Act, had sold arecanut to M/s. M.K.Traders, Allahabad and had received 'C' Form. However, subsequently, on an enquiry made by the U.P. Trade Tax Authority, registration of the aforesaid M.K.Traders was cancelled w.e.f. 25.04.2006. Thereafter, a communication was sent on 30.07.2014 by the Joint Commissioner of Commercial Taxes, Faizabad, U.P., by which the Assessing Authority was informed that 'C' Form produced by the purchasing dealer namely M/s.M.K.Traders have been found to be invalid and accordingly, a request was made to reject 'C' Form. Thereupon, after a period of eight years, a proposition notice dated 20.10.2014 was issued to the respondent. The respondent filed objection to the same on 29.12.2014 and eventually an order of re-assessment was passed on 31.01.2015 - The initiation of proceeding of re assessment is clearly barred by limitation as the case of respondent is governed by Section 46(1) of the Act and since the initiation of proceeding of re-assessment itself was beyond a period of eight years, the proceeding has to be held to be barred by limitation in view of the period of limitation prescribed under Section 46(1) of the Act. It is pertinent to note that Section 40(2) of the Act applies to a case of a dealer who is unregistered and who has not paid taxes and has fraudulently failed to pay tax which results in punishment under Section 79 of the Act - the condition precedent for invocation of Section 40(2) of the Act have not been fulfilled in the case of the respondent and hence, the aforesaid provision does not apply to the case of the respondent. Whether Section 39(2) of the Act has to be read independently? - HELD THAT:- In Section 39(2) of the Act, the expression re assessment has been used and Section 40(1) of the Act refers to Section 39 of the Act. Therefore, Sections 39 and 40 of the Act have to be read in conjunction with each other and cannot be read in isolation. The substantial question of law is answered against the petitioner and in favour of the respondent - Petition dismissed.
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