1999 (7) TMI 649 - HC - VAT and Sales Tax

Issues Involved:
1. Quashment of the orders dated July 27, 1989, under the Madhya Pradesh General Sales Tax Act, 1958, and M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976.
2. Validity of the assessment orders dated June 1, 1990, under section 39(1) of the State Sales Tax Act.
3. Validity of the penalty order dated May 25, 1990, under section 39(2) of the State Sales Tax Act.
4. Limitation period for initiating assessment proceedings under section 18(6)(a) of the State Sales Tax Act.

Detailed Analysis:

1. Quashment of Orders Dated July 27, 1989:
The petitioner sought the quashment of orders dated July 27, 1989 (annexures E and F), passed by the Assistant Sales Tax Officer under the State Sales Tax Act and Entry Tax Act, respectively. The orders assessed the petitioner to sales tax and additional tax amounting to Rs. 29,156.32 and imposed penalties totaling Rs. 10,300. The petitioner contended that the assessment proceedings were barred by limitation as per section 18(6)(a) of the State Sales Tax Act, which mandates initiation within 12 months from the completion of proceedings under section 4-A(1). The completion date was July 16, 1987, but the notice initiating assessment was issued on January 12, 1989, beyond the 12-month period.

2. Validity of Assessment Orders Dated June 1, 1990:
The petitioner filed revision applications against the assessment orders, arguing that the proceedings were time-barred. The Deputy Commissioner of Sales Tax provided partial relief by reducing the tax amounts and setting aside the penalty under section 17(3) of the State Sales Tax Act. However, the Deputy Commissioner did not address the jurisdiction issue concerning the limitation period. The petitioner maintained that the proceedings initiated on January 12, 1989, were beyond the statutory 12-month period, rendering them invalid.

3. Validity of Penalty Order Dated May 25, 1990:
The Deputy Commissioner issued a notice on October 23, 1989, proposing to levy a penalty on the petitioner under section 18(6) of the State Sales Tax Act. Subsequently, an order dated May 25, 1990, imposed a penalty of Rs. 11,000. The petitioner sought the quashment of this penalty order on the grounds that the assessment proceedings themselves were time-barred, and therefore, any penalty based on such proceedings was invalid.

4. Limitation Period for Initiating Assessment Proceedings:
The core issue was whether the assessment proceedings under section 18(6)(a) were initiated within the 12-month period from the completion of proceedings under section 4-A(1). The court examined the statutory provisions and found that the notice initiating proceedings was dated January 12, 1989, well beyond the 12-month period from the completion date of July 16, 1987. The court rejected the respondents' argument that the period prescribed under section 18(8)(ii) (two calendar years) applied, clarifying that section 18(8) pertains to different circumstances. The court concluded that the assessment proceedings were indeed time-barred.

Conclusion:
The petition was allowed, and the assessment orders and the orders passed in revisions (annexures E, F, G, G-1, and I) were set aside as barred by limitation. The court ordered the refund of any security amount to the petitioner after due verification. No order as to costs was made.

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