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1987 (2) TMI 448 - SC - VAT and Sales TaxWhether for purposes of limitation the date of the order of assessment for the year 1975-76 in the instant case should be the date of the original assessment order, i.e., February 7, 1979 or whether it should be the date of the order passed under section 21 of the Act, i.e., January 18, 1980? Held that - Appeal allowed. Order dated January 18, 1980 has to be treated as an order of assessment even though it is not in the form in which an order of assessment has to be passed and not as an order merely on the question whether the reassessment proceedings under section 21 of the Act should be proceeded with or not. The period of limitation for the application for rectification should, therefore, be calculated from the date of the order under section 21 of the Act. We cannot, therefore, subscribe to the view of the High Court expressed in its observation that since no fresh order of assessment had been passed after examining the accounts of the assessee the original assessment order should be considered to remain intact as nothing is added or altered in pursuance of the order under section 21 of the Act .
Issues Involved:
1. Period of limitation for filing an application for rectification under Section 22 of the U.P. Sales Tax Act. 2. Effect of reopening assessment under Section 21 on the original assessment order. Issue-wise Detailed Analysis: 1. Period of Limitation for Filing an Application for Rectification under Section 22 of the U.P. Sales Tax Act: The core issue revolves around whether the period of limitation for filing an application for rectification should be calculated from the date of the original assessment order or from the date of the reassessment order under Section 21. The original assessment order for the year 1975-76 was passed on February 7, 1979, and the reassessment order under Section 21 was passed on January 18, 1980. The appellant filed the rectification application on November 4, 1982, which is within three years from the reassessment order but beyond three years from the original assessment order. The High Court held that the rectification application was barred by limitation as it was filed beyond three years from the original assessment order. However, the Supreme Court overturned this decision, holding that the limitation period should be calculated from the date of the reassessment order under Section 21. The Court emphasized that once a notice under Section 21 is issued, the original assessment order ceases to be operative, and the reassessment order becomes the effective order for all purposes, including the rectification application. 2. Effect of Reopening Assessment under Section 21 on the Original Assessment Order: The Supreme Court held that the effect of reopening the assessment under Section 21 is to vacate or set aside the original assessment order and substitute it with the reassessment order. The Court referred to its previous decisions, particularly Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu, to support this view. The Court noted that even if the reassessment order does not alter the original assessment, it still constitutes a fresh order of assessment. The Court rejected the department's argument that the reassessment order dated January 18, 1980, should be treated merely as an order discharging the notice under Section 21 and not as a reassessment order. The Court clarified that Section 21 does not contemplate a preliminary order deciding whether to proceed with reassessment. Once a notice under Section 21 is issued, the original assessment is reopened, and any subsequent order under Section 21 is the effective assessment order. The Court concluded that the application for rectification should be considered within the limitation period if filed within three years from the reassessment order under Section 21. Therefore, the appellant's rectification application for the assessment year 1975-76 was deemed timely. Conclusion: The Supreme Court set aside the High Court's judgment, restored the Tribunal's decision, and allowed the appeal. The Court held that the period of limitation for rectification applications should be calculated from the date of the reassessment order under Section 21, not the original assessment order. This interpretation ensures that the reassessment order is the effective order for all subsequent proceedings, including rectification applications. The appeal was allowed without any order as to costs.
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