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Judgment
B.V. Nagarathna, J.
Petitioner is a Private Limited Company engaged in execution of civil works contracts in the State. It is registered as a dealer under the provisions of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the (Act'') and has been assigned Tax Identification Number (TIN). In respect of the tax period from April 2010 to March 2011, petitioner filed its returns under Section 35 of the Act. The said returns were accepted under sub-section (1) of Section 35 of the Act. In fact, during that period petitioner had executed certain civil works in the form of construction of roads, drains, culverts and laying of HDPE dual water supply pipeline at the proposed IT/BT park near Bangalore International Airport, Bangalore. The said contract was awarded by Karnataka Industrial Area Development Board (KIADB) in favour of M/s. Amrutha Constructions Private Limited, Bangalore, as the main contractor and the latter in turn sub-contracted the entire works to the petitioner herein. After the audit of the books of accounts of the petitioner, re-assessment proceedings were initiated under sub-section (1) of Section 39 of the Act and on 6.6.2014, an order was made holding that petitioner was entitled to refund of Rs. 5,47,397/- after considering the tax deduction certificate which had been issued by KIADB in favour of the petitioner herein. The same is evidenced by Annexures-C and C1 to the writ petitions. When the petitioner was expecting refund of the said amount, once again re-assessment proceedings were initiated under Section 39(2) of the Act and an order was made on 21.10.2014 (Annexure-A to the writ petitions) holding that petitioner was in arrears of tax, interest and penalty to an extent of Rs. 2,01,36,424/-. Accordingly, demand was made on the petitioner. Thereafter, respondent has once again passed one more order under sub-section (2) of Section 39 of the Act, on 10.11.2014, by modifying earlier assessment order dated 21.10.2014. Copies of that order is produced as Annexure-B and reduced demand (Annexure - B1) was made on the petitioner to an extent of Rs. 1,68,81,584/-.
Being aggrieved by order dated 21.10.2014 (Annexure-A) and order dated 10.11.2014 and demand notices at Annexures � A1 and B1 respectively, petitioner is before this Court.
I have heard learned counsel for petitioner and learned Government Pleader for the respondent and perused the material on record.
During the course of submission, learned counsel for petitioner pointed out that assessing authority cannot review assessment order or pass any fresh order or even modify that order except under sub-section (2) of Section 39 of the Act only when further evidence has come to the notice of the assessing authority. He would submit that reassessment proceedings would attain finality when once an order is made under sub-section (1) of the Section 39 of the Act and a fresh reassessment cannot be made except when further evidence has come to the notice of the assessing authority. In the instant case, material evidence was already before the assessing authority in the form of TDS Certificate which was issued by KIADB in the name of the petitioner and there was no other evidence which came to light after passing of the assessment order as per Annexure-C. He therefore contended that assessing authority has no jurisdiction to once again pass orders as per Annexure-A1 and B1 and hence he submitted that those orders may be quashed. In support of these submissions, learned counsel has placed reliance on two orders of this Court passed in the case of, M/S. VARS Builders in Writ Petition No. 13342/2009 and connected writ petitions dated 22.6.2010 and in the case of ELJEN PROMOTERS N. BUILDERS, reported in 2010 (69) Kar. L.J. 334 (HC).
Per contra, learned Government Pleader appearing for respondents supported the impugned orders and contended that the authority had jurisdiction to pass orders at Annexures A1 and B1. Referring to the statement of objections, he contended that the main contract was awarded to M/s. Amrutha Constructions Private Limited and therefore TDS certificate had to be issued in favour of that entity, but in the instant case, the benefit of TDS has been availed by the petitioner, who was only a sub contractor. He therefore submitted that there is no merit in the writ petitions. He also contended that under Clause-(2)(e) of Section 39, if there are any deductions which have been wrongly allowed, then the concerned authority may pass a fresh order despite making reassessment order under sub-section (1) of Section 39 of the Act.
In reply, learned counsel for petitioner pointed out that sub-section (2) of Section 39 has been amended with effect from 1.4.2013 and the same has a prospective operation, but in the instant case assessment is for a period 2010-11 and therefore the amended provision would not apply to the case on hand.
Sub-section (2) of Section 39 reads as under:
"39, Re-assessment of tax
(2) Where after making a re-assessment under this Section.-
(a) any further evidence comes to the notice of the prescribed authority; or
(b) if the prescribed authority has reason to believe that the whole or any part of the turnover of a dealer in respect of any tax period has escaped re-assessment to tax; or
(c) tax has been under re-assessed; or
(d) has been re-assessed at a rate lower than the rate at which it is assessable under this Act; or
(e) Any deductions or exemptions have been wrongly allowed in respect thereof, the prescribed authority may, notwithstanding the fact that whole or part of such escaped turnover was already before the said authority at the time of re-assessment, proceed to make any further reassessments in addition to such earlier reassessment.
Having heard the learned counsel for parties and on perusal of the material evidence, it is observed that in so far as assessment year is concerned, it is not the aforesaid amended provision which is applicable. Sub-section (2) of Section 39 as it stood prior to the amendment reads as under:-
"39. Re-assessment of tax
(2) Where after making a re-assessment under this Section, any further evidence comes to the notice of the prescribed authority, it may make any further re-assessments in addition to such earlier reassessment. "
The only condition for making further reassessment in addition to earlier assessment is when the authority takes notice of further evidence. But in the instant case, there was no further evidence which came to the notice of the assessing authority. Merely because the assessment in respect of M/s. Amma construction was made subsequently those facts could not have been taken note of in the instant case. There must be further evidence which is noticed by the assessing authority so as to make further assessment or reassessment. There being no further evidence which came to the notice of the assessing authority and the evidence regarding deduction on the basis of TDS certificate being already before the assessing authority which made reassessment as per Annexure-C and granted an order of refund of excess tax paid could not have later on interfered with the reassessment order vide Annexures � A1 and B1. Also, the assessing authority could not go into the question as to whether TDS certificate could have been issued in the name of petitioner or not, after the completion of assessment proceedings. The assessing authority thus did not have any jurisdiction to do so and therefore subsequent assessment orders at Annexures A1 and B1 and demand notices at Annexures-A2 and B2 respectively are quashed. In this regard, reliance could be placed on aforesaid two orders passed by this Court which have been relied upon by the learned counsel for petitioner.
However, if the respondent/department is of the view that the assessment made at Annexure-C calls for any further interference, then liberty is reserved to them to take such action in accordance with law.
At this stage, learned counsel for petitioner Seeks a direction for refund of the excess amount determined in terms of Annexure-C1.
Liberty is reserved to the petitioner to make a representation and if such a representation is made, the same shall be considered in accordance with law and expeditiously within a period of two months from the date of representation.
Writ petitions are disposed in the aforesaid terms.