TMI Blog2018 (3) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... fiction. The legislature is quite competent to create a legal fiction, in other words, to enact a deeming provision for the purpose of assuming existence of a fact which does not really exist. In sum and substance, in order to invoke jurisdiction under Section 22(1) of the VAT Act or to initiate proceedings for reassessment there must be an order of assessment duly passed by the assessing officer and it must be in existence as a condition precedent to invoke Section 22(1) and the limitation prescribed is five calendar years from the date of commencement of such proceedings, whereas the deemed assessment order under Section 21(2) is only reassessable under Section 21(3) of the VAT Act within one calendar year from such year. In case there is no order of assessment passed under Section 21(7) of the VAT Act, it cannot be subject to reassessment proceeding under Section 22(1) of the VAT Act. Penalty - whether the penalty imposed invoking Section 22(2) of the VAT Act is sustainable? - Held that: - it has already been held that there is no order of assessment as the assessing officer did not pass any assessment order and thus, there is failure on the part of the assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15, 19-1-2015, 28-1-2015 and 18-2-2015. It is the case of the petitioner that no order of assessment was passed on the said original assessment proceedings in accordance with Section 21(7) of the VAT Act. It is the further case of the petitioner that in accordance with the instructions dated 5-7-2013, the Commercial Tax Officer (Enforcement) prepared report for the years 2010-11, 2011-12 and 2012-13 in case of the petitioner and proposed to levy tax of 4% of the materials treating them as telecommunication cables and accessories and accepting the report of the said officer, the assessing authority issued notices on 30-6-2016 to the petitioner for the period 2010-11, 2011-12 and 2012-13 for reassessment which was opposed by the petitioner by filing preliminary objection on 12-8-2016 that the reassessment proceeding initiated is barred by limitation, but no cognizance of that objection was taken. The said objection was not considered and the order of reassessment Annexure P-8 was passed in all the three proceedings leading to filing of these writ petitions principally on the ground that no order of assessment was passed on the original assessment proceedings though the hearing conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents, would submit that the order being appealable, the petitioner be resorted to the remedy of appeal by making mandatory deposit. He would further submit that deemed assessment is also reassessable under Section 22(1) of the VAT Act. 10. I have heard learned counsel for the parties and considered their rival submissions and also went through the record carefully as well as critically. 11. The first issue for consideration would be whether the writ petitions challenging the order of reassessment under Section 22(1) of the VAT Act is maintainable in law. 12. It was vehemently submitted on behalf of the respondents relying upon the decision of the Supreme Court in the matter of Commissioner ofIncome Tax and others v. Chhabil Dass Agarwal (2014) 1 SCC 603 that such writ petitions would not be maintainable, whereas the petitioner has relied upon the decision of the Supreme Court in Calcutta Discount (supra). 13. In Calcutta Discount (supra), Their Lordships of the Supreme Court have clearly and unmistakably held that the High Court in appropriate cases has power to issue an order prohibiting the Income Tax Officer from proceeding to reassess the income when the conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argeable to tax had escaped assessment, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside or vacate the notice for reassessment on a re-appraisal of the evidence. 15. The above-stated enunciation of law laid down in Calcutta Discount (supra) reiterated in M/s. A. Raman and Co.'s case (supra) by Their Lordships of the Supreme Court has further been followed very recently by the Supreme Court in the matter of Jeans Knit Private Ltd. Bangalore v. Deputy Commissioner of Income Tax Bangalore 2016 SCC OnLine SC 1536 and it has been clearly held that writ petition filed by the assessee challenging the issuance of notice under Section 148 of the Act, 1961 and the reasons which were recorded by the Assessing Officer for reopening the assessment is maintainable, after noticing the earlier decision of the Supreme Court in Chhabil Dass Agarwal's case (supra) and observed as under: - 2. We find that the High Courts in all these cases have dismissed the writ petitions preferred by the appellant/assessee herein challenging the issuance of notice under Section 148 of the Income Tax Act, 1961 and the reasons which were recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the returns for a year and/or; (ii) revised return for any quarter or quarters of such year, in the prescribed manner and within the prescribed time or before the date on which the return for the first quarter of the subsequent year becomes due, (iii) has paid the tax payable according to such returns or revised returns as also interest payable, if any, and (iv) has furnished the statement under clause (b) of sub- section (1) of section 19, within the prescribed time, the returns furnished or revised returns furnished by such dealer for that year shall be accepted and his assessment shall be deemed to have been made for the purpose of sub- section (1) : Provided that the assessment under this sub-section of every such registered dealer who is required to furnish audit report under sub-section (2) of section 41 shall be deemed to have been made if such dealer has furnished the audit report along with the statement referred to in sub-clause (iv). (3) Notwithstanding the provisions of sub-section (2), the commissioner shall select for re-assessment a number of such dealers as he deems fit whose assessment for a year is deemed to have been made under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The commissioner shall, where the omission leading to assessment or reassessment made under sub-section (1) is attributable to the dealer, impose upon him a penalty not exceeding twice the amount of tax so assessed or re-assessed but shall not be less than the amount of tax assessed. (3) The assessment or re-assessment under sub-section (1) shall be made within a period of two calendar years from the date of commencement of the proceedings under the said sub-section. 21. Section 22(1) of the VAT Act mandates assessment and also mandates the same by express order in writing which can be gathered from the fact that it states that assessment or reassessment can be made on any of the grounds mentioned in clauses (a) to (e) of sub-section (1) of Section 22 at any time within a period of five calendar years from the date of order of assessment . Thus, existence of original assessment order which is sought to be reopened and reassessed is the jurisdictional fact and condition precedent for exercise of power under Section 22(1) of the VAT Act. The use of words from the date of order of assessment clearly indicates that the original assessment order has to be in existence prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 25. The legislature is quite competent to create a legal fiction, in other words, to enact a deeming provision for the purpose of assuming existence of a fact which does not really exist. (See J.K. Cotton Spinning Weaving Mills Ltd. v. Union of India AIR 1988 SC 191.) 26. The Supreme Court in the matter of Rishabh Agro Industries Ltd. v. PNB Capital Services Ltd. (2000) 5 SCC 515 defined the word deemed with reference to the provisions of the Companies Act as under:- The word deemed used in the section would thus mean, supposed , considered , construed , thought , taken to be or Presumed . 27. The Supreme Court in the matter of Harish Tandon v. Additional District Magistrate, Allahabad (1995) 1 SCC 537 has held that full effect has to be given to the legal fiction created by statute and held as under:- 13. The role of a provision in a statute creating legal fiction is by now well settled. When a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, the court has to examine and ascertain as to for what purpose and between what persons such a statutory fiction is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which are produced or manufactured at an intermediate stage and, thereafter, consumed or utilized in the integrated process for the manufacture of another commodity is not actually removed shall be construed and regarded as removed. The Legislature is quite competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not really exist. 33. Further, Their Lordships of the Supreme Court in the matter of M. Venugopal v. Divisional Manager, Life Insurance Corpn. of India (1994) 2 SCC 323after referring to the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council 1952 AC 109 : (1951) 2 All ER 587 held that legislature can introduce a statutory fiction and courts have to proceed on assumption that such state of affairs exists on relevant date. 34. Thus, in sum and substance, in order to invoke jurisdiction under Section 22(1) of the VAT Act or to initiate proceedings for reassessment there must be an order of assessment duly passed by the assessing officer and it must be in existence as a condition precedent to invoke Section 22(1) and the limitation prescribed is five calendar years from the date of commencement of such pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any period has been under-assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within five calendar years from the date of order of assessment, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess - 4. It is crystal clear therefrom that it applies only if an assessment has already been made and there has been under- assessment or escaped assessment therein. In a case where there has been no assessment, as in the case before us for the assessment years in question, the provisions of section 19 do not apply and cannot be invoked. 36. Reverting to the facts of the present case, after having noticed the judgment of the Supreme Court in Filter Co.'s case (supra), it is quite vivid that in the instant case, the matter was heard by the assessing officer up to 18-2-2015 after having issued notices on 12-5-2014, but no order of assessment was passed under Section 21(7) of the VAT Act, though original assessment proceedings were initiated by issuance of notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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