2015 (7) TMI 1435 - HC - VAT and Sales Tax

Validity of reassessment notice dated 31.5.1994 issued under Section 12 of the Rajasthan Sales Tax Act 1954 - it is submitted that provisions of Section 12 are applicable in its spirit and the assessing authority is empowered for initiating reassessment proceedings for any reason - HELD THAT - The provisions of Section 12 of the Act though prescribe for reassessment in case of escaped assessment or the assessee having been assessed at too low a rate in any year the said provision cannot be applied in a case where the assessee has placed the entire material before the Assessing Authority and the Assessing Authority while passing the original assessment order had applied his mind and a particular notification only on account of change of opinion later on without there being any allegation of the petitioner not having disclosed material facts at the time of assessment cannot empower the Assessing Officer to issue notice under Section 12 of the Act. The fact that a purportedly wrong notification for calculating rate of tax has been applied by the Assessing Authority while the original assessment for which there are no allegation about suppression of facts by the assessee cannot be a ground for initiating the reassessment proceedings. In the case of Tarajan Tea Co. (P) Ltd. 1999 (2) TMI 722 - SUPREME COURT the Hon ble Supreme Court on coming to the conclusion that there was no omission or failure on part of the assessee to make a return held the reopening as unsustainable. The law laid down in various judgments as noticed herein-before is clearly applicable to the facts and circumstances of the present case wherein as noticed herein-before at the time of passing of the original assessment order the petitioner had disclosed the relevant facts and was accordingly assessed there is no allegation that the material facts were not disclosed and therefore the issuance of notice under Section 12 of the Act cannot be sustained. The writ petition filed by the petitioner is allowed.

Summary

Issues:
1. Validity of reassessment notice under Section 12 of the Rajasthan Sales Tax Act, 1954.
2. Applicability of provisions of Section 12 for initiating reassessment proceedings.
3. Jurisdiction of assessing authority in issuing reassessment notice.
4. Disclosure of material facts by the assessee during original assessment.
5. Grounds for initiating reassessment proceedings based on change of opinion.
6. Interpretation of "escaped assessment" under Section 12 of the Act.

Analysis:

1. The writ petition challenged the reassessment notice issued under Section 12 of the Act. The petitioner contended that all necessary facts were disclosed during the original assessment, and the assessing authority applied a specific notification for assessment. The petitioner argued that the notice for reassessment was without jurisdiction solely based on a change of opinion.

2. The respondents argued that Section 12 empowers the assessing authority to initiate reassessment proceedings for 'any reason'. They claimed that the original assessment did not consider that the sales were made to a manufacturer of tax-free goods, justifying the reassessment notice. They contended that the assessing authority was within its rights to issue the notice.

3. The court analyzed the provisions of Section 12, which allow reassessment for escaped assessment or under-assessment. It held that the provision cannot be invoked merely due to a change of opinion by the assessing officer, especially when all material facts were disclosed during the original assessment without any allegation of suppression.

4. Referring to past judgments, the court emphasized the duty of the assessee to disclose all material facts necessary for assessment. It highlighted that the assessing authority cannot reopen assessments based on a purportedly wrong application of a notification, especially when there is no evidence of non-disclosure of facts by the assessee.

5. Citing precedents like M/s. Prithvi Singh and Associated Stone Industries Ltd., the court reiterated that the assessing authority must have sufficient reasons to reopen an assessment under Section 12. In this case, since the petitioner had disclosed all relevant facts during the original assessment, the court found no grounds for sustaining the reassessment notice.

6. Ultimately, the court allowed the writ petition, quashing and setting aside the impugned reassessment notice dated 31.5.1994. The court made no order as to costs, concluding that the notice was unsustainable due to the lack of legal grounds for reassessment under Section 12 of the Act.