JUDICIARY ON GST AUDIT

JUDICIARY ON GST AUDIT

[2002] 119 STC 0460W Patna High Court

M/s. Eureka Forbes Ltd., petitioner, a limited. Petitioner has challenged notices issued by the respondent-Deputy Commissioner of Commercial Taxes, Jamshedpur, under section 19(1) read with section 17(2) of the Bihar Finance Act, 1981; orders of reassessment and orders passed in revisional applications by the Commissioner of Commercial Taxes, Patna, by which the orders of reassessment have been upheld and the revision petitions have been dismissed.

It was under impugned notices issued on different dates in the year, 1993, issued under section 19(1) read with section 17(2) of the Bihar Finance Act, 1981, the petitioner was asked by the respondent-Deputy Commissioner, Commercial Taxes, Jamshedpur as to why reassessment for the aforesaid periods be not done. The petitioner filed reply objecting the reassessments stating therein that the reassessments were not permissible, as it amounted to review of earlier assessment, merely on the basis of change of opinion and not on the basis of any information and/or other documents.

At this stage it is to be taken into note that the reassessments in these cases for the aforesaid period have been made by the respondent-Deputy Commissioner, Commercial Taxes, solely on the basis of an "audit report". In the State of Bihar, the respondent-State has levied tax at the rate of 8 per cent with regard to the "machineries"; whereas 12 per cent of tax is levied with respect to "electrical goods". The vacuum cleaners, which were originally assessed at the rate of 8 per cent by the assessing authority, were so assessed treating the same as "machineries". Subsequently the audit party while submitting audit report gave its opinion that the vacuum cleaners are "electrical goods" and for that the assessment should have been done at the rate of 12 per cent instead of 8 per cent, as has been done in the case of the petitioner. It was on the basis of such opinion of the audit party as mentioned in the audit report orders of reassessment have been passed, which have been confirmed by the revisional authority.

Counsel for the petitioner challenged the reassessment and thereby the impugned orders on different grounds, as enumerated below:

               (i) Audit report cannot constitute information, as enumerated under section 19(1) of the Bihar Finance Act, 1981 and on that basis, no proceeding for reassessment can be initiated;

               (ii) There is no new material on the record to make reassessment in terms with section 19(1) of the Act aforesaid;

               (iii) Mere change of opinion, as has been made by the audit party and/or by the Deputy Commissioner, Commercial Taxes, Jamshedpur, cannot be a basis for reassessment in terms with section 19(1) of the aforesaid Act; and

Patna High Court decided that

               (i) A mere change of opinion and/or second thought by any authority on the same set of facts and materials on record would not constitute "information" under section 19(1) of the Bihar Finance Act, 1981;

               (ii) There must be some material and/or facts on the record which had not been taken into account at the time of original assessment, to make reassessment in terms with section 19(1) of the Bihar Finance Act, 1981; and

               (iii) "Audit report" cannot constitute information", as enumerated under section 19(1) of the Bihar Finance Act, 1981, for the purpose of reopening of assessment.

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