TMI Blog2021 (4) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... icient to vest power in the respondent/authority to exercise suo moto revision merely because an order is erroneous - there must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. While discussing the aspects regarding the payments made to the sub contractors, there is no categorical finding given as to whether the assessee was, indeed, entitled to claim such benefit or not entitled to the same. In the absence of such finding being given by the respondent/revisional authority, the matter has been simply remanded to the Prescribed Authority under the KVAT Act to verify the issue based on certain observations made - the respondent/Authority was not right in remanding the matter to the Prescribed Authority to verify the issues with regard to certain observations made during the course of the order of purchases and sub contractors and to make a fresh re-assessment under Section 39(1) of the KVAT Act without giving a finding as such and in categorical terms as to whether the appellant/as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the sub contractors through banking transactions and the details were reflected in the books of accounts. The said sub contractors had filed their returns of turnover and have discharged their tax liabilities on the turnovers in accordance with their books of accounts. The appellant had produced all the details of the sub-contractors. The certificates issued by them declaring the amounts paid by the appellant in the returns of turnover filed by them and that they have discharged the tax due on the taxable turnover. 5. It is the case of the appellant that under Rule 3(2)(i-1) of the KVAT Rules the appellant is eligible to claim deduction of the entire sub-contractors' payments made during the year. Accordingly, the appellant claimed the said deductions along with the returns filed by the appellant for the respective years. The Prescribed Authority (PA) initially passed an assessment order and thereafter re-assessment order for the year 2008-09, but in respect of other assessment years, the Prescribed Authority passed only an assessment order and issued an audit report by accepting the total and taxable turnovers declared by the appellant during the respective tax per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to the respective notices issued by the respondent/revisional authority, the appellant/ assessee filed its reply. Appellant/assessee was heard in the matter and the impugned orders at Annexure - A in the respective appeals were passed by the respondent. Being aggrieved, the assessee has preferred these appeals. 10. We have heard Sri Sandeep Huligol, learned counsel for the appellant/assessee and learned Additional Government Advocate, Sri K. Hemakumar and perused the material on record. 11. Appellant's counsel made a two-fold submission: firstly, he submitted that the respondent was not right in issuing the impugned notices and exercising suo moto revisional jurisdiction in the instant case as the first appellate authority had granted relief to the appellant/assessee by placing reliance on the judgment of the Hon'ble Supreme Court in the case of Larsen and Toubro. That when the first appellate authority had granted relief to the appellant/assessee placing reliance on the judgment of the Hon'ble Supreme Court, then the suo moto revision of the order of the first appellant authority would not lie. He next contended that the relief granted to the appellant/assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the first appellate authority as well as the Prescribed Authority and remanded the matter to the Prescribed Authority to verify the issues keeping in view the observations made in the order that purchases and sub contractors and to conclude re-assessment under Section 39(1) of the KVAT Act is as per law. Learned counsel for the appellant/assessee contended that the respondent/Authority has not taken a categorical stand in the matter and instead simply remanded the matter in toto to the respondent/Authority as well as the earlier order of the Prescribed Authority. According to the learned counsel for the appellant, there cannot be a second innings in exercise of the jurisdiction by the respondent/Authority, which is in the form of suo moto revisional jurisdiction. 14. Learned counsel for the appellant contended that the said exercise of jurisdiction was also faulty for the reason that on merits of the matter this is not a case where there was any prejudice caused to the Revenue and in the absence of such a precondition being met, setting aside of the orders of the first appellate authority as well as Prescribed Authority in toto and remanding the matter to the Presc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction made by the appellant/assessee insofar as the payments made to the sub-contractors are concerned. It is the case of the appellant/assessee that the sub-contractors have offered the said amounts for tax as they have indicated the said payments made to them in their returns and accordingly, the said amounts have been taxed. That no amount has escaped taxation since the appellant has made the respective payments to its sub-contractors who have offered the same for tax in their respective returns. All that the appellant claimed was deduction in respect of the payments made to the sub-contractors. It is also not a case that the sub-contractors have not offered the amount received from the appellant/assessee towards taxation. Therefore, the contention of the appellant s counsel is that it was wholly unnecessary to have initiated the suo moto revisional proceedings. Also, assuming that the initiation was justified, the manner in which the revisional power has been exercised so as to simply remand the matter to the Prescribed Authority for re-assessment under Section 39(1) of the KVAT Act was wholly unwarranted in the absence of giving any finding as to the controversy with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder is erroneous, but not prejudicial to the interest of the Revenue, the power of suo moto revision cannot be exercised. Every erroneous order of an authority inferior to the revisional authority cannot be a subject matter of revision. In the absence of the second requirement being fulfilled, namely, the erroneous order was prejudicial to the interest of Revenue. For that, there must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. 20. Though the expression prejudicial to the interest of the Revenue has not been defined as such, under the KVAT Act, it would imply that on account of an erroneous assessment or re-assessment the revenue lawfully due to the State has not been realised or paid by the assessee. In order to determine all these aspects, there must be material on record to be called for by the respondent/Additional Commissioner to satisfy, prima facie, that the aforesaid two circumstances existed before exercising suo moto powers otherwise, the exercise of such power i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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