Neutral Citation No.

- 2023:AHC:236496-DB

Court No. - 39

Case :- WRIT TAX No. - 248 of 2021

Petitioner :- M/S Flipkart India Pvt. Ltd.

Respondent :- State Of U P And 4 Others
Counsel for Petitioner :- Nishant Mishra,Tanmay Sadh
Counsel for Respondent :- C.S.C.

Hon'ble Saumitra Dayal Singh,J.

Hon'ble Shiv Shanker Prasad,J.
1. Heard Mr. Tarun Gulati, learned Senior Advocate assisted by Mr.

Kishore Kunal (both through video conferencing) alongwith Mr. Nishant

Mishra, learned counsel for the petitioner and Mr. Ankur Agarwal, learned

Standing Counsel for the State-respondents.

2. The present petition was originally filed to assail the proposal dated

29.05.2018 issued by the Additional Commissioner, Grade-I, Commercial

Tax, Ghaziabad Zone-I, Ghaziabad issued under Section 29 (7) of the Uttar

Pradesh Value Added Tax Act, 2008 (hereinafter referred to as the “Act”) as

also the consequent order dated 30.01.2021 (as modified on 08.02.2021)

passed by that authority, granting permission to the petitioner’s assessing

authority, namely, Deputy Commissioner, Sector-7, Commercial Tax,

Ghaziabad, to re-assess the petitioner for the A.Y. 2012-2013 (U.P. and

Central), in the extended period of limitation provided under Section 29 (7)

of the Act. The petition was entertained vide order dated 22.03.2021.

Further, the operation and effect of the order dated 30.01.2021 and the

consequential notice dated 15.02.2021 (issued by the assessing authority)

were stayed.
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3. Despite that stay order an ex-parte reassessment order was passed

by the assessing authority. The revenue claims, that reassessment order

had been passed on 17.03.2021 itself (i.e. few days before grant of the

interim order dated 22.03.2021). However, it was first uploaded on the web

portal of the revenue, on 24.03.2021. Occasioned by this development, an

Amendment Application was filed to challenge the reassessment order

dated 17.03.2021 for the A.Y. 2012-2013 (U.P. and Central). It was allowed.

Further, vide order dated 29.07.2021, the operation and effect of the

reassessment order was stayed.

4. Pleadings have been exchanged and the matter has thus been

heard. The petitioner is a duly incorporated company registered under the

Act. It is engaged in the activities of trading in goods and providing

warehousing and fulfilment services to retailers of goods and services

through a website. It manages the inventory, packing and invoicing on

behalf certain retailers. At the same time, according to the petitioner, it has

not made sale of goods to individual customers.

5. At present, it is also not in dispute that in the year 2013, the petitioner

shifted its principal place of business from Cabin No.-2, First Floor, G-50,

Sector-3, Noida to D-510-513, Buffer Godown Compound, Devi Mandir

Road, Dasna Ghaziabad-201001.

6. For the A.Y. 2012-2013 (U.P. and Central), the petitioner filed its

annual return under the Act on 25.12.2013 through online mode. The

physical copy of that return was filed on 19.01.2014. First, the assessing

authority proceeded to frame an ex parte provisional assessment order

dated 25.01.2014 (under Section 25 (1) of the Act), creating a demand of

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tax of Rs. 85,25,811/-. Consequently, attachment notice was issued to

recover that tax due. The petitioner challenged the same through process of

appeal.

7. In the Second Appeal therefrom, the Commercial Tax Tribunal vide its

order dated 30.01.2015 set aside the ex parte provisional assessment order

dated 25.01.2014 and remitted the matter to the assessing authority to pass

a de novo assessment order. That order attained finality.

8. At that stage, occasioned by the above noted change of address,

further application was moved by the petitioner on 05.12.2015 to record the

change of address in the registration and assessment records of the

petitioner. Yet, a fresh notice was issued to the petitioner on 19.12.2015 at

its old address to assess the petitioner for A.Y. 2012-13. That led to the

second ex parte proceedings. Vide order dated 04.01.2016, the petitioner

was subjected to regular assessment for the A.Y. 2012-2013 under Section

28(b)(iii) of the Act. This time, tax was assessed at Rs. 3,72,94,000/-.

9. Being aggrieved, the petitioner filed an application before the

assessing authority under Section 32 of the Act to set aside that ex parte

assessment order dated 04.01.2016. It was allowed by the assessing

authority on 01.02.2016. Consequently, the petitioner’s regular assessment

proceeding for A.Y. 2012-13 was reopened.

10. While its assessment for A.Y. 2012-13 was pending, the petitioner felt

further aggrieved by the inaction of the revenue authorities in not recording

the change of address; in not uploading the correct/changed address of the

petitioner and in continuing to pass ex parte orders without due service of

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necessary notice. Thus, the petitioner approached this Court by means of

Writ (Tax) Nos. 80 of 2016 and 168 of 2016 to assail the ex parte

assessment orders for the A.Ys. 2011-2012, 2013-2014 and 2014-2015.

Those writ petitions (for other assessment years) were allowed vide order

dated 29.02.2016. Ex parte orders were set aside and refund Rs. 49.24

crores was directed to be made. That refund was also received by the

petitioner on 31.03.2016.

11. Then for the A.Y. 2012-2013, fresh notice of assessment was issued

to the petitioner under Section 28 (2) (iii) of the Act on 30.03.2016. Also,

territorial jurisdiction to assess the petitioner to tax was transferred to the

petitioners’ assessing authority at Ghaziabad. Still, pursuant to the above

notice, the third ex parte assessment proceedings for A.Y. 2012-2013 were

concluded on 04.05.2016, by the Noida authority. It created a demand of

tax at Rs. 1,49,34,487/-. Similar assessment orders were framed for A.Ys.

2013-2014 and 2014-2015.

12. Thereafter, the petitioners’ assessing authority at Noida, again

passed an order under Section 31 of the Act. He rectified and thus annulled

the third ex parte assessment order dated 04.05.2016. The only reason

given in that order is the inherent lack of jurisdiction with the Deputy

Commissioner, Commercial Tax, Noida to assess the petitioner to tax on

04.05.2016 as that jurisdiction stood transferred to Deputy Commissioner,

Commercial Tax, Sector – 7, Ghaziabad w.e.f. 31.03.2016, by virtue of

order of the Additional Commissioner, Commercial Tax (Law), Lucknow.

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13. In the meantime, the petitioner had filed Writ (Tax) No. 546 of 2016

arising from similar ex parte assessment order for the A.Y. 2014-2015. That

came to be allowed with cost Rs. 50,000/-, on 02.08.2016.

14. Also, by way of another/fourth ex parte assessment proceedings,

assessment order was framed in the case of the petitioner for A.Ys. 2012-

2013 (U.P. and Central), on 31.03.2017. That and another assessment

order for A.Y. 2013-14 were challenged by the petitioner in Writ (Tax) No.

760 of 2017, on the ground of limitation etc. The writ petition was

entertained by this Court and on 14.11.2017 and operation and the effect of

the fourth (ex parte) assessment orders for the A.Y. 2012-2013 and for A.Y.

2013-2014, was stayed.

15. While that writ petition remained pending, acting suo moto, the fourth

(ex parte) assessment order passed in the case of the petitioner for the A.Y.

2012-2013 (U.P. and Central) was rectified by the petitioners’ assessing

authority under Section 31 of the Act. Thus, on 23.04.2018, the petitioners’

assessing authority suo moto rectified the assessment order dated

31.03.2017. Since that order may not have been communicated to the

petitioner earlier, we required the learned Standing Counsel to produce the

original records. The record reveals that the assessing authority was of the

view that the limitation to frame regular assessment order for A.Y. 2012-

2013 expired on 30.09.2016. On that self-appraisal on facts and law made,

he further opined that the fourth ex parte assessment order dated

31.03.2017 had been passed beyond limitation. Therefore, he rectified such

mistake in the order and practically nullified that assessment order while it

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was pending consideration in the writ proceedings being Writ (Tax) No. 760

of 2017.

16. For reasons not disclosed to us, neither party informed the coordinate

bench about this/last development. In such facts, it was not disclosed to the

co-ordinate bench that the fourth (ex parte) assessment order dated

31.03.2017 for A.Y. 2012-13 had been rectified and thus nullified on

23.04.2018. In ignorance of that fact, the co-ordinate bench quashed the

assessment order dated 31.03.2017, vide judgment and order dated

28.08.2019.

17. Meanwhile, the Additional Commissioner had already issued a notice

proposing to grant permission to the petitioners’ assessing authority to re-

assess the petitioner for the A.Y. 2012-2013 (U.P. and Central) in the

extended period of limitation. Later, the Additional Commissioner had

issued a consequential notice dated 29.05.2018 to the petitioner seeking to

re-assess it, for the A.Y. 2012-2013 (U.P. and Central) by invoking the

extended period of limitation. Also, the petitioner applied to the authorities to

keep those proceedings in abeyance during the pendency of Writ (Tax) No.

760 of 2017. Still, the petitioner was visited with another notice dated

13.06.2018. In response thereto, on 18.07.2018, it applied to Additional

Commissioner to supply the reasons for invocation of the extended period

of limitation. The reassessment proceedings thus initiated, remained

pending during pendency of the aforenoted writ petition.

18. It is extremely strange, though both parties were already involved in

intense litigation and were fully aware of all facts yet, neither informed the

coordinate bench about the same. In such ignorance, on 28.09.2019, the

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coordinate bench allowed Writ (Tax) No. 760 of 2017. The fourth (ex parte)

assessment order dated 31.03.2017 for the A.Y. 2012-2013 was quashed.

At the same time, the coordinate bench set aside the assessment order

dated 31.03.2017 for the A.Y. 2013-2014.

19. Relevant to A.Y. 2012-13, the coordinate bench made the following

observations:

“Learned counsel for the respondent could not justify the action of
the respondent passing the orders for the assessment year 2012-
13 both under Act 2008 and CST Act in question after the expiry of
period of limitation as provided under Section 29(6) of the Act.
In view of above mentioned facts that the limitation as prescribed
under Section 29(6) of Act 2008 for the assessment year 2012-13
has expired. On 13th September, 2016 and the impugned orders
both under Act 2008 and CST Act for assessment year 2012-13
have been passed on 31st March, 2017 which are apparently much
beyond the period of limitation prescribed therein. Therefore, the
impugned orders for the assessment year 2012-13 both under Act
2008 and CST Act are hereby quashed.
The learned Senior Counsel now raised an objection for the order
passed for the assessment year 2013-14 both under the Act 2008
and CST Act.”

20. In contrast, for A.Y. 2013-2014, the coordinate bench granted

following relief:

“In view of the facts and circumstances of the case as stated

above, the impugned order dated 31.3.2017 for the assessment
year 2013-14 under the U.P. Act 2008 and CST Act are hereby set
aside.
It is made clear that respondents are permitted to initiate the
proceeding by issuing notice at the current address of the
petitioner, if any, in accordance with law.
The writ petition is accordingly allowed.”

21. Thereafter, on 10.08.2020 the petitioner received further notice

proposing to extend the period of limitation to reassess the petitioner for the

A.Y. 2012-2013. On 28.08.2020, it again applied for the reasons to believe.

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Thereafter, the Additional Commissioner issued another assessment notice

dated 06.01.2021 fixing the date 14.01.2021. The petitioner appeared and

again applied for reasons to believe. On 31.01.2021 an order was passed

by the Additional Commissioner granting permission to the petitioner’s

assessing authority to re-assess the petitioner in the extended period of

limitation for the A.Y. 2012-2013 (U.P. and Central). That order was modified

on 08.02.2021. Consequently, the assessing authority issued assessment

notice to the petitioner dated 15.02.2021.

22. Learned Senior Counsel for the petitioner has submitted, in the

scheme of the Act, in absence of any assessment order being passed by

the assessing authority on a conscious application of mind, the assessment

made by way of self-assessment arises on a deemed basis, as an

enforceable consequence in law, under Section 27 of the Act.

23. For ready reference, the provisions of Section 27 of the Act are

quoted below:

“27. Self assessment

(1) Subject to provisions of section 28, every dealer, who has

submitted the annual return of turnover and tax, in the
prescribed form and manner, shall be deemed to have been
assessed to an amount of tax admittedly payable on the
turnover of purchase or sale or both, as the case may be,
disclosed in such return, and to an amount of input tax credit
shown admissible in the return.
(2) For all purposes under this Act and rules made thereunder-
(a) annual return of turnover and tax, referred to in sub-section
(7) of section 24, submitted by a dealer, shall be deemed to be
an assessment order and facts disclosed or figures mentioned
in such return shall be deemed part of such assessment order;
and
last date of the assessment year succeeding the assessment
year in which the date prescribed for submission of such
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 annual return falls, shall be deemed to be the date of such
assessment order."

24. It is his submission, unlike the earlier statutory law (U.P. Trade Tax

Act, 1948), the Act makes a clear departure and creates a deeming fiction

in law - in favour of the assessee. Thus, even in the absence of a

conscious/scrutiny assessment proceedings being undertaken and specific

assessment order being framed (in black and white), it may not be said that

such an assessee was not assessed to tax. In that event, an assessment

order would arise, on a deemed basis being the disclosure made by that

assessee in its annual return filed within time. Relying on Section 27 (2) (a)

of the Act, he would submit, the Act leaves no element of doubt as to what

would constitute a deemed assessment order. The annual return would

itself constitute such deemed assessment order.

25. In view of that statutory provision and effect caused in law, Mr. Gulati

would further submit, the assessing authority and the Additional

Commissioner have completely misapplied themselves to the correct facts

and law. It could never be said with any amount of certitude that the

turnover of the petitioner for the A.Y. 2012-2013 (U.P. and Central), had

escaped assessment. The annual return had been filed by the petitioner for

A.Y. 2012-2013, within time. Therefore, the mandatory and binding

consequence of deemed assessment arose on 31.09.2016 i.e. at the end of

the normal period of limitation to make an assessment, as provided under

Sections 29 (1) and 29 (6) of the Act. Till then the petitioners assessing

authority had time to frame a regular assessment. For ready reference,

provision of Sections 29 (1) and 29 (6) of the Act are quoted below:
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“29. Assessment of tax of turnover escaped from assessment
(1) If the assessing authority has reason to believe that the
whole or any part of the turnover of a dealer, for any
assessment year or part thereof, has escaped assessment to
tax or has been under assessed or has been assessed to tax
at a rate lower than that at which it is assessable under this
Act, or any deductions or exemptions have been wrongly
allowed in respect thereof, the assessing authority may, after
issuing notice to the dealer and making such inquiry as it may
consider necessary, assess or re-assess the dealer to tax
according to law :
Provided that the tax shall be charged at the rate at which it
would have been charged had the turnover not escaped
assessment or full assessment as the case may be.
Explanation I: Nothing in this sub-section shall be deemed to
prevent the assessing authority from making an assessment
to the best of its judgment.
Explanation II: For the purpose of this section and of section
31, " assessing authority" means the officer or authority who
passed the earlier assessment order, if any, and includes the
officer or authority having jurisdiction for the time being to
assess the dealer.
Explanation III: - Notwithstanding the issuance of notice under
this sub-section, where an order of assessment or re-
assessment is in existence from before the issuance of such
notice it shall continue to be effective as such, until varied by
an order of assessment or re-assessment made under this
section in pursuance of such notice.
….”
(6) Where an order of assessment or re-assessment has
been set aside by the assessing authority himself under
section 32, a fresh order of assessment or re-assessment
may be made before expiry of the assessment year in which
such order of assessment or reassessment has been set
aside:
Provided that if an order of assessment or re-assessment
made ex parte is set aside on or after first day of October in
any assessment year, fresh order of assessment or re-
assessment may be made on or before thirtieth day of
September of the assessment year succeeding the

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 assessment year in which such ex parte order of assessment
or re-assessment was set aside.
Provided further that where second or subsequent time any
order of assessment or reassessment is made ex parte and
where such second or subsequent ex parte order of
assessment or reassessment is to be set aside and a fresh
order of assessment or reassessment may be made within
the time aforementioned when the first ex parte order is set
aside.”
26. Alternatively, it has been submitted, merely because a conscious

assessment may not have been made by the assessing authority, it may not

itself constitute a “reason to belief” that any part of the turnover had

therefore, escaped assessment for A.Y. 2012-13. In absence of any

material being available at the hands of the assessing authority and/or the

Additional Commissioner as may have led to formation of a belief that any

part of the turnover of the petitioner had escaped assessment, there could

never arise any reason for such a belief to be entertained. In other words, it

has been submitted, there is neither any relevant material nor any reason

was formed “to believe” that any part of turnover had escaped assessment

at the hands of the petitioner. Consequently, it has been asserted that the

re-assessment proceedings had been initiated against the petitioner for the

A.Y. 2012-2013, on pure whims, fencies and conjectures. He has relied on

a coordinate bench decision of this Court in M/s Manaktala Chemical Pvt.

Ltd. Vs. State of U.P. (2006) SCC Online All 1569.

27. Third, it has been submitted, in any case in face of the order passed

by the coordinate bench dated 28.08.2019 (extracted above) in Writ (Tax)

No. 760 of 2017, the assessment proceedings against the petitioner for A.Y.

2012-13 remained quashed. Neither this Court granted any liberty to the

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assessing authority to pass a fresh assessment order in the case of the

petitioner for the Assessment Year 2012-2013 (U.P. and Central) nor the

revenue challenged that order before the Supreme Court. Therefore, the

order of the coordinate bench dated 28.08.2019 attained finality. The

narration to the contrary made in the re-assessment order for the A.Y. 2012-

2013 is plainly against the record. Liberty had been granted only with

respect to A.Y. 2013-2014.

28. Last, it has been submitted, the entire exercise has been made by the

revenue authorities in abuse of their powers, despite earlier orders wherein

certain adverse observations had also been made. The limitation to make

the assessment order existed up to 31.03.2016, in the first place. Upon the

ex parte assessment order dated 04.01.2016 being set aside by the

assessing authority, in exercise its power under Section 32 of the Act, on

01.02.2016, that limitation stood extended under Section 29(6) of the Act,

up to 30.09.2016. No fresh order or assessment was passed within that

limitation. For reasons best known to the jurisdictional assessing authority

(at Ghaziabad), chose to pass a fresh order for A.Y. 2012-13 not earlier

than 31.03.2017. On that date the limitation to draw regular assessment

proceedings in the case of the petitioner for that assessment year stood

lapsed. The further orders passed by the assessing authority with reference

to his powers under Section 31 of the Act i.e. for rectification of mistakes did

not cause extension of limitation that stood lapsed from before. Reliance

has been placed on a decision of the Supreme Court in Fag Precision

Bearings Vs. Sales Tax Officer (I) and Another (1997) 3 SCC 486.

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29. Responding to the above, learned Standing Counsel for the revenue

contends, irrespective of the lapse of limitation on 30.09.2016, the revenue

authorities were well within their right to seek reassessment of the petitioner

for A.Y. 2012-13 in the extended period of limitation i.e. eight years from the

end of that assessment year, subject to observance of conditions

prescribed under Section 29 of the Act. Those requirements are met.

30. Second, since the first regular assessment order (for A.Y. 2012-13)

dated 04.01.2016 had been set aside under Section 32 of the Act on

01.02.2016, it has been asserted, the limitation to make the assessment

existed till 30.09.2016. No assessment order made within that limitation; the

case of the petitioner has been described to be one of no assessment.

31. Based on the principle that the assessing authority had inherent

jurisdiction to make an assessment order for every assessment year, it has

been vehemently urged, in the absence of any assessment order the entire

turnover of the petitioner had escaped assessment. In that context, learned

counsel for the revenue asserts, there is no error on part of the assessing

authority in making the proposal to reassess the petitioner for the A.Y. 2012-

13 as no part of the turnover for that assessment year had been assessed

to tax.

32. As to reasons, we have perused the record. It is an admitted case of

the revenue as well - there exists no objective material to establish that any

part of the return file by the assessee was either false or wrong or

incomplete. It is also not the case of the revenue that there is any material

on the assessment record to establish that the assessee had made any

excessive claim or shown less tax liability. There is no allegation of

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suppression of turnover etc. The learned Standing Counsel would candidly

admit, there is no such material on record.

33. As to the effect of the earlier order of the coordinate bench dated

28.08.2019, learned counsel for the revenue has relied on the operative

portion of that order to submit that the writ court left it open to the assessing

authority to make a fresh assessment order. At the same time, it is

undisputed that the revenue never challenged that order before the

Supreme Court. It has not sought review or clarification of that order.

34. Last, it may be specifically noted, the revenue is not relying on the

subsequent orders passed by the assessing authority on 31.03.2017. In

that regard it has been fairly stated that the normal period of limitation to

make a regular assessment expired on 30.09.2016. Thereafter, there did

not survive any provision of law to extend the limitation to make a regular

assessment. It is that mistake (committed in law), that the assessing

authority later corrected by the order dated 23.04.2018. At the same time, it

is admitted that the revenue authority did not inform the writ Court about

that order in Writ Tax No. 760 of 2017 which was decided on 28.08.2019.

35. Having heard the learned counsel for the parties and having perused

the record, the first issue to be dealt with in the present proceedings is the

effect of Section 27 of the Act. There did not pre-exist any principle of law

where under an assessee could claim a deemed assessment or a

consequence in law, equivalent to that. The U.P. Trade Tax Act that was

repealed by the Act, did not contain a concept of a deemed assessment.

Under that law, whenever limitation to frame assessment lapsed, no

assessment arose. However, Section 27 of the Act made a clear departure

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from that pre-existing law. In no uncertain terms it provided that the annual

return of turnover and tax filed under Section 24(7) of the Act would

constitute a deemed assessment. It would arise on the last day of filing of

the annual return. Further, the facts disclosed, and figures mentioned in that

return were deemed to be part of the assessment order.

36. For the deeming fiction in law to arise, the legislature had further

provided that the last date to file the annual return for an assessment year

would be as prescribed. Section 24(7) of the Act read as below:

"(7) Every taxable dealer, including a dealer who has carried on

business during part of an assessment year, shall, for such
assessment year or part thereof as the case may be, submit
Annexures of Consolidated Details within such time and in such
form and manner as may be prescribed."

37. Then Rule 45(7) of the Rules framed under the Act provided the

annual return could be filed by 31st October of the subsequent assessment

year. The same could be extended by the Commissioner or the State

Government, for adequate reasons. For ready reference the provisions of

Rules 45(7) of the Rules are quoted below:-

"(7) Every dealer liable to pay tax shall, alongwith the last return of
the financial year but not beyond 31st October of the subsequent
assessment year, submit to the Assessing Authority the Annexures
of Consolidated Details of his turnover and tax,-

(a) in Form LII in case of a dealer other than a dealer referred to in

clauses (b) and (c) below

(b)" in form Form LII-A in case of dealer exclusively dealing sale

and purchase within the State;

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 (c) in form Form LII-B in case of a dealer executing works contract
or transfer of right to use any goods or both, as the case may be;

for the preceding assessment year alongwith copies marked

"Original" of all forms of declaration or certificates, on the basis of
which exemption or reduction in the rate of tax is claimed or which
determine the nature of a transaction and annexure as described in
the relevant forms:

Provided that the Assessing Authority may, for adequate reasons to

be recorded in writing, extend the time for filing such Annexures of
Consolidated Details upto a period of ninety days beyond the
period prescribed under this sub-rule:

Provided Further that the Commissioner or the State Government

may, for adequate reasons to be recorded in writing, by an order in
general, extend the time for filing the Annexures of Consolidated
Details beyond the period prescribed under this sub-rule."

38. Thus, in the present facts the last date of filing of return for the A.Y.

2012-13 would have been 31.10.2013. The petitioner had filed it’s annual

return on 25.12.2013. Admittedly, it was extended till 31.12.2013. Upon the

provisional assessment order set-aside, since the assessing authority

chose to pass the conscious/ specific assessment order for A.Y. 2012-13 on

04.01.2016, the deeming fiction in law stood replaced by that order dated

04.01.2016. At the same time, it being further undisputed between the

parties that that specific assessment order was recalled on 01.02.2016, it

left no trace in law to eclipse the effect in law of a deemed assessment

order that had otherwise arisen on 31.12.2013.

39. In other words, the deeming fiction in law revived upon order dated

01.02.2016 being passed. Earlier, it may have remained in the shadow and

thus dormant in face of the specific/conscious assessment order dated

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04.01.2016 yet, in view of that order being recalled on 01.02.2016, it got

resurrected by the force of law. It became absolute upon expiry of period of

limitation to make a fresh assessment i.e. on 30.09.2016. Since, the

assessing officer failed to make any specific order of assessment in terms

of Section 29(6) of the Act till 30.09.2016, his powers to make the regular

assessment stood exhausted. It is on the occurrence of that passive event

on 30.09.2016 i.e. lapse of limitation to make a regular assessment that the

deeming fiction of law created by Section 27 of the Act became absolute.

40. What survived with the assessing authority thereafter was his

jurisdiction to make a reassessment for A.Y. 2012-13. At the same time, the

jurisdiction to make a reassessment remained hinged to the scope created

under Section 29 of the Act. It is too far well settled in law to merit any

fruitful discussion that a reassessment proceeding could be initiated under

the Act only against valid 'reason to believe' to be recorded by the

assessing authority. It was a sine qua non for valid assumption of

jurisdiction.

41. Again, it is well settled in law that for a ‘reason to believe’ to arise,

there must exist cogent material. That and not a purely subjective opinion

may give rise to any reason - that any part or whole of turnover had

escaped assessment. A simple belief as to escapement could never

sufficient to assume jurisdiction to reassess an assessee.

42. Further, even if such jurisdictional fact may exist i.e. the assessing

authority may have held in his possession, objective/cogent material as

may give rise to a ‘reason to believe’ to reassess and assessment, the

jurisdiction could not be validly assumed by an assessing authority, acting

17
on his own, unless he first formed and recorded his ‘reason to believe’ - as

to escapement.

43. For that purpose, the relevant date would remain as prescribed under

Section 29(1) of the Act being 3 years from the end of the relevant

assessment year. In present facts, that date expired on 31.03.2016. The

order dated 01.02.2016 passed by the assessing authority under Section 32

of the Act to recall the earlier / regular assessment order dated 04.01.2016,

had no bearing on that date. That event only caused the effect of extending

the period of limitation to make a fresh assessment (regular), by

30.09.2016.

44. Section 29(1) and Section 29(6) were mutually exclusive provisions.

They did not overlap or interject the applicability of the other. Section 29(6)

of the Act was applicable to situations where an ex parte order of

assessment or reassessment had been set aside by the assessing

authority. In contrast, Section 29(1) governed the limitation to initiate a

reassessment proceeding. Thus, if an assessment or reassessment

proceeding had been validly initiated and consequently, an ex parte

assessment / reassessment order was passed then upon it being set aside

under section 32 of the Act, the limitation to make a fresh assessment /

reassessment order would stand extended in terms of Section 29(6) of the

Act.

45. If however, as in the present case, jurisdiction to reassess had

remained from being assumed within the normal period of limitation - that

expired on 31.03.2016, the subsequent setting aside of the regular ex parte

18
assessment order would have no effect as to jurisdiction to initiate such

reassessment proceeding.

46. Therefore, in the present facts the assessing authority was obligated

to first obtain an approval of his higher authority namely the Additional

Commissioner to proceed to reassess the petitioner in the extended period

of limitation namely eight years.

47. Seen in that light, besides the initial missteps (committed during

pendency of Writ Tax No. 760 of 2017), it has to be examined if there

existed any material with the assessing authority and whether the belief of

escapement formed by the assessing authority was founded on any reason

referable to any material on record. Here, as we have noted above the

assessing authority has not raised any doubt as to the correctness of the

facts and figures disclosed by the assessee in the annual return filed on

25.12.2013 (through online mode) and on 19.01.2014 (through offline

mode). The assessing authority has merely recorded, since the petitioner

had not been assessed to tax by way of regular assessment order for the

A.Y. 2012-13, its entire turnover had escaped assessment.

48. Whatever doubt may have existed under the provision of Section 21

of the U.P. Trade Tax Act as to the consequence in law that may arise in

such facts, it is beyond the scope of any discussion in the present

proceeding that arise under the Act. As discussed above, by virtue of

Section 27 of the Act, not only the petitioner was visited with the

consequence of a deemed assessment, but the shape and character of that

order stood defined by the annual return filed by the petitioner. That return

filed within the limitation prescribed under Rule 45(7) of the Rule framed
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under the Act, it never became open for the assessing authority to claim

that the present was a case of no assessment. The observation and

reasoning to that effect is perverse and contrary to the law.

49. Once, the consequence of an assessment order arose and that

assessment order was defined by the disclosure of facts and figures in the

annual return filed by the assessee for A.Y. 2012-13, jurisdiction to reassess

the petitioner for A.Y. 2012-13 may have been assumed only against a valid

reason to believe recorded in the context of the facts and figures that found

mentioned in such assessment order/ annual return. We may have been

tempted to consider the figures in the annual return and the disclosure

made therein, yet, it is an undisputed fact that such return was filed and

was subjected to provisional assessment proceeding (once) and regular

assessment proceeding (once). At both stages that return was considered.

Therefore, no further discussion is required as to the existence of facts and

figures disclosed in such annual return.

50. Even if the assessing authority was seeking to reassess the petitioner

on the strength of its annual return, it was incumbent on the assessing

authority to record his reasons with respect to and/or in contrast to the facts

and figures disclosed by the assessee in its annual return. It was further

incumbent on the assessing authority to form reasons on the strength of

objective material on record that any part of petitioner’s turnover had

escaped assessment.

51. The burden to establish existence of recorded reasons was entirely

on the revenue. Neither the petitioner was obligated to provide any material,

nor it was required to assist in the formation of the reasons. Since the
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assessing authority wanted to assume the jurisdiction to reassess the

petitioner for the A.Y. 2012-13 he took it upon himself to bring on record

both, the relevant material as may have led to formation a reason - to

believe, that any turnover had escaped assessment and he further

burdened himself to record the relevant reasons as to the belief of

escapement of turnover from assessment. The burden thus cast, was not

discharged.

52. The assessing authority laid an incorrect premise by observing that

the assessee had not been assessed to tax. That we have dealt with above.

More critically the assessing authority failed to bring on record any material

and most crucially he failed to record any reason for the belief entertained

by him that the turnover had escaped assessment.

53. In view of above, there was neither any relevant material nor any

reason was recorded by the assessing authority that any part of the

turnover of the petitioner had escaped assessment. Consequently, the

jurisdiction to reassess the petitioner never arose with the assessing

authority for A.Y. 2012-13. Unfortunately, that basic aspect escaped the

attention of the Additional Commissioner, who appears to have granted the

permission to the petitioner- assessing authority to reassess the petitioner

in the extended period of limitation, in a mechanical exercise of his power.

In paragraphs 10, 11 and 13 of M/s Manaktala Chemical Pvt. Ltd. (Supra) it

was held as below:-

“10. The proviso confers power and gives jurisdiction/authority to the

Commissioner if he is ‘satisfied’ either on his own or on the basis of the
reasons recorded by the assessing authority that it is just and expedient
to either assess or reassess the dealer, only then, he would authorise the
assessing authority to make such assessment or reassessment within the

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 extended period of limitation. The plain and simple meaning of the
aforesaid proviso is that the permission/approval for such reassessment
of alleged escaped turn over is to be granted by the Commissioner only
on being satisfied either on his own or on the basis of the reasons
recorded by the assessing authority that it is just and expedient to reopen
the assessment.
11. Once the proviso postulates recording of reasons by the
assessing authority, it necessarily obligates the Commissioner or the
Additional Commissioner to consider such reasons and make them
known to the assessee, before he finally forms his satisfaction and even if
the Commissioner or the higher authority on his own reasons feels
satisfied that it is just and expedient to reopen the assessment, it would
still require that such reason must be made known to the dealer also so
that before the assessment is reopened he may have an opportunity to
satisfy the higher authority that the reasons assigned by the assessing
authority are not relevant or they are incorrect or they do not make out a
legal ground for reopening of the assessment and likewise if the
Commissioner or the higher authority proposes to authorise the
assessing authority for reopening the assessment on his own, then also
reasons for such satisfaction have to be supplied to the dealer, so that he
may have a say to convince the higher authority for not authorising the
assessing officer for reopening the assessment.
13. When an order is passed on the basis of the reasons recorded, it
naturally means that the reason must be rationale, genuine and relevant.
Any reason which cannot be termed as rationale, genuine or relevant
would not make out a case for reopening of the assessment and for that
matter also, the dealer has to be associated in the proceedings initiated
seeking approval from the Commissioner or the Additional Commissioner,
as case may be.”
54. Also, we find it never survived with the assessing authority to

contemplate if he could assess the present petitioner for the A.Y. 2012-13.

The order of the coordinate bench dated 28.08.2019 in Writ Tax No. 760 of

2017 is specific. As noted above, that writ petition had been filed by the

petitioner to assail the regular assessment orders for the A.Ys. 2012-13 and

2013-14. While deciding that writ petition the coordinate bench specifically

quashed the assessment order for the A.Y. 2012-13 (U.P. and Central).

Only thereafter it proceeded to take up the submissions advanced for the

A.Y. 2013-14. It is in that context only that the discussion as well records

that the order dated 31.03.2017 for the A.Y. 2013-14 is set aside.

55. No doubt ever existed as to the outcome of proceeding. The

coordinate bench had distinctively used the words 'quashed' and 'set aside'

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to cause a different legal effect qua the assessment proceedings for A.Ys.

2012-13 and 2013-14. Once the proceeding for A.Y. 2012-13 had been

quashed, nothing survived for reconsideration or further consideration. In

contrast after setting aside the assessment order for A.Y. 2013-14, the

matter was remitted to the petitioner’s assessing authority to pass a fresh

assessment order. Those different conclusions arose from different fact

considerations made by the coordinate bench while considering the

assessment orders for the A.Ys. 2012-13 and 2013-14. For A.Y. 2012-13 it

was specifically recorded that the assessment proceedings had become

time barred whereas for the A.Y. 2013-14, that satisfaction was not reached.

56. Learned counsel for the revenue is correct in his submission that the

aforesaid order of the coordinate bench would remain confined to regular

assessment proceedings, and it may not be read to prejudice a

reassessment proceedings. That technical construction would be of no avail

as in the present case reassessment proceedings were initiated against the

petitioner for A.Y. 2012-13, in absence of jurisdictional fact and without

recording relevant reason to believe. As held in Fag Precision Bearings

(Supra), lapse of time is no reason to reassess an assessee. Paragraph 9

of that report reads as below:-

“9. Under the terms of Rule 37-A, the Commissioner must put the
reasons and circumstances necessitating stay of assessment
proceedings in writing. In the instant case, the reasons and
circumstances necessitating stay are that the assessment was in
progress and “since some more time will be taken and the assessment
proceedings are not likely to be completed within the prescribed time … it
is considered proper to stay the assessment …”. To accept the aforesaid
as good reason to stay assessment proceedings is to hold that the
Commissioner, or the State Government, can give a go-by to the statutory
provision prescribing the period during which assessment proceedings
shall be completed only because the sales tax authorities have not
completed the assessment proceedings within the stipulated time. We
cannot accept this as a good reason. The aforestated power to stay
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 assessment proceedings can be exercised only in extraordinary
circumstances and for supervening reasons which cannot be attributed to
the default or failure of the assessing authorities. It would be a valid
exercise of the power to stay assessment proceedings of a class of
assessees, for example, when a point of law involved in such
assessments is pending decision in a higher court. It would be a valid
exercise of such power in an individual case where, for example, search
and seizure of the assessee's premises has unearthed material which
requires to be sifted and analysed before a satisfactory assessment order
can be passed. It is not enough that the order should state, as has been
done in the present case, that the assessment proceedings were pending
and would take “some more time”.”
57. In view of the above, we are not inclined to examine whether the

reassessment order dated 17.03.2021 is ante dated or not. Since the

jurisdiction never arose, the entire proceedings were conducted without

jurisdiction and are a nullity.

58. Consequently, we have no hesitation to record our satisfaction that

the order dated 30.01.2021, as modified on 08.02.2021 passed by that

authority, granting permission to the assessing authority, namely, Deputy

Commissioner, Sector-7, Commercial Tax, Ghaziabad as well as the

reassessment order dated 17.03.2021 for the Assessment Year 2012-2013

(U.P. and Central) are a nullity. They are quashed.

59. Consequently, the writ petition is allowed. No order as to costs.

(Shiv Shanker Prasad, J.) (Saumitra Dayal Singh, J.)

Order Date :- 13.12.2023
Sushil/S.K. Srivastava/-

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Digitally signed by :-
SUSHIL KUMAR SINGH
High Court of Judicature at Allahabad