TMI Blog2016 (4) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... he return filed is not satisfactory then the Commissioner will ‘reassess’ to the best of his judgment the amount of net tax due for the tax period. Section 34 of the DVAT Act spells out the maximum period within either an assessment or, where the circumstances so warrant, a reassessment under Section 32 of the DVAT Act can be made. The outer limit for either is four years from “the end of the year comprising of one or more tax period for which the person furnished a return under Section 26 or 28 of the Act or the date on which the Commissioner made an assessment of the tax for the tax period whichever is earlier”. In the present case, the Assessee was filing monthly returns and, therefore, the limitation for the purposes of Section 34 of the DVAT Act would have to be reckoned from the date of the filing of the return by way of self assessment. The notices for reopening of the assessment for the months comprising the Assessment Year 2009-10 ought to have been issued before the expiry of the respective dates as shown in the above table. Barring the reopening of the assessments for February and March 2010, where the dates of the notices of default assessment were prior to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Monitors. There was no indication in the said notices regarding any erroneous classification of the monitors as forming the basis for reopening the assessments. There was also no whisper of the determination under Section 84 of the DVAT Act in the case of NEC which, as it transpired, was one of the reasons for reopening the assessments. In other words, the Assessee was not put on notice as to the grounds on which the assessments were sought to be reopened. Existence of Alternative Remedy - Held that:- in the present case the entire proceedings for the months of AY 2009-10 (barring February and March 2010) are barred by limitation. There has also been an obvious violation of the principles of natural justice. Therefore, the impugned notices of assessment dated 31st March 2014 issued to the Petitioner as well as notices of default assessment of penalty of the same date are hereby quashed. - Decided in favour of petitioner - W. P. (C) 2685/2014 & CM No. 5591/2014 - - - Dated:- 7-4-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. S.K. Bagaria, Senior Advocate with Mr. Tarun Gulati, Mr. Shashi Mathews, Mr.Sparsh Bhargava, Ms. Rachana Yadav, Mr. Ankit Sac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise Tariff will not be covered by the scope of this notification. Note-(3). Subject to Note (2), for the purpose of any entry contained in this notification, where the description against any heading or, as the case may be, sub-heading, matches fully with the corresponding description in the Central Excise Tariff, then all the commodities covered for the purposes of the said tariff under that heading or sub-heading will be covered by the scope of this notification. 5. If an entry does not fall under any of the Schedules, then in terms of the Section 4(1)(d) of the DVAT Act, tax is payable at the rate of 12.5%. Determination under Section 84of the DVAT Act 6. Another company dealing with electronic products, i.e., NEC India Private Limited ( NEC ) filed, on 8th July 2008, an application under Section 84 of the DVAT Act for determination of the following question: Whether LCD Monitors, LCD Displays/Plasma Displays are exempt from tax as being meant for educational purposes like books, periodicals and journals including maps, charts and globes which are covered by Entry No.5 of the First Schedule to the Delhi Value Added Tax Act, 2004 and are exempt from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner enclosed details of its sales turnover of Monitors for 2009-10 and 2010-11. Default Assessments 11. The Petitioner states that on 17th April 2014 it received 12 notices of default assessment of tax and interest under Section 32 of the DVAT Act for the period April 2009 to March 2010 raising a demand of more than ₹ 15 crores. 12. In the impugned notice it was stated that the Petitioner had sold IT related TFT/LCD/LED Monitors by charging VAT at 4% or 5% although the said item is not covered under the Third Schedule to the DVAT Act. Asserting that it has to be classified only under the residuary entry, the demand notice also made a reference to the determination order passed at the instance of NEC. The Petitioner was asked to make payment of the tax and arrears before 30th April 2014. On the same day, the VATO also issued the impugned penalty notices under Section 33 of the DVAT Act for the period April 2009 to March 2010. Pursuant to the receipt of the impugned notices, the Petitioner sent a letter dated 24th April 2014 to the VATO stating, inter alia, that no show cause notice was issued to them asking why LCD/LED/TFT Monitors should not be treated as unc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e within time. Submissions of counsel for the Petitioner 16. Mr. S.K. Bagaria, learned Senior counsel for the Petitioner, first pointed out that the re-opening of the assessments was time-barred on a collective reading of Section 31 (1) read with Sections 32 and 34 of the DVAT Act. He pointed out that the returns, when originally filed, were accepted by the DT T and therefore were deemed to be assessments in terms of Section 31 (1). So construed, the notices of default assessments for most of the months of the AY 2009-2010, barring the months of February and March 2010, were barred by limitation. 17. Mr Bagaria next pointed out that when a thorough audit was conducted by the DT T of the Petitioner's business in 2012, no discrepancy was found. The notice dated 8th March 2014 issued by the VATO only sought information under Section 59(2) of the DVAT Act. This notice was received on 25th March 2014. The earlier letter dated 11th February 2014 was not received by the Petitioner. There is no indication in the said notice of the VATO having invoked powers under Section 32 of the DVAT Act for reopening an assessment. There was no show cause notice issued to the Petitioner see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpret Section 34 in light of Section 32 of the DVAT Act was to compute the expiry of the period of four years from the end of the year. The word 'assessment' in Section 34 (1) DVAT Act related only to an assessment under Section 32 of the DVAT Act and not a self-assessment under Section 31(1) of the Act. 21. Referring to the decision in L.G. Electronics India Pvt. Ltd. v. Commissioner, Value Added Tax (decision dated 21st January 2014 in W.P. (C) 213/2014), Mr Narayan submitted that the Petitioner had an alternative efficacious remedy of filing the objections before the OHA and if still aggrieved to file an appeal before the AT. He submitted that there is no particular reason why the Petitioner should be permitted to directly approach this Court in a writ petition under Article 226 of the Constitution. He submitted that the points regarding limitation and classification could well be urged before the OHA. 22. Turning to the merits of the case Mr Narayan submitted that the action to reopen the assessment was taken only after notice was issued under Section 59(2) of the Act and only after the authorised representative of the Petitioner appeared and submitted the sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than one tax period by a single order so long as all such tax periods are comprised in one year. (1A) If, upon the information which has come into his possession, the Commissioner is satisfied that any person who has been liable to pay tax under this Act in respect of any period or periods, has failed to get himself registered, the Commissioner may for reasons to be recorded in writing, assess to the best of his judgment the amount of net tax due for such tax period or tax periods and all subsequent tax periods. (2) Where the Commissioner has made an assessment under this section, the Commissioner shall forthwith serve on that person a notice of assessment of the amount of any additional tax due for that tax period. (3) Where the Commissioner has made an assessment under this section and further tax is assessed as owed, the amount of further tax assessed is due and payable on the same date as the date on which the net tax for the tax period was due. Explanation.- A person may, if he disagrees with the notice of assessment, file an objection under section 74 of this Act. 34. Limitation on assessment and re-assessment.- (1) No assessment or re-asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner is not satisfied with the return furnished. 29. Where the a dealer has not furnished returns as envisaged under Section 32 (1) (a) of the DVAT Act, then the Commissioner, for reasons to be recorded in writing, can assess the taxable turnover using his 'best judgment' . Where in terms of Section 32 (1)(b), (c) or (d) of the DVAT Act, the dealer has furnished incomplete returns that do not satisfy the requirements of the Act or for any reason the return filed is not satisfactory then the Commissioner will reassess to the best of his judgment the amount of net tax due for the tax period. 30. Section 34 of the DVAT Act spells out the maximum period within either an assessment or, where the circumstances so warrant, a reassessment under Section 32 of the DVAT Act can be made. The outer limit for either is four years from the end of the year comprising of one or more tax period for which the person furnished a return under Section 26 or 28 of the Act or the date on which the Commissioner made an assessment of the tax for the tax period whichever is earlier (emphasis supplied). 31. Although Mr. Narayan urged that Section 34(1)(b) of the DVAT Act tal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, it has time till then to complete the assessment in terms of Section 34(1)(b) of the DVAT Act. 34. The Court is unable to accept with the above submission of the DT T. Given the overall scheme of the DVAT Act and Section 31, 32 and 34 in particular, the Court accepts the manner of computation of the four year period as depicted by the Petitioner. The notices for reopening of the assessment for the months comprising the Assessment Year 2009-10 ought to have been issued before the expiry of the respective dates as shown in the above table. Barring the reopening of the assessments for February and March 2010, where the dates of the notices of default assessment were prior to the completion of four years, i.e., 26th March and 23rd April 2014, in respect of all other returns by way of self-assessment made by the Petitioner from April 2009 to January 2010, the re-opening of the assessment was sought to be done on a date after the expiry of the four-year period. 35. In H.M. Industries v. Commissioner of Value Added Tax (decision dated 26th September 2014 in ST.Appl. 32/2013), this Court held that unless the conditions of Section 32(1) of the DVAT Act are satisfied, default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing blanks therefor) all sorts whether rolled, forged etc.' The Appellants there were manufacturing pipe fittings such as elbows, bends and reducers. The question was whether such articles would fall under Item 26-AA(iv) or under the residuary Tariff Item 68. In that context, it was observed by the Supreme Court in para 4 of the said order that only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry . It was held that Tariff Item 26-AA(iv) encompasses all sorts of pipes and tubes. Therefore, there was no reason why a similar item cannot be prescribed as pipes and tubes. Likewise, in the present case, it is not shown by the DT T that LCD/LED/TFT Monitors cannot be brought under the broad classification of 'Monitors'. 40. In Jain Exports Private Limited v. Union of India (supra), it is held that coconut oil without qualifying words would cover both edible as well as non-edible (commercial or industrial) varieties. It is found in that case that in Appendix 9 to the Import Policy of 1980-81 there was no classification of coconut oil. In the circumstances, it was held that all var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Denatured Salt falling under Chapter Heading No. 25.01. The Department has not shown that the subject product is not bought or sold or is not known or is dealt with in the market as Denatured Salt. Department s own Chemical Examiner after examining the chemical composition has not said that it is not denatured salt. On the other hand, after examining the chemical composition has opined that the subject matter is to be treated as Sodium Chloride. 44. In Sun Export Corporation v. Collector of Customs, Bombay (supra), the Supreme Court reiterated the well settled principle that if in a matter of classification of goods two views were possible, the one favouring the Assessee has to be preferred. 45. In this context, the Court would like to observe that the determination by the Commissioner in the case of NEC under Section 84 of the DVAT Act was not binding on the present Petitioner as it was not a party to those proceedings. 46. In the present case the DT T has not been able to persuade the Court that LCD/LED/TFT monitors sold by the Petitioner during the period under consideration is not classifiable as Monitors under Item 3 below Entry 41A of the Third Schedule to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r circumstances, in the context of Section 142 (2A) of the income Tax Act 1961, the Supreme Court in Rajesh Kumar v. Deputy Commissioner of Income Tax (2007) 2 SCC 181 observed in para 26 as under: [W]hen by reason of an action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice are required to be followed. In such an event, although no express provision is laid down in this behalf, compliance with principles of natural justice would be implicit. In case of denial of principles of natural justice in a statute, the same may also be held ultra vires Article 14 of the Constitution . Existence of Alternative Remedy 53. Lastly, on the issue of the existence of an alternative remedy, the Court notes that in the present case the entire proceedings for the months of AY 2009-10 (barring February and March 2010) are barred by limitation. There has also been an obvious violation of the principles of natural justice. 54. In Filterco v. Commissioner of Sales Tax, Madhya Pradesh (supra), a Constitution Bench of the Supreme Court in similar circumstances disapproved of the in limine dismissal of the writ petition by the High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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