2006 (12) TMI 454 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Notice u/s 21(1) of the Punjab General Sales Tax Act, 1948.
2. Limitation for Exercise of Revisional Jurisdiction.

Summary:

1. Validity of Notice u/s 21(1) of the Punjab General Sales Tax Act, 1948:
The petition challenges the notice dated September 4, 2006, u/s 21(1) of the Punjab General Sales Tax Act, 1948, proposing to revise the order of assessment finalized on March 20, 2001. The petitioner, a co-operative society registered under the Punjab Co-operative Societies Act, 1961, contended that the period prescribed for completing assessment should also apply to the exercise of suo motu revisional jurisdiction. Reliance was placed on various judgments, including Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur [1963] 14 STC 976, and Mechfield Industries v. Commissioner of Taxes, Assam [2006] 146 STC 695, to argue that revisional jurisdiction exercised after the prescribed period should be considered without jurisdiction.

2. Limitation for Exercise of Revisional Jurisdiction:
The State argued that no limitation is prescribed for the exercise of revisional jurisdiction u/s 21(1) of the 1948 Act, citing judgments such as State of Haryana v. National Scientific Industries [1996] 103 STC 455. The court examined whether revisional jurisdiction could be exercised only within the period prescribed for completing assessment or within a further reasonable period. It referred to several Supreme Court judgments, including State of Orissa v. Debaki Debi [1964] 15 STC 153 (SC) and S. B. Gurbaksh Singh v. Union of India [1976] 37 STC 425 (SC), which emphasized that even in the absence of a statutory limitation, revisional power must be exercised within a reasonable period.

The court concluded that the period prescribed for completing assessment does not control the exercise of revisional jurisdiction. However, even when no limitation is prescribed, the power of revision must be exercised within a reasonable period, which depends on the facts of each case. In this case, the notice issued after more than five years without any special justification was deemed unreasonable. Therefore, the impugned notice dated September 4, 2006, was quashed as arbitrary.

Conclusion:
The petition was allowed, and the impugned notice dated September 4, 2006, was quashed.