The Supreme Court on Tuesday upheld the Allahabad High Court’s December ruling, dismissing the Uttar Pradesh government’s appeal against the quashing of UP Value Added Tax reassessment proceedings initiated against Flipkart India for the 2012-13 assessment year.
The Bench comprising Justices J.B. Pardiwala and R. Mahadevan ruled that the reassessments, which were conducted ex parte, were time-barred and could not be extended beyond the stipulated limitation period.
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The Allahabad High Court had previously ruled in favor of Flipkart, asserting that the state’s efforts to reopen the assessment through notices issued in September 2018 and a reassessment order passed in January 2021 by the Additional Commissioner under Section 29 (7) of the Uttar Pradesh Value Added Tax Act, 2008, were without jurisdiction. The court noted that these proceedings were initiated without valid reasons or sufficient justification.
The High Court also pointed out that the Deputy Commissioner’s initiation of proceedings and the approval by the Additional Commissioner lacked any recorded reasoning to suggest that Flipkart’s turnover had been underreported or escaped assessment. It concluded that the jurisdiction to reassess Flipkart for the 2012-2013 year never existed.
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In its appeal to the Supreme Court, the Uttar Pradesh government argued that the High Court had overlooked key legal provisions, including the argument that “recording reasons to believe” was not required for initiating reassessment proceedings under Section 29(7) of the Act. The government contended that reassessment could be initiated even on the grounds of a “change of opinion.”
Flipkart, represented by counsel Kishore Kunal, had challenged the validity of the reassessment, arguing that the limitation period to initiate a regular assessment had expired in 2016, making the reopening of the case invalid. The company stated that in the absence of an assessment under Section 28, its self-assessment should be deemed final under Section 27 of the Act.
The Supreme Court decision upheld the decision of the High Court and the Value Added Tax reassessment against Flipkart remains null, void and quashed.
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