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2024 (5) TMI 841 - ALLAHABAD HIGH COURTValidity of reassessment order - disallowance of ITC claim - purchase of various raw materials to manufacture 'Mentha Oil' - 'reason to believe' to reassess the petitioner was founded on the fact that the petitioner had sold 'Mentha Oil' in the course of export, against statutory 'Form I' issued under the Central Sales Tax Act 1956 - HELD THAT:- Plainly, ITC is not part of determination of turnover or tax liablity. On the contrary, it is an allowance that arises to certain dealers in the prescribed manner, upon fulfillment of specified circumstances. That amount may be corrected both at the instance of the assessee as also the assessing officer. Once crystallized, the allowance thus created would be adjusted against the gross tax liability that may arise against the assessee. By its very nature, ITC is different and distinct from assessment/determination of turnover. It is an allowance utilized to pay tax dues. Neither the legislature intended nor there is any warrant to otherwise reach a conclusion that computation of ITC allowance is part and parcel of procedure to assess the 'turnover of sale' or 'turnover of purchase' of goods. Again, amount of ITC admissible has been included as part of the regular assessment that may be made. Undeniably, Section 29(1) of the Act is the only provision that could give rise to jurisdiction to initiate reassessment proceedings. It does not include within its scope an eventuality where ITC may have been wrongly computed i.e. in excess of its entitlement. In absence of any jurisdiction vested (by the legislature), in the Assessing Officer to initiate reassessment proceedings to recompute the ITC or to disallow ITC or to RITC, there is no other principle in law available, as may allow the revenue to assume that jurisdiction - jurisdiction to reassess may never arise under Section 29 of the Act - to RITC, where purchase turnover giving rise to ITC was not first disturbed under Section 29 of the Act, for reason of it's escapement. The issue whether RITC may be done where jurisdiction may have been validly initiated, is not here. Thus, the scheme of the Act is - the computation of correct ITC may be examined by the Assessing Authority, not later than the stage of making the regular assessment order i.e. at the stage of Section 28 of the Act. That order may remain amenable to jurisdiction of suo moto revision. Suffice to note, that jurisdiction has not arisen in the present case. Therefore, the reassessment proceedings initiated against the petitioner only to RITC was without jurisdiction. Insofar as Section 29 of the Act did not empower the assessing authority to generally initiate the assessment proceedings on a sweeping allegation of escapement of "tax" but, on a specific allegation of escapement from assessment of any turnover of a dealer etc. based on a "reason to believe" (as discussed above), there are no merit in the objection being raised by the State that the reassessment proceedings were within jurisdiction, in this case - there was inherent and complete lack of jurisdiction to reassess the petitioner only to RITC. Also, the reassessment order was passed in complete violation of principles of natural justice. On both counts, the bar of alternative remedy is lifted, in the present facts. Conduct of Reassessment Proceedings - Principles of Natural Justice - HELD THAT:- The court found that the reassessment proceedings were conducted in great haste, violating the principles of natural justice. The Additional Commissioner granted permission to the Assessing Officer on 18.3.2023, and the notice was issued on 22.3.2023, served on the petitioner on 24.3.2023, with the reassessment order passed on 28.3.2023. The court noted that the petitioner was not given a reasonable opportunity to respond, as only two days were provided to respond to the reassessment notice. The court held that such a procedure undermined the trust in the rule of law and was unacceptable. The writ petition deserves and is allowed.
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