“Since the jurisdiction never arose, the entire proceedings were conducted without jurisdiction and are a nullity.” – Allahabad HC
The Allahabad High Court has nullified the reassessment order against Flipkart, underlining that the burden of proving escaped assessment lies with the assessing authority.
The Division Bench of Justices Saumitra Dayal Singh and Shiv Shanker Prasad emphasized that the department must establish the existence of recorded reasons, and the petitioner, Flipkart, is not obligated to furnish material or assist in formulating reasons.
The assessing authority, seeking jurisdiction to reassess for the fiscal year 2012–13, failed to present relevant material or reasons indicating a belief that turnover had escaped assessment.
Flipkart contested the proposal under Section 29(7) of the Uttar Pradesh Value Added Tax Act, 2008, and the subsequent order granting reassessment permission for Assessment Year 2012–2013. The court entertained the petition and stayed the operation of the order.
The petitioner argued that the absence of a conscious assessment by the authority does not constitute a valid “reason to believe” in turnover escapement. It asserted that there was no relevant material or reason to believe that turnover had escaped assessment.
Contrarily, the department claimed no error in the reassessment proposal, contending that no part of the turnover for the fiscal year 2012–13 had been taxed.
The Bench observed that, “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.”
It was also observed that, “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.”
It was also noted that, “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.” The court, however, held that the assessing authority lacked both relevant material and recorded reasons for believing any turnover had escaped assessment. Consequently, it was held that the jurisdiction to reassess the petitioner never arose for the fiscal year 2012–13.
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