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Judgment
Aravind Kumar, J.
Petitioner is assailing the correctness and legality of the re-assessment order and demand notice dated 10.02.2015 Annexures-E and E-1 respectively passed by the first respondent for the assessment year 2011-12.
Deputy Commissioner of Commercial Taxes, (Audit)-3.3, DVO-3 passed an order on 09.01.2014 Annexure-A whereunder certain excess input taxes is allowed to be carried forward. A notice under section 39(2) under the Karnataka Value Added Tax Act, 2003 (for short ''Act'') for reassessment came to be issued on 25.11.2014 Annexure-B. Initially petitioner filed objections on 08.12.2014 and thereafter additional objections came to be filed on 19.01.2015 vide Annexures-C and D respectively and after considering the plea of the petitioner-assessee first respondent namely Deputy Commissioner of Commercial Taxes, (Audit)-3.4, DVO-3 passed an order under section 39(2) of the Act on 10.02.2015 Annexure-E. Assailing the validity of notice dated 25.11.2014 Annexure-B for reassessment being illegal and as such re-assessment order passed under section 39(2) read with section 72(2) and 36(1) of the Act for the year 2011-12 is void is under challenge in these writ petitions.
I have heard the arguments of Sri. M.N. Shankare Gowda, learned counsel appearing for petitioner and Sri. T.K. Vedamurthy, learned HCGP appearing for respondents. Original records have been produced by learned HCGP and same have been perused.
Contentions of Sri. M.N. Shankare Gowda, learned counsel appearing for petitioner are as under:
"(i) Order dated 09.01.2014 Annexure-A is an order passed under section 38(1) and not an order passed under section 39(1) and as such question of issuing notice under section 39(2) and passing an order thereunder for re-assessment does not arise;
(ii) First respondent is not authorized by second respondent under Rule 46 of the Karnataka Value Added Tax Rules to initiate proceedings under section 39(2) of the Act;
(iii) Order dated 09.01.2014 would indicate that it is an assignment not for VAT transaction but it relates to CST transaction and hence there is no authorization in the eye of law;
(iv) In the absence of valid authorization the reassessment order would be one without jurisdiction;
(v) Deputy Commissioner of Commercial Taxes, (Audit)-3.4 has not applied his mind to re-assess the petitioner under section 39(2) since the very notice dated 25.11.2014 Annexure-B would indicate that with an intention to re-examine the turnover and tax liabilities, a notice came to be issued calling for production of registers which is an indicator to the fact that there was no application of mind at the time of issuance of notice for reassessment. Hence, he contends order of re-assessment is bad in law."
In support of his submission he has relied upon following Judgments:
"1. (2010) 69 KLJ 290 - Model Bucket and Attachments Private Limited, Dharwad Vs The Deputy Commissioner of Commercial Taxes (DM), Hubli
(2010) 68 KLJ 17 - R.C. India, Bangalore Vs State of Karnataka."
Per contra, Sri. T.K. Vedamurthy, learned HCGP appearing for respondents would support not only the order of re-assessment but also notice issued prior to it and contends that order dated 09.01.2014 though does not specifically indicate that it is an order passed under section 39(1) of the Act it is factually one such order as could be seen from said order itself. He would submit that authorization issued on 30.11.2013 by Commissioner of Commercial-Taxes in favour of Deputy Commissioner of Commercial Taxes, (Audit) 3.3 would clearly indicate that pursuant to same reassessment was done and as such it is an order passed under section 39(1). He would also contend that subsequently the assignment given to Deputy Commissioner of Commercial Taxes, (Audit)-3.3 came to be withdrawn by Commissioner on 19.11.2014 and reassigned to Deputy Commissioner of Commercial Taxes, (Audit)-3.4 who pursuant to the same has issued the impugned notice dated 25.11.2014 and has passed the impugned re-assessment order dated 10.02.2015 Annexures-B and E respectively. Hence, he prays for dismissal of the writ petitions.
Having heard the learned advocates appearing for the parties and on perusal of the case papers as well as records made available by learned HCGP it would emerge that order dated 09.01.2014 does not indicate that it is an order passed under section 38(1) of the Act. It is clearly mentioned therein that by virtue of assignment No. 19026573 assessee was called upon to produce the books of accounts for verification which related to the period 2011-12 and in response to the same, the authorized representative of petitioner-assessee appeared and produced the books of accounts and on scrutiny of the same, an order came to be passed on 09.01.2014, which is apparently an order passed under section 39(1) and it cannot be construed as an order being passed under section 38(1) as contended by Sri. M.N. Shankare Gowda, learned counsel appearing for petitioner, inasmuch as an order under section 38(1) is a deemed assessment order based on the returns filed by assessee and accepting the same without calling for production of books of accounts. Whereas in the instant case assessing officer has called upon the assessee/petitioner to produce books of accounts and after scrutiny of records assessment order dated 09.01.2014 came to be passed. It also requires to be noticed that the Commissioner in exercise of power under Rule 46 has passed an order on 30.11.2013 authorising the Deputy Commissioner of Commercial Taxes, (Audit)-3.3 for re-assessment of petitioner return/accounts for the year 2011-12 and such assignment is found in the original records and annexures thereto particularly Sl. No. 43 would indicate that the Commissioner had authorized the Deputy Commissioner of Commercial Taxes, (Audit)-3.3 to reassess the petitioner''s accounts for the year 2011-12. Hence, for these reasons first contention raised by learned counsel for petitioner stands rejected.
Subsequent to passing of re-assessment order under section 39(1), the first respondent herein namely Deputy Commissioner of Commercial Taxes, (Audit)-3.4, DVO-3 has issued notice dated 25.11.2014 vide Annexure-B which is purported to be under section 39(2) read with section 72(2) and 36(1) of the Act and same has been impugned in the present petitions contending inter alia that as already noticed herein as one being without jurisdiction. This court in order to satisfy itself as to whether the said re-assessment proceedings initiated by Deputy Commissioner of Commercial Taxes, (Audit)-3.4 is based on the assignment made by the Commissioner in exercise of his power under Rule 46 or not had summoned the original records and same has been made available. A perusal of original records would clearly indicate that by order dated 19.11.2014 passed by Commissioner he has not merely withdrawn the earlier assignment made to Deputy Commissioner of Commercial Taxes, (Audit)-3.3 but has also assigned the same to Deputy Commissioner of Commercial Taxes, (Audit)-3.4 for determination of tax payable and to frame reassessment order as could be seen from the order dated 19.11.2014 and for immediate reference operative portion of the said order is extracted herein below:
At this juncture itself it would be appropriate to note the contention of Sri. M.N. Shankare Gowda, learned counsel appearing for petitioner. He has contended that reason assigned is for verification of CST transaction and reassessment initiated is in respect of VAT transaction and as such it cannot be construed as a valid assignment. Though at first blush said argument looks attractive, on deeper examination it would not hold water, for the simple reason namely it is the internal audit wing which has assigned the reason for carrying out verification of CST transaction. However, Commissioner while ordering for re-assessment and transferring file from Deputy Commissioner of Commercial Taxes, (Audit)-3.3 to Deputy Commissioner of Commercial Taxes, (Audit)-3.4 has categorically assigned it to Deputy Commissioner of Commercial Taxes, (Audit)-3.4 to carry out re-assessment in respect of VAT transaction and as such second contention also cannot be accepted and it stands rejected.
There cannot be any dispute with regard to the proposition laid down by this court in the case of Model Bucket and Attachments Private Limited, Dharwad Vs The Deputy Commissioner of Commercial Taxes (DM), Hubli reported in 2010 (69) Kar.LJ 290 whereunder Co-ordinate Bench of this court has held that re-assignment can be done only by prescribed authority referred to under section 39(1) of the Act read with Rule 46. It has been held by the Coordinate Bench of this court in said Judgment as under:
"9. A reading of the provisions of Section 39(1) it makes clear that it confers power for reassessment and further reassessment and to levy tax, penalty and interest thereon. However, reassessment could be done only by the prescribed authority. The prescribed authority referred to under Section 39(1) of the Act means a authority mentioned under the Rules. Under Rule 46 of the Rules requires the Commissioner to authorize any officer to make reassessment under Section 39. By reading of both the provisions, it is clear that the reassessment must be by the authorized person and authorized person is one who has been authorized by the Commissioner for Commercial Tax. When law requires that the Commissioner shall authorize the officer, the authorization must be an expressed authorization.
In this case, the State has not disputed that there is no expressed authorization except relying on the e-mail print out. No other material is produced to show that the Commissioner had issued any authorization to the officer. The authorized officer must be a person competent to reassess the tax in consonance with the provisions of Section 39".
It was noticed by Co-ordinate Bench of this court in Model Bucket''s case referred to supra that State therein had not disputed the fact that there is no express authorization except relying on ''e-mail print out'' to contend that it is an authorization, and same came to be rejected by this court. However, in the instant case we are not placed in said factual situation at all. On the other hand facts in the instant case as could be seen from the original records would indicate that specific authorization came to be issued by Commissioner in exercise of his power under section 39(1) and Rule 46 dated 19.11.2014 whereunder Deputy Commissioner of Commercial Taxes, (Audit)-3.4 has been authorized to re-assess the petitioner''s accounts for the year 2011-12 and said order namely dated 19.11.2014 which is available in the original records though in the preamble indicates that it is transfer of files from one authority to another authority operative portion of the order passed by Commissioner when read would leave no doubt in the mind of this court to hold that it is an authorization issued to the transferee officer namely Deputy Commissioner of Commercial Taxes, (Audit)-3.4 not only to determine tax liability but also authorizing him to frame reassessment proceedings. Hence, assignment in question is held to be valid as it is in consonance with the Act and Rules made thereunder. Hence, I do not find any merit in these writ petitions, accordingly writ petitions stand rejected. No costs.
It is needless to state that petitioner if so advised, would be entitled to file a statutory appeal against order of reassessment dated 10.02.2015 Annexure-E within three weeks from today. In the event of such appeal being filed appellate authority shall not insist for application for condonation of delay being filed and it shall examine such appeal on merits and in accordance with law.
Registry is directed to return the certified copy of impugned order dated 10.02.2015 Annexure-E if sought for, on same being substituted with a photo copy duly attested by learned counsel for petitioner.
Ordered accordingly.