IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF OCTOBER, 2019 BEFORE:
THE HON’BLE MRS. JUSTICE S.SUJATHA WRIT PETITION No.30531/2018 (T – RES) BETWEEN:
M/s ALLIANCE INFRASTRUCTURE PROJECTS (P) LTD., REP. BY ITS DIRECTOR SRI KAMALAKAR M. SHET AGED ABOUT 73 YEARS NO.85, KARTHIK NAGAR, MARATHAHALLI, K.R. PURAM, OUTER RING ROAD, BENGLAURU-560037 ... PETITIONER [BY SRI K.HEMA KUMAR, ADV.] AND:
1 . THE COMMERCIAL TAX OFFICER (AUDIT)-4.5, VTK-2, A-BLOCK, 1ST FLOOR, BESIDES NATIONAL GAMES VILLAGE, KORAMANGALA, BENGALURU-560047 2 . THE COMMISSIONER OF COMMERCIAL TAXES IN KARNATAKA, VANIJYA THERIGE KARYALAYA, 1ST MAIN, GANDHINAGAR, BENGALURU-560009 …RESPONDENTS [BY SRI T.K.VEDAMURTHY, AGA.] THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER OF RE-ASSESSMENT BEARING CAS No.U/VAT-
22668437.03 AND THE CONSEQUENTIAL NOTICE OF DEMAND, BOTH DATED 30.05.2018 PASSED BY THE FIRST RESPONDENT UNDER SECTION 39(1) OF THE ACT (ANNEXURES-P AND Q), PERTAINING TO THE TAX PERIOD MAY, 2007.
THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R Heard the learned counsel for the respective parties.
2. The petitioner has assailed the order of re- assessment passed by respondent No.1 under Section 39(1) of the Karnataka Value Added Tax Act, 2003 and the consequential notice of demand both dated 30.05.2018, primarily on the ground that the reassessment order impugned, is barred by limitation.
3. The petitioner is a Private Limited Company incorporated under the provisions of the Companies Act, 1956 and registered under the provisions of the Karnataka Value Added Tax Act, 2003 (‘Act’ for short). The petitioner is engaged in the execution of works contract of construction of residential/commercial building for sale. The Deputy Commissioner of Commercial Taxes (Assessing Authority) had passed an order of re-assessment dated 16.01.2010 under Section 39(1) of the Act relating to the tax periods April, 2007 to September, 2007 levying tax on certain receipts. Being aggrieved, the petitioner had preferred appeals before the First Appellate Authority under Section 62 of the Act. The appeals filed by the petitioner came to be allowed vide order dated 31.05.2010. Pursuant to the said order, the Additional Commissioner of Commercial Taxes (Revisional Authority) exercising power under Section 64(1) of the Act, initiated the suo-moto revision proceedings and the same came to be dropped in terms of the order dated 13.06.2012. Subsequently, respondent No.2 – Commissioner of Commercial Taxes initiated proceedings under Section 64(2) of the Act and passed an order on 17.07.2014 setting aside the orders passed by the First Appellate Authority as well as the Revisional Authority under Section 64(1) of the Act and the case was remanded to the Assessing Authority for re-verifying the taxable contract receipts for the period April and May, 2007 and re-do the assessment de-novo in the light of the observations made in the SMR order and as per law. Consequent to the said order, the Assessing Authority has passed the re-assessment order dated 30.05.2018 and issued the demand notice in terms of the tax liability quantified. Being aggrieved by the said order of re-assessment dated 30.05.2018 and the demand notice, the petitioner is before this Court.
4. Learned counsel appearing for the petitioner would submit that sub-section (1) of Section 40 of the Act contemplates that an assessment under Section 38 or reassessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after five years after the end of the prescribed tax period. In terms of sub-section (3), in computing the period of limitation specified for assessment or re- assessment, as the case may be under the Act, the period taken for disposal of any appeal against an assessment or other proceeding by the appellate authority, a tribunal or competent court or any revisional proceeding by the Joint Commissioner or the Additional Commissioner or the Commissioner shall not be taken into account in computing such period for assessment or reassessment as the case may be. Thus, the order of re-assessment dated 30.05.2018, if examined in the light of these provisions, the assessment impugned is apparently barred by limitation. Hence, on this ground, the writ petition deserves to be allowed setting aside the re-assessment order impugned herein.
5. Learned Additional Government Advocate appearing for the revenue would submit that the original assessment order relating to the tax periods in question was passed by the prescribed authority on 16.02.2010, against which appeals were preferred by the assessee and the Appellate Authority allowed the appeals vide order dated 31.05.2010 which was taken up in revision by the Additional Commissioner under Section 64(1) of the Act and the same came to be dropped on 13.06.2012. Subsequently, the Commissioner of Commercial Taxes exercising powers under Section 64(2) of the Act has set aside the orders of the First Appellate Authority as well as Revisional Authority vide order dated 17.07.2014 and remanded the matter to the Assessing Authority to re-do the assessment de-novo. The order of the prescribed authority/original assessing authority dated 30.05.2018 passed in compliance with the order of the Commissioner dated 17.07.2014 is well within the time prescribed under Section 40 (1) of the Act and hence, the writ petition deserves to be rejected.
6. I have carefully considered the submissions of the learned counsel appearing for the parties and perused the material on record.
7. Section 40(1) of the Act reads thus:-
“An assessment under Section 38 or reassessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after five years after the end of the prescribed tax period.”
.
8. Sub-section (3) reads thus:-
“In computing the period of limitation specified for assessment or re-assessment, as the case may be under the Act, the period taken for disposal of any appeal against an assessment or other proceeding by the appellate authority, a tribunal or competent court or any revisional proceeding by the Joint Commissioner or the Additional Commissioner or the Commissioner shall not be taken into account in computing such period for assessment or reassessment as the case may be.”
9. The contention of the petitioner that in computing the period of limitation, the period taken for disposal by the Appellate Authority and Revisional Authority shall not be taken into account in computing the period for assessment or re-assessment and as such the order impugned is barred by limitation cannot be countenanced for the reason that the re-assessment order impugned is passed pursuant to the directions issued by the Commissioner of Commercial Tax exercising the powers under Section 64(2) of the Act.
10. Section 64(2) of the Act is quoted hereunder for ready reference:-
“The Commissioner may on his own motion call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any officer subordinate to him 1[or the Authority for Clarification and Advance Rulings constituted under Section 60] is erroneous in so far as it is prejudicial to the interest of the revenue, he may if necessary, stay the operation of such order for such order for such period as he deems fit and after giving the person concerned an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment or directing a fresh assessment.”
11. In terms of the said provisions, the Commissioner is empowered to pass such order as the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment or directing a fresh assessment. A direction issued by the Commissioner to do the fresh assessment would not come within the purview of sub- section [3] of Section 40 of the Act. The period of limitation would start running from the date of passing of the order by the Commissioner under Section 64(2) of the Act directing the fresh assessment. If that to be considered in terms of sub-section [1] of Section 40 of the Act, the order impugned is well within the time prescribed.
12. Hence, the arguments advanced by the learned counsel for the petitioner fails and the writ petition is dismissed with liberty to the petitioner to avail the alternative remedy of appeal available under the Act. If such an appeal is preferred within a period of two weeks from the date of receipt of certified copy of the order, the same shall be considered by the Appellate Authority in accordance with law on merits without objecting to the aspect of limitation.
Sd/- JUDGE PMR