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2016 (5) TMI 77 - DELHI HIGH COURT

2016 (5) TMI 77 - DELHI HIGH COURT - [2016] 91 VST 202 (Del) - Seeking quash of impugned SCN - Deductions had been wrongly claimed by the petitioner under Rule (5) of DSTWC Rules - Invokation of revisional powers under Section 46 of the DST Act - Petitioner contended that the assessment proceedings had lapsed on account of the fact that no reassessment order was passed and suo motu power under Section 46 of the DST Act cannot be invoked on the same ground. The reasons supplied on the request by .....

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t order for the year 2003-04 deductions have been wrongly allowed hence said order is erroneous and prejudicial to the interest of revenue. In other words, the language of Section 46 of the DST Act has been reproduced. The reasons fail to specify how the original assessment order is erroneous or prejudicial to the interests of the Revenue and in what manner deductions had been wrongly claimed and allowed to the petitioner. While it is true that in its judgment the Court concluded that no assess .....

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onal power under Section 46 of the DST Act was not made independently by the Deputy Commissioner. She was acting on the directions of her superior officers. It is well settled legal position that a quasi judicial authority should discharge the statutory discretionary powers independently and not under the dictation of superior officers. - It is evident that in exercise of the power under Section 46 of the DST Act, the Deputy Commissioner did not bear in mind the previous history of the case .....

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16 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. Rajesh Jain with Mr. Raj K. Batra and Mr. Virag Tiwari, Advocates For the Respondents Through: Mr. Satyakam, Additional Standing Counsel, GNCTD ORDER Dr. S. Muralidhar, J. Background facts 1. The Petitioner, Kumagai Skanska HCC Itochu Group, is a joint venture registered as such under the Income Tax Act, 1961. It and was also a dealer registered under the Delhi Sales Tax on Works Contract Act, 1999 ('DSTWC Act ) (now repealed .....

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of TDS certificate covering the amount of tax deducted and deposited by Delhi Metro Rail Corporation ( DMRC ). 3. On the basis of the above order, the Petitioner filed an application for refund on 2nd March 2005 in form ST-21 in accordance with Rule 29 of the Delhi Sales Tax Rules, 1975 ( DST Rules ) read with Section 30 (1) of the Delhi Sales Tax Act, 1975 ( DST Act ) as was made applicable to the DSTWC Act. 4. The Petitioner states that it kept following up on its refund application through se .....

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hence the turnover escaped assessment to tax under Rule 5 of the Delhi Sales Tax Act on Works Contract Rules, 1999 ( DSTWC Rules ). It is stated that for some reason the said notice was not proceeded with and no reassessment order was passed. Writ Petition 8526 of 2008 6. Meanwhile, aggrieved by the inaction of the Department as far as the issue of refund was concerned and instead initiating reassessment proceedings under Section 24 of the DST Act, the Petitioner filed Writ Petition (Civil) No. .....

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dated 25th November 2009, Writ Petition (Civil) No. 8526 of 2008 was disposed of by this Court. In the said order, the Court inter alia noted that the Respondent did not dispute that the reassessment order had not been passed till that date. It was contended by the Department that the limitation period would be six years from the date of the final order of assessment in question and not four years as was contended by the Petitioner. The Court after analysing Section 24 of the DST Act noted that .....

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the reasons themselves demonstrate that the entire turnover as disclosed by the Petitioner is taken into account and the reasons given is that claims of deduction made by the Petitioner was not permissible under Rule 5 of the Works Contracts Rules, 1999. Thus it is not the case of the Petitioner (sic Respondent) that the Petitioner had not disclosed full particulars. In these circumstances, the limitation has prescribed under Section 24 (1) (b), i.e., four years from the date of final order of a .....

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Respondent in this Court was asked to be released to the Petitioner along with interest accrued thereon. The Petitioner was directed to make a claim of interest for the past period with the Sales Tax Authorities. 11. With no appeal being filed against the above order by the Respondent, the above order has become final. Pursuant to the above order, the said sum of ₹ 1,78,58,291 together with interest accrued thereon was refunded to the Petitioner by the Respondent. Revisional power under t .....

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ly granted or that that liability to tax is understated or (b) in any case, the order is erroneous, insofar as it is prejudicial to the interest of Revenue and after examination, the Commissioner may pass an order to the best of his judgment, where necessary. 13. By way of Amendment to the DVAT Act, by the Delhi Value Added Tax (Amendment) Act, 2009 notified on 6th January 2010, sub-Section 5 was inserted in Section 74A of the DVAT Act which stated that notwithstanding anything contained in any .....

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the DVAT Act which was similar to Section 46 of the DST Act which granted to the Commissioner the suo motu power of revision. The decision in International Metro Civil Contractors 14. In International Metro Civil Contractors v. CST/VAT (2008) 16 VST 329 (Del) this Court held that Section 74A did not resuscitate or resurrect the long-dead revisionary power conferred on the Commissioner under Section 46 of the DST Act. It had no retrospective effect. The said Special Leave Petition ( SLP ) filed b .....

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DVAT Act was introduced. Section 106 was the repeal and savings' provision. Section 106 (4) stated that notwithstanding anything contained in the DVAT Act, for the purpose of levy, assessment, deemed assessment, reassessment, appeal, revision, review etc. which relates to any period ending before 1st April 2005 the repealed Act, and all rules, regulations, orders, notifications, forms and notices issued thereunder and in force immediately before 1st day of April 2005 shall continue to have .....

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h the books of accounts and other relevant record and to show cause as to why the said assessment order dated 24th February 2005 be not revised under Section 16 of the DSTWC Act read with Section 46 of the DST Act. 17. Inter alia it was stated in para 5 of the said notice that whereas it has come to the notice of the undersigned that in the assessment order for the year 2003-04 deductions have been wrongly allowed hence said order is erroneous and prejudicial to the interest of revenue. Earlier .....

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it was held that the Commissioner under the DVAT Act can exercise suo motu powers of revision under Section 74A of the DVAT Act in respect of assessments completed under the DST Act provided the power is invoked and exercised during the period of limitation as stipulated under Section 74A and subject to the other conditions precedent stipulated therein. The Division Bench also took note of one of the conclusions of the Full Bench that the order of assessment framed under the DST Act is deemed to .....

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itiated under Section 74A of the DVAT Act during the period of limitation as stipulated under Section 74A subject to the conditions precedent stipulated therein. 20. The Division Bench took note of Section 74A (2) (b) which stated that no order under the said provision can be passed after the expiry of four years from the end of the year in which the order passed by the subordinate officer has been served on the dealer. In the present case, the original order of assessment determining the refund .....

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e passed in exercise of the power of revision has to be passed within five years of the date of the order sought to be revised, the Court held that Section 46 of DST Act has been replaced by Section 74A of the DVAT Act qua the power of the revision and further that it is Section 74A which should be held to apply. Accordingly, the SCN dated 2nd February 2010 was quashed as being time barred. Review petition of the Department 22. Soon thereafter the Department filed Review Petition No. 420 of 2012 .....

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plicable to such revisions notwithstanding the repeal of the said Act by the DVAT Act, 2004. Accordingly, the order dated 22nd May 2012 is recalled and the matter was again placed for hearing on the other grounds taken by the Petitioner. Submissions of the Petitioner on merits of the impugned SCN 24. There are two broad submissions made by Mr. Rajesh Jain, learned counsel for the Petitioner to assail the impugned SCN dated 2nd February 2010. The first concerns the power of jurisdiction of the of .....

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TWC Rules and therefore, the turnover has escaped assessment. (b) The said assessment proceedings had lapsed on account of the fact that no reassessment order was passed. This Court in its judgment dated 25th November 2009 held that no further order could be passed pursuant to the said notice. The suo motu power under Section 46 of the DST Act cannot be invoked on the same ground. Reliance is placed on the decision of the Gauhati High Court in Santalal Mehendi Ratta (HUF) v. Commissioner of Taxe .....

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ing Authority while considering the refund application, to question the correctness of assessment. The Court accordingly directed the authorities to pass appropriate orders on the refund application within a period of 15 days. Soon after, the SCN under Section 46 of the DST Act was issued to International Metro Civil Contractors. This was challenged in the Writ Petition (Civil) No. 5828 of 2007 which came to be allowed by the aforementioned judgment in International Metro Civil Contractors (supr .....

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ith. The SCN did not specify (a) which deductions have been wrongly allowed, (b) to what extent, (c) what are the relied upon documents to support the stand taken in the SCN and (d) which sub-rule of Rule 5 of DSTWC Rules has been violated etc. In other words, in the absence of any specific finding given and without adducing any document to support such finding, Respondent No. 2 cannot purport to exercise suo motu power seeking to revisit the original assessment order dated 24th February 2005. ( .....

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he reasons supplied on the request by the Petitioner for invoking the powers under Section 46 of the DST Act had revealed that the original assessment order was neither stated to be erroneous nor prejudicial to the interests of the Revenue. The reasons are not sustainable in law since they failed to point out how the deductions had been wrongly allowed. 26. It is further pointed out by Mr. Rajesh Jain that for the preceding AYs 2001-02, 2002-03 as well as for the subsequent AY 2004-05 refund has .....

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pproached this Court with any arguments to the effect that he was entitled to the deductions allowed in the assessment order. All through these legal proceedings, the Petitioner has taken advantage of technical reasons to avoid a revision whereas huge public money is involved in the case. 28. It is further contended that on the earlier occasions when the notice dated 5th July 2007 had been quashed by the Court by its judgment dated 24th November 2009 there was no occasion for the Court to go int .....

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he notice of the undersigned that in the assessment order for the year 2003-04 deductions have been wrongly allowed hence said order is erroneous and prejudicial to the interest of revenue. In other words, the language of Section 46 of the DST Act has been reproduced. The reasons fail to specify how the original assessment order is erroneous or prejudicial to the interests of the Revenue and in what manner deductions had been wrongly claimed and allowed to the Petitioner. 30. It is sought to be .....

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sidered and an appropriate order passed exercising the revisional power under Section 46 of the DST Act. 31. It must be remembered at this stage that the grounds on which the revisional power sought to be exercised is identical to the ground on which the power under Section 24 of the DST Act to reopen the assessment was invoked by issuing the notice dated 5th July 2007. In other words it is the very same reason viz., alleged wrong claim of deductions under the DSTWC Act, that prompted the reopen .....

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assed pursuant to the notice dated 5th July 2007 issued under Section 24 of the DST Act. 33. While it is true that in its judgment the Court concluded that no assessment order could be passed on account of limitation, the fact remains that there had to be strong reasons even prima facie for the Deputy Commissioner to invoke revisional powers under Section 46 of the DST Act in light of the above background of the case. 34. Keeping the above facts in mind, the Court proceeds to examine the backgro .....

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learned counsel for the Department gave an opinion that it will not be worthwhile or a suitable case to file any SLP in Supreme Court. The note then stated that it is further submitted that under the present circumstances there is one remedy available before the Department that is revision of orders prejudicial to revenue under Section 46 of the DST Act, 1975 ..... It was noted that the instant case had been reopened vide notice dt. 5/07/07 under Section 24 of the Act for reassessment proceedin .....

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he assessment order dated 24th February 2005 under Section 46 of the DST Act be undertaken. 37. The above note was prepared by the Deputy Commissioner (Special Zone) on 6th January 2010. The photocopy of the said note together with further endorsement thereunder had been placed on record. The above note was marked to the Joint Commissioner (Law & Justice) who recorded in his own handwriting: revision proceedings to safeguard the interest of Revenue may be initiated immediately. The said proc .....

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ioner (L&J) directed that it should be done immediately, and it was pursuant to the said direction that the Deputy Commissioner proceeded to issue the SCN to the Petitioner. Acting under dictation 40. The fact remains that there was no subjective satisfaction of the Deputy Commissioner for initiation of the revisional proceedings by applying objective criteria. This is evident from the fact that nearly three weeks after the above note, on 29th January 2010 the Deputy Commissioner actually pe .....

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d 29th January 2010 should be read as the reasons for deciding to invoke the power of revision under Section 46 of the DST Act, which is decision appears to have been taken on 7th/9th January 2010 itself, cannot be accepted. 41. It is well settled legal position that a quasi judicial authority should discharge the statutory discretionary powers independently and not under the dictation of superior officers. In Sita Juneja & Associates v. CIT (supra) this Court noticed the judgment of the Sup .....

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ssociates v. CIT (supra) to the observations in Orient Paper Mills v. Union of India (supra) where the Supreme Court held that the assessing authorities as well as the appellate authorities are called upon to decide disputes independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by the others. Then it is a misnomer to call their orders as their judgments, they would essentially be the judgments of the authority that gave th .....

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satisfied that in the present case the invoking of the revisional power by the Deputy Commissioner under Section 46 of the DST Act was unjustified and unwarranted. The impugned SCN dated 2nd February 2010 requires to be quashed on this ground alone. Power and jurisdiction of the officer issuing the SCN 44. The other major point urged in the writ petition concerns the authority of the jurisdiction of the Deputy Commissioner to issue the impugned SCN. 45. In this regard the Court has been shown a .....

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er where the order sought to be revised was passed by an assessing authority below the rank of Assistant Commissioner. The delegation of the power was made to the Deputy Commissioner where the order to be revised was passed by the Assistant Commissioner in the capacity of an Assessing Authority. After the enactment of the DVAT Act, there has been re-designation of the authorities. A sample order dated 22nd September 2006 has been placed on record. The Assistant Commissioner who was earlier exerc .....

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