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2019 (8) TMI 667

..... in terms of Rule 45(13)(a) of the Rules - Assessing Officer had issued such notice to the assessee on 19.03.2017 served on 20.03.2017. HELD THAT:- Under Section 24 of the Act, a taxable dealer is obliged to submit its tax return for different tax periods, as also its annual return. Section 25 of the Act provides for assessment of tax for a tax period i.e. a provisional assessment. Tax period has been defined under Section 2(ak) of the Act, as a period for which a dealer is liable to submit tax return under Section 24 of the Act - Section 26 of the Act provides, every taxable dealer, for each assessment year shall be assessed to tax payable by him and to amount of Input Tax Credit (I.T.C.) admissible to him - Thus, it fixes the scope and purpose of an assessment to be made. It is in the above statutory context, provisions of Sections 27, 28 and 29 of the Act appear and they provide for self-assessment; assessment of tax after examination of record and; assessment of tax of turnover escaped from assessment year appear. Section 28 of the Act provides for a full-fledged or regular assessment to be made. However, it departs from its predecessor enactment i.e. U.P. Trade Tax Act, 1948. T .....

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..... f the Act, upon the satisfaction of the assessing officer being found existing in terms of Section 28(1)(b) of the Act, that power could be exercised irrespective of the fact whether any proceedings had been conducted under Section 27 of the Act and irrespective of the fate of those proceedings. The initiation of proceedings under section 28 of the Act, vide notice dated 27.2.2018 did not suffer from any infirmity - though a deemed assessment for A.Y. 2014-15 had come into existence on 31.03.2017, yet, it did not preclude the assessing officer to make an assessment upon examination of record under Section 28 of the Act, which order is found to have been passed in accordance with law, upon a valid notice dated 27.02.2018. Though it is a tough case inasmuch as the assessment order was passed ex parte and none of the appeal authorities have considered the merits of assessment order, yet, this Court in exercise of its revision jurisdiction is constrained to answer the question in the affirmative i.e. against the assessee and in favour of the revenue in view of the fact that the assessee never raised such challenge on merits, before the appellate authorities. Revision dismissed. - Sales .....

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..... issued by the assessing authority of the assessee under Section 28 of the Act, stating that the return filed by the assessee for the A.Y. 2014-15 was incomplete and that the assessee had not filed its revised return despite service of notice under Rule 45(13) of the Rules. Accordingly, the assessee was required to participate in those assessment proceedings. The assessee filed a specific objection as to the jurisdiction of the Assessing Authority to proceed under Section 28 of the Act. The assessee also appears to have furnished reply on merits. Further notices were also issued to him, thereafter. However, it is a fact that the assessee did not fully participate in the assessment proceedings. Finally, an ex parte assessment order was passed against him on 31 March, 2018. In the first appeal filed by the assessee therefrom, the assessee appears to have only raised the issue of lack of jurisdiction with the Assessing Authority to pass an assessment under Section 28 of the Act. That objection was rejected. In the further appeal to the Tribunal, again, the assessee appears to have raised solitary issue of lack of jurisdiction of the Assessing Authority. It was again rejected by the Tri .....

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..... sessing Authority. 8. Therefore, first, the notice requiring the assessee to file a revised return should have been issued and served on the assessee on such date, and in such manner, as may necessarily have allowed the assessee 15 days time to file its revised return or reply or object before the last date mentioned under Section 27(2) (b) of the Act arrived. That notice should have therefore been served not later than 16 March, 2017. Since, the notice was issued on 19 March, 2017 and it was served on 20th March, 2017, the Assessing Authority did not allow the assessee mandatory minimum 15 days time to file its revised return. The notice was invalid. Consequently, a deemed order of assessment came into existence on 13 March, 2017. Also, for that reason, the Assessing Officer could not have assessed the assessee under Section 28 of the Act. 9. As to the prescription of time under Rule 45(13)(a) of the Rules, it has been submitted the legislature has not provided or permitted for curtailment or alteration of that period. A fixed period of limitation to do an Act having been prescribed, it was not for the Assessing Officer to curtail the same or to change the same. Reliance has been .....

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..... rt in Sales/Trade Tax Revision No. 232 of 2019 (The Commissioner, Commercial Tax U.P. Vs. S/S Purwar Trading Co.) decided on 24.07.2019. Thus, it has been submitted, Section 28 of the Act is an independent provision and in its operation, the jurisdiction of the Assessing Officer is not governed or conditioned or restricted by the proceedings that may have been drawn up, concluded or dropped under Section 27 of the Act. 13. Referring to Section 29(3) of the Act, it has been submitted, the period of limitation prescribed for the Assessing Authority to pass an assessment is three years from the end of the relevant assessment year. However, for the legal fiction of deemed assessment to come into play, a shorter period of two years is prescribed. It is therefore his submission, irrespective of the fate of the proceedings under Section 27 of the Act i.e. whether those were valid or not, the Assessing Authority would retain to itself full jurisdiction to make an assessment under Section 28 of the Act. 14. In the above regard, he has also referred to Rule 45(13) (a) of the Rules to submit, under that provision of law, the Assessing Officer has a very limited jurisdiction to examine the ann .....

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..... revised Annexures of Consolidated Details of turnover and tax, within the time prescribed or extended; or such Annexures of Consolidated Details contain wrong or incorrect particulars or do not accompany declaration or certificate for exemption or reduction in the rate of tax, or (ii) dealer by whom tax return for one or more tax periods of the assessment year have not been submitted; or (iii) dealer in whose case assessing authority has passed provisional assessment order under section 25 in respect of one or more tax periods to the best of its judgment; or (iv) dealer in whose case, on the basis of material available on records, if the assessing authority is satisfied that the turnover of sales or purchases or both, as the case may be, and amount of tax shown payable as disclosed by the dealer in Annexures of Consolidated Details are not worthy of credence or tax shown payable in these Annexures has not been deposited by the dealer, or the amount of input tax credit claimed is wrong or the amount of tax payable shown is incorrect; or (v) dealer who has prevented or obstructed an officer empowered to make audit, survey, inspection, search or seizure under the provisions of this A .....

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..... of reverse input tax credit. (5) Order of assessment shall be in writing and copy of assessment order along with prescribed notice of demand of the balance amount of tax, if any, to be deposited by the dealer, shall be served on the dealer. (6) Dealer shall deposit amount of tax assessed in excess of amount of tax deposited by him for the assessment year, within a period of thirty days after the date of service of the assessment order and notice of demand. (7) Where the amount of tax deposited by the dealer is found in excess of tax assessed, the same shall be refunded to the dealer according to the provisions of this Act. (8) Assessing authority shall not be precluded from making assessment order under this section on the ground of passing of any provisional assessment order in respect of any tax period under section 25 and such provisional assessment order, if any, shall stand merged in the assessment order passed under this section. (9) Notwithstanding anything to the contrary in any other provision of this Act, where an unregistered dealer brings any taxable goods from outside the State more than once during an assessment year, separate assessment relating to goods brought on .....

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..... ion of record and; assessment of tax of turnover escaped from assessment year appear. 18. The scope of Section 27 of the Act has been dealt with by this court in the case of S/s Purwar Trading Co. (supra), where it has been held as below: "12. Perusal of sub-section 1 of Section 27 of the Act, makes it clear that a deemed assessment arises by operation of law to the amount of tax admittedly payable on the disclosed turnover of sale or purchase or both, as the case may be, disclosed by the assessee. Thus, the Act does not contemplate any order to be passed by the assessing authority but it only contemplates the effect or consequence of a disclosure made by the assessee in manner prescribed. Thus, by deeming fiction the act of disclosure made by a n assessee has been placed on parity with an assessment order that may otherwise be passed. The purpose and effect of the deeming fiction is that notwithstanding any order passed by the assessing authority, the assessee who may have filed a return, would become bound to pay admitted tax and to avail Input Tax Credit (ITC) as he otherwise would be, had he been regularly assessed to tax. 13. That intent has been further made clear by Sec .....

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..... ny other purpose such as rectification of mistake etc. 16. Also, the powers of the assessing authority to pass any assessment order are contained in the later provisions being Sections 28 and 29 of the Act. A regular assessment order may be passed by the assessing officer under Section 28 of the Act. Also, in the event of any escapement of the turnover from assessment, the assessing authority has been given the power to make a re-assessment under Section 29 of the Act. While a regular assessment may be made in the normal period of limitation, that is prescribed as three years, under Section 29(3) of the Act, the re-assessment order may be passed even thereafter subject to the stipulations contained under Section 29 of the Act". 19. Section 28 of the Act provides for a full-fledged or regular assessment to be made. However, it departs from its predecessor enactment i.e. U.P. Trade Tax Act, 1948. The Act contemplates a regular assessment upon examination of records be made only in certain cases specified in sub-section (1) of Section 28 of the Act. Thus, though section 26 of the Act requires an assessment to be made in each case, as to tax payable and I.T.C. entitlement availabl .....

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..... ment or reassessment as three years from the end of the assessment year in question. 22. Thus, in view of the first conclusion drawn, there never came into existence any order of deemed assessment. That legal fiction came into existence upon passage of two years time from the end of the relevant assessment year. Therefore, the limitation to pass an assessment order contained in Section 29(3) of the Act is referable only to an order of assessment of tax made after examination of records, under Section 28 of the Act or an order of assessment of tax on turnover that may have escaped assessment, under Section 29 of the Act. That period of limitation therefore remained unaffected by proceedings under Section 27 of the Act. 23. At the same time, in the event, an assessing officer, upon examination of the annual return finds that the return is incomplete or incorrect or contains wrong particulars or net tax, has not been paid according to the provision of the Act or the Rule, or if it is not accompanied by required forms of declaration or certificate, he may, even in exercise of powers vested under section 27 of the Act, serve such dealer a notice to submit his revised return within 15 da .....

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..... rovision the rule or bye-law has to be ignored. The statutory provision has precedence and must be complied with". Thus, as a principle, the subordinate legislation i.e. the Rules cannot be read so as to override the statute itself. 26. More so, in the present case, in view of the clear stipulations contained in Section 28(1)(b)(i) & (iv) of the Act, the assessing officer would remain fully competent and enabled to make an assessment of tax after examination of records, amongst others if either the dealer had not submitted the annexures of consolidated details or; revised annexures of consolidated details (of turnover and tax within time prescribed or extended) or; if such annexures of consolidated details contain wrong or incorrect particulars or; they do not accompany the declaration or; certificate for exemption or reduction in the rate of tax or; if the assessing officer is satisfied with the turnover of sale or purchase or both as the case may be and the amount of tax shown payable as disclosed by the dealer in the annexures of consolidated details are not worthy of credence etc. Thus, in part, these conditions overlap with the provisions of Rule 45(13)(a) of the Rule .....

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..... 15 days time to the assessee to revise his return. In case, he files a revised return to the satisfaction of the assessing officer, the legal fiction of deemed assessment would arise. However, if despite time so granted, the assesee fails to file his revised return, he shall necessarily be visited with a regular assessment in terms of section 28 of the Act. 30. By virtue of section 28 of the Act, to which section 27 proceedings are "subject to", it does not mean - unless a valid notice under Rule 45 of the Rules is first issued and unless the assessee fails to file a revised return in response thereto, the assessing officer would be restrained or debarred from initiating proceedings under Section 28 of the Act. It only implies, by way of first consequence, that the legal fiction of deemed assessment may not arise in every case, by way of a necessary and automatic consequence of an annual return being filed. Even before end of two years from the end of the relevant assessment year the assessing authority would have a limited right to look into the final return to satisfy itself as to correctness and completeness of that return and to see whether net tax has been paid accor .....

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..... er section 28 of the Act. In that case, the legal fiction of deemed assessment, would not operate as an embargo or restraint on the power of the assessing authority to proceed to assess the assessee after examination of records. That power is found to exist, and may be exercised independent of section 27 of the Act. Hence, the fact that the assessing officer had not issued any earlier notice or had issued an invalid notice under Rule 45(13)(a) of the Rules, would be of no consequence. That notice and that time stipulation would remain relevant only for the purpose of a deemed/self-assessment. Initiation of those proceedings would not be mandatory precondition to be satisfied to initiate assessment upon examination of records. 36. The stipulation contained in Rule 45(13)(c) of the Rules, is only an exception when a deemed assessment order may not arise i.e. in case an assessee fails to respond to a valid notice issued under Rule 45(13)(a) of the Rules, he would necessarily be visited with a regular assessment proceeding. However, that interpretation does not obstruct the exercise of powers that are found to be otherwise existing with the assessing officer under Section 28 of the Act .....

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..... under Section 28 of the Act were validly initiated. 40. The further submission advanced by learned Senior Counsel, since stipulated time mentioned in clause (c) of sub-rule (13) of Rule 45 of the Rules was not available of 19.3.2017 therefore no notice could have been issued under Rule 45(13)(a) of the Rules and consequently the deemed assessment arising under section 27 of the Act could never be made "subject to" section 28 of the Act, is found to be untenable in view of the reasoning given above. Once the power to make an assessment upon examination of the records is found to be exercisable independent of section 27 of the Act, the argument advanced by learned senior counsel does not survive. 41. Thus, in the first place, there never arose an order under Section 27 of the Act. Only a legal fiction of deemed assessment arose on 31.3.2017, for the limited purpose of creating a demand of admitted tax and entitlement of Input Tax Credit (ITC). No third purpose or inference arose. Then provisions of Section 28 of the Act being independent of Section 27 of the Act, upon the satisfaction of the assessing officer being found existing in terms of Section 28(1)(b) of the Act, th .....

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