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State of Gujarat v/s Pepsico India Holdings Pvt. Ltd.

    Tax Appeal No. 689 of 2015

    Decided On, 16 October 2015

    At, High Court of Gujarat At Ahmedabad

    By, THE HONOURABLE MS. JUSTICE HARSHA DEVANI & THE HONOURABLE MR. JUSTICE ABDULLAH GULAMAHMED URAIZEE

    For the Appellant: Maithili Mehta, Assistant Government Pleader. For the Respondent: S.N. Soparkar, Amar N. Bhatt, Advocates.



Judgment Text

Harsha Devani, J.

1. The appellant State of Gujarat in this appeal under section 78 of the Gujarat Value Added Tax Act, 2003 has challenged the order dated 17.10.2014 passed by the Gujarat Value Added Tax Tribunal at Ahmedabad in Second Appeal No. 17 of 2008 by proposing the following questions, stated to be substantial questions of law:--

"(1) Whether the Hon'ble Tribunal in the facts and circumstances has erred in law and in facts in holding that reassessment order is time barred?

(2) Whether the Hon'ble Tribunal in the facts and circumstances has erred in law and in facts in holding that liability of additional tax can be adjusted against incentive limit and it is not required to be paid in cash?"

2. The facts stated briefly are that the respondent assessee was initially assessed for the calendar year 2000 on 27.7.2004 and a total demand of Rs. 3,88,44,094/- came to be adjusted against the exemption limit and accordingly no demand was raised in the assessment. The assessing authority thereafter took the matter in reassessment and raised a demand of Rs. 52,61,140/- on the ground that the assessee should have paid additional tax by way of cash payment instead of adjusting the same against the exemption limit under the respective scheme. The assessee preferred an appeal before the first appellate authority, which dismissed the appeal. The assessee carried the matter in further appeal before the Tribunal, which by the impugned order dated 17.10.2014, allowed the appeal inter alia on the ground that reassessment under section 44 of the Gujarat Sales Tax Act, 1969 (hereinafter referred to as "the Act") was barred by limitation.

3. Ms. Maithili Mehta, learned Assistant Government Pleader for the appellant assailed the impugned order by placing reliance upon the orders passed by the assessing authority and the first appellate authority. It was submitted that the assessee having not disclosed the correct facts in the declaration filed by it, the Assessing Authority was justified in invoking the provisions of section 44(a) of the Act. It was submitted that the Tribunal was, therefore, not justified in holding that the reassessment was barred by limitation.

4. On the other hand, Mr. S.N. Soparkar, learned senior advocate with Mr. Amar Bhatt, learned advocate for the respondent invited the attention of the court to the assessment order dated on 27.7.2004 to point out that the assessing authority for the period till 31.3.2000 has computed the tax at 8% and 15% respectively and for the period April, 2000 to 31.12.2000, has computed the tax at 8.8% and 16.5% respectively, by adding 10% additional tax. It was pointed out that in the assessment order the assessing authority has itself adjusted the amount of tax payable, including the additional amount, against the exemption limit. It was submitted that, therefore, all facts were there before the assessing authority which has duly applied its mind to the said facts and after considering the additional tax payable, has adjusted the same against the exemption limit. Under the circumstances, there is no question of any concealment of any material particulars or furnishing of incorrect declaration of return so as to warrant invocation of the extended period of limitation under section 44(a) of the Act. It was submitted that in case where the provisions of clause (a) of section 44 are not satisfied, the limitation for making re-assessment is five years. In the present case, the period of five years in relation to the year 2000 expired on 31.12.2005 whereas the reassessment proceedings came to be initiated on 4.2.2006 which was clearly beyond a period of five years. It was, accordingly, submitted that the Tribunal has rightly held that the reassessment under section 44 was barred by limitation and, therefore, it is not necessary to go into the merits of the findings recorded by the Tribunal on other issues and that the appeal deserves to be dismissed on this ground alone.

5. This court has considered the submissions advanced by the learned counsel for the respective parties and has perused the record of the case.

6. The facts reveal that it is an admitted position that the proceedings under section 44 of the Act have been initiated beyond a period of five years. Section 44 of the Act makes provision for "Reassessment of turnover escaping assessment" and lays down that if the Commissioner has reason to believe that any turnover of sales or turnover of specified sales or turnover of purchases of any goods chargeable to tax under the Act has escaped assessment or has been under-assessed or assessed at a lower rate in respect of any period in an order of assessment under section 41, or if the Commissioner has reason to believe that any deduction has been wrongly given or any drawback, set off or refund has been wrongly granted in any order of assessment so made then the Commissioner may, (a) where he has reason to believe that the dealer has concealed such sales or specified sales or purchases or any material particulars relating thereto, or has knowingly furnished incorrect declaration or returns, at any time within eight years, and (b) in any other case, at any time within five years. Therefore, for the purpose of invoking the extended period of limitation under clause (a) of section 44 of the Act, the appellant is required to make out a case that the reassessment proceedings had been initiated on account of the Commissioner having reason to believe that the dealer had concealed such sales or specified sales or purchases or any material particulars relating thereto, or has knowingly furnished incorrect declaration or return. On a perusal of the orders passed by the assessing authority as well as the first appellate authority, it is apparent that nothing is indicated therein as to what was the nature of concealment or incorrect declaration or return furnished by the assessee. A perusal of the order of assessment dated 27.7.2004 clearly shows that the assessing authority at the relevant time had taken into consideration the additional tax payable under section 4A of the Act and had duly computed the tax liability after considering the component of additional tax and had adjusted the same against the exemption limit. Under the circumstances, on the facts as emerging from the record, the Commissioner had no reason to believe that the assessee had concealed any material particulars or had furnished incorrect declaration or return. Therefore, the ingredients of clause (a) of section 44 of the Act are clearly not satisfied. Consequently, the Assessing Authority was not justified in invoking the extended period of limitation under section 44(a) of the Act. The Tribunal, therefore, did not commit any legal error in holding that the reassessment was barred by

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limitation. Having regard to the fact that the reassessment under section 44 of the Act is itself barred by limitation, it is not necessary to enter into the merits of the other issues adjudicated by the Tribunal. 7. In the light of the above discussion, the first question proposed by the appellant viz., whether the Tribunal was justified in holding that the reassessment is time barred, cannot be said to be a substantial question of law arising out of the impugned order so as to warrant interference. Considering the fact that the order of reassessment has been held to be time barred, it is not necessary to enter into the merits of the other questions proposed by the appellant. In the result, the appeal fails and is, accordingly, dismissed.
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