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DHANANI IMP. EXP. PVT. LTD. AND 1 Versus STATE OF GUJARAT AND 1

2016 (7) TMI 1150 - GUJARAT HIGH COURT

Reopening of assessment after the 4 years - GVAT - Rate of VAT - 4% or 12.5% - bicycles, tricycles, cycle rickshaws, pedal rickshaws, and cycles combination and accessories and parts thereof. - Held that:- When the petitioner's assessment thus became final and by efflux of time, even exercise of powers by the Commissioner under section 35(1) became barred by limitation, subsection (8A) was not even yet introduced in the statute book. We have serious doubt whether this provision could be applied .....

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e prescribed authority to collect tax when it is found that tax has been evaded or sought to be evaded or tax liability has not been disclosed correctly or excess tax has been claimed, the same can be done during the course of any proceedings if the prescribed authority is so satisfied. The pendency of proceedings therefore, would be sinequanon for exercise of such powers. Admitted facts are that no proceedings for assessment of the petitioner were pending on that day. The return filed by the pe .....

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rom Special Civil Application No.9519 of 2016. 2. Petitioner No.1 is a company registered under the Companies Act and is engaged in business of manufacturing of tyres and tubes for bicycles. The company is a registered dealer under the Gujarat Value Added Tax Act ('VAT Act' for short) and had paid VAT at the rate of 4% relying on Entry 6 of ScheduleII of the VAT Act, which includes bicycles, tricycles, cycle rickshaws, pedal rickshaws, and cycles combination and accessories and parts the .....

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e of 4%, the same should not be charged at 12.5% with interest and penalty. In the notice, it was conveyed that the Government notification granting exemption from tax on excess of 4%, was issued only on 24.09.2016 and that therefore, till then, the tax had to be paid at the normal rate. Notice also suggested that the item in question was covered in the residuary clause. 3. The petitioner opposed such proposals by raising objections under letter dated 23.02.2016 and raised several legal contenti .....

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proceeded to pass impugned order dated 29.04.2016 purportedly under exercise of powers under section 34(8A) of the VAT Act and demanded tax with interest and penalty of ₹ 4.73 lacs. 5. Learned counsel for the petitioner raised following contentions: I. The original assessment was completed upon passing of the order of assessment on 23.02.2010. The same also became time barred upon completion of four years from the end of the assessment year in terms of subsection (9) of section 34. Such co .....

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no proceeding was pending. IV. Even otherwise, the classification was correctly accepted under Entry 6 and would not fall within the residuary clause. 6. On the other hand, learned AGP Shri Vora opposed the petition contending that subsection (8A) of section 34 empowers the prescribed authority with ample powers to levy tax when it is found that the tax has been evaded. The legislature has not laid down any time limit for exercise of such power. The assessment of the petitioner was under scruti .....

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section provides for the assessment of returns by the Commissioner. Section 33 pertains to self assessment. Section 34, on the other hand pertains to audit assessment. Subsection (1) of section 34 provides that subject to the provisions of subsection (2), the amount of tax due from a registered dealer shall be assessed in the manner provided hereafter separately for each year, during which he is liable to pay tax. Subsection (9) of section 34 provides that no assessment under subsections (2), (5 .....

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se of any proceedings under this Act, if the prescribed authority is satisfied that the tax has been evaded or sought to be evaded or the tax liability has not been disclosed correctly or excess tax credit has been claimed by any dealer in respect of any period or periods by not recording or recording in an incorrect manner, any transaction of sale or purchase, or that any claim has been incorrectly made, then in such a case notwithstanding any notice for assessment has been issued under other p .....

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im: Provided further that the prescribed authority shall, notwithstanding anything contained in section 17, be deemed to have the requisite jurisdiction and power to assess such dealer in respect of such transaction of sale or purchase or claim, covered by clause (a) and such assessment proceedings shall, for all purposes of this Act, be deemed to have been transferred to such authority. (b) The assessment proceedings under this subsection shall be without prejudice to the assessment proceedings .....

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tion, the dealer may be assessed separately under the other provisions of this section in respect of the said period or periods: Provided that, once the dealer is assessed under this subsection, no tax from such transaction or claim and penalty and interest, if any, shall be levied or demanded from such dealer, at the time of assessment to tax under the other provisions of this section in respect of the said period or periods relating to such transaction or claim. Explanation - For the purpose o .....

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s reason to believe that whole or any part of the taxable turnover in respect of any period has escaped assessment or has been under assessed or has been assessed at the lower rate or wrongly been allowed in deduction or wrongly allowed a credit, the Commissioner may serve a notice to the dealer and after giving opportunity to the dealer and making an inquiry, if found necessary, proceed to the best of his judgment the amount of tax due to the dealer in respect of such turnover. Subsection (2) o .....

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f assessment. Subsection (8A) of section 34 therefore needs to be seen in background of such statutory provisions, particularly, bearing in mind facts of the case. 11. Facts of the case are that by the time the respondents issued notice for revising the tax of the petitioner under subsection (8A) of section 34, the original assessment was already completed in February 2010. In any case, in terms of subsection (9) of section 34, such assessment became time barred by 31.03.2011. In terms of subsec .....

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