The Allahabad High Court has overturned the reassessment order targeting Flipkart, asserting that the responsibility to demonstrate any overlooked assessments rests with the assessing authority.

The bench, comprising Justice Saumitra Dayal Singh and Justice Shiv Shanker Prasad noted that the department bore the burden of proving the presence of documented reasons. The petitioner had no obligation to furnish any evidence or aid in the formulation of these reasons. The assessing authority sought to assert jurisdiction for reassessing the petitioner for the fiscal year 2012–13.

The assessing authority voluntarily assumed the responsibility of presenting the necessary evidence that could have led to the formation of a belief regarding the escape of turnover from assessment. Furthermore, the authority undertook the additional task of documenting the pertinent reasons behind this belief. However, the authority failed to fulfill this burden adequately.

Flipkart challenged the proposal put forth by the Additional Commissioner under Section 29(7) of the Uttar Pradesh Value Added Tax Act, 2008, along with the subsequent order granting permission to Flipkart's assessing authority to re-assess the company for the assessment year 2012–2013 (applicable to both Uttar Pradesh and Central). The petition was admitted for consideration, and a stay was granted on the enforcement and impact of the order and the resulting notice.

The assessee contended that merely because a conscious assessment may not have been made by the assessing authority, it may not itself constitute a “reason to believe” that any part of the turnover had therefore escaped assessment for FY 2012–13.  In the absence of any material being available at the hands of the assessing authority and/or the Additional Commissioner as may have led to the 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 essence, it has been argued that there is a lack of pertinent evidence or any justification to support the belief that any portion of the turnover evaded assessment by the petitioner.

The department asserted that the assessing authority had not erred in proposing the reassessment of the petitioner for the fiscal year 2012–13, as none of the turnover for that assessment year had been subjected to taxation.

The court ruled that the assessing authority failed to provide any pertinent material or document any reason indicating that any portion of the petitioner's turnover had evaded assessment. As a result, the assessing authority did not have the jurisdiction to reassess the petitioner for the fiscal year 2012–13.

Counsel For Petitioner: Tarun Gulati, Kunal Kishore, Nishant Mishra,Tanmay Sadh

Counsel For Respondent: C.S.C.

Case Title: M/S Flipkart India Pvt. Ltd. Versus State Of U P And 4 Others

Case No.: Writ Tax No. - 248 Of 2021