Supreme Court junks UP Govtappeal Against Allahabad HC's Flipkart Tax Order

Supreme Court junks UP govt's appeal against Allahabad HC's Flipkart tax order

The Supreme Court has upheld the Allahabad High Court decision to quash tax reassessment proceedings against Flipkart India for the Assessment Year 2012-13.

The bench comprising Justice JB Pardiwala and Justice R Mahadevan deemed the reassessments initiated by the Government of Uttar Pradesh time-barred. While rejecting the state government and its revenue department's appeal against the December order of the high court, the judges explained that the limitation could not be extended at a belated stage.

Since there was no evidence of escaped turnover or suppression, they reiterated, "The high court is justified in invoking writ jurisdiction as per the facts of the case.”

The high court had ruled in favor of the assessee, holding that the powers exercised to extend limitation for assessment against Flipkart on the September 2018 reassessment notice, followed by the January 2021 reassessment order of the Additional Commissioner under Section 29 (7) of the Uttar Pradesh Value Added Tax Act, 2008, were without jurisdiction, hence quashed.

The court had further said that the proceedings under Section 29 (7) initiated by the Deputy Commissioner and the Additional Commissioner’s approval were unreasonable. No relevant material or reason recorded by the assessing authority showed Flipkart’s turnover had escaped assessment. Therefore, the jurisdiction to reassess the assessee never arose.

The state government submitted before the top court that the high court failed to consider the relevant provisions, proving that the condition of ‘recording reasons to believe’ was not a requirement to initiate reassessment proceedings under Section 29(7). It could be initiated even for a ‘change of opinion’.

While challenging the validity of reassessment proceedings, Flipkart argued that the limitation period for regular assessment expired on 30 September 2016. Thus, the revenue department could not reopen the assessment.

In the absence of assessment under Section 28, in terms of provisions of Section 27 of the state VAT, Flipkart’s self-assessment was the deemed assessment. Counsel Kishore Kunal represented Flipkart in the Supreme Court.