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M/s JMC Projects (India) Ltd. Versus The State of Karnataka Rep By Commissioner of Commercial Taxes

Revision of Assessment order – Validity – Commissioner by invoking suo moto revisional powers as per section 63A of KVAT act, revised order of assessment – Aggrieved by revision of assessment order petitioner filed appeal before tribunal which was rejected – Held that:- Section 63A makes it clear that Joint Commissioner has power to exercise revisional jurisdiction for which was not prior to four years from date of order sought to be revised – Rule against retrospective operation was fundamental .....

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Shivayogiswamy, AGA ORDER This Court by order dated 07.02.2014, having noticed that the Tribunal had framed two questions for its consideration, had admitted these revision petitions to adjudicate the very same questions framed by the Karnataka Appellate Tribunal for adjudication and they read as under: (1) "Whether, in the facts and circumstances of the appellant's case, the RA had the jurisdiction to invoke revision proceedings U/s. 63-A of the Act? (2) Whether, the turnover relatable .....

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ner that Joint Commissioner did not possess jurisdiction to exercise the power under Section 63A of the Act on the ground that that said provision came to be inserted by Act No.4/2006 with effect from 01.04.2006 and as such, for the period anterior to 01.04.2006, Joint Commissioner cannot exercise the suo moto power to revise the order of assessment. 3. The petitioner is a Limited Company engaged in the business of civil works contracts of construction of commercial and residential buildings and .....

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he revisional authority issued notice for revising the order of assessment passed on 08.06.2006. A detailed reply was filed by the petitioner before the respondent Joint Commissioner. After considering the same, the revision was partly allowed in favour of the assessee. Challenging the order of the revisional authority, the petitioner filed an appeal before the Karnataka Appellate Tribunal (KAT), which has been dismissed by order dated 27.06.2012. An objection was taken with regard to the applic .....

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earned counsel for the petitioner has not challenged the order of the Tribunal on merits of the case and limited his submissions only with regard to the applicability of Section 63A of the KVAT Act. The case of the petitioner admittedly relates to the period prior to the date on which the Act No.4 of 2006 had come into effect by which Section 63A was inserted. It has been submitted that in view of the fact that the said provision has not been given retrospective effect, the assessment order coul .....

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provision being retrospectively made applicable does not arise, as Section 63A of the KVAT Act was brought in prospectively with the power given to the Joint Commissioner to re-open or revise assessment of a period four years prior. He, thus, submitted that the Joint Commissioner has power to revise the assessment for the period 01.04.2005 to 31.03.2006, even though the period related prior to 01.04.2006, which was the date on which Section 63A of the KVAT Act had been inserted. 8. Chapter VII o .....

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T Act provides for Revision by High Court in certain cases. The Legislature, by the Amendment Act No.4 of 2006, besides making several other amendments under the KVAT Act, also inserted a new Section 63A of the KVAT Act providing for Revisional powers of Joint Commissioner, which were in the same terms as provided for Additional Commissioner under Section 64 of the KVAT Act. The said Section 63A of the KVAT Act came into effect from 01.04.2006. For ready reference, Section 63A of the KVAT Act is .....

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giving the person concerned an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment or directing a fresh assessment. (2) The Joint Commissioner shall not exercise any power under this section, if.- (a) the time for appeal against the order has not expired; or (b) more than four years have expired .....

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s Section is stayed by an order or injunction of any court, shall be excluded. (6) For the purposes of this Section, 'record' shall include all records relating to any proceedings under this Act available at the time of examination by the Joint Commissioner." Clause(a) of Sub-section(2) of the said Section provides for when the said power can be exercised by the Joint Commissioner and Clause(b) of sub-section(2) provides that the Joint Commissioner shall not exercise any power under .....

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If we arrive at a conclusion that the Joint Commissioner can exercise such powers only for the tax period after 01.04.2006, as the Section 63A has come into effect from the said date, then exercise of such power by the Joint Commissioner in the present case cannot be justified as the same relates to Assessment Year 2005-06, which is prior to 01.04.2006. However, sub-section (2) of Section 63A of the KVAT Act makes it clear that the Joint Commissioner has the power to exercise revisional jurisdi .....

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tion which favours the assessee has to be preferred and not the one which favours the revenue. But such a question would arise only when there is ambiguity in the provision. From a plain reading of Section 63A of the Act, it is explicitly clear that the Joint Commissioner can exercise the power of revision with effect from, 01.04.2006. Sub-section (2)(b) of Section 63A of the KVAT Act would make it clear that such power cannot be exercised if four (4) years have expired after passing of the orde .....

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years prior, we need not consider as to whether Section 63A of the KVAT Act would be retrospectively applicable or not. In fact our view is supported by the judgment of Hon'ble Apex Court in the case of Addl. Commissioner (legal) and another vs. Jyoti traders and another reported in (1999) 2 SCC 77 wherein the assessment for Assessment year 1985-86 was completed on 27.01.1989 and 28.02.1990 respectively. Notices for reopening came to be issued on 08.09.1994 and 11.01.1994 respectively. High .....

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material if the period of assessement or reassessment under Section 21(2) before the addition of the said proviso had expired and as such while reversing the decision of Allahabad High Court, it was held as under: "25. The two decisions in the cases of Ahmedbad Manufacturing & Calico Printing Co. Ltd. and Biswanath Jhunjhunwalla & Anr. are more closer to the issue involved in the present case before us. They laid down that it is the language of the provision that matters and when me .....

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he notice which is sine qua non, an indispensable requisite, for the initiation of assessment or reassessment proceedings where income had escaped assessment. That is not so in the present case. Under sub-section (1) of Section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Sub-section (2) provided that except as otherwise provided in this sec .....

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nk that subsection (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment before the expiration of 8 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reassessment un .....

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Sales Tax, its service on the assessee is not a condition precedent to re-open the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to sub-section (2) of Section 21 of the Act becomes redundant. Commencement of Act can be different than the operation of the Act though sometime both may be the same. Proviso now added to sub-section (2) of Section 21 of the Act does not put any embargo .....

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ld have been completed within four years of that particular assessment year and now by the amendment adding proviso to section 21(2) of the Act it is eight years. The only safeguard being that it is after satisfaction of thee Commissioner of Sales Tax. The proviso is operative from February 19, 1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to previous eight assessment years. We need not refer to the provisions of the Income Tax Act t .....

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