2001 (8) TMI 1367 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the deferment orders dated July 31, 1989, and December 3, 1998.
2. Applicability of the stay order granted by the Supreme Court and its impact on the limitation period for assessment.
3. Legality of retrospective operation of the deferment order to save the limitation period.

Summary:

1. Validity of the Deferment Orders:
The appellant, an electronic division of BHEL, challenged the deferment orders dated December 3, 1998, passed by the Joint Commissioner u/s 12(6)(b) of the Karnataka Sales Tax Act, 1957, read with section 9(2) of the Central Sales Tax Act, 1956, for the assessment years 1980-81 to 1984-85. The core question was whether the impugned deferment order is valid in law and can be availed of by the assessing authority to gain time for making the assessment. The court noted that the first deferment order dated July 31, 1989, was invalid as it was not preceded by a show cause notice, violating the principles of natural justice. The second deferment order dated December 3, 1998, was also challenged on the grounds that it was passed after the expiry of the period of limitation and sought to give it retrospective effect, which is legally impermissible.

2. Applicability of the Stay Order:
The appellant argued that the stay order granted by the Supreme Court in Writ Petition No. 237 of 1993, which quashed the provisional assessment orders, should be considered while computing the limitation period. The court observed that the stay order did not explicitly prohibit the final assessments and that the assessing authority did not treat the stay order as a bar to passing the assessment orders. The learned single Judge's reasoning that the stay order prohibited the assessment was found to be unjustified.

3. Legality of Retrospective Operation:
The court held that the deferment order passed after the expiry of the period of limitation could not be given retrospective effect to save the limitation period. The provision for exclusion of time in computing the period of limitation for deferment of assessment is meant to prevent further running of time against the Revenue if the limitation had not expired. Once the period of limitation expires, the right to make an assessment gets extinguished, and the deferment provisions cannot be used to overcome this.

Conclusion:
The impugned deferment order dated December 3, 1998, and the order of the learned single Judge were set aside. The respondents were restrained from making any assessment at this stage due to the expiry of the period of limitation. However, the judgment does not absolve the appellant of the liability to pay the admitted tax as per the returns. The writ appeals were allowed with no order as to costs.