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2008 (8) TMI 806 - HC - VAT and Sales TaxExtension of time - whether exercise of power of extension of time after assessment having become time-barred was permissible? - Held that - As there is no express mention of any power to grant extension after the assessment has become time-barred. In absence of any contrary view we respectfully follow the judgment of the Karnataka High Court in Bharat Heavy Electricals Ltd. s case 2001 (8) TMI 1367 - KARNATAKA HIGH COURT which is holding the field for the last more than ten years on an analogous provision and hold that the power of extension of time for completing assessment has to be exercised before the assessment becomes time-barred. This question is answered in favour of the assessee.
Issues:
1. Validity of extension of time for assessment. 2. Requirement of following principles of natural justice. 3. Permissibility of exercising power of extension after assessment has become time-barred. 4. Interpretation of relevant legal provisions. Issue 1: Validity of Extension of Time for Assessment The appeal was filed under section 68 of the Punjab Value Added Tax Act and section 9(2) of the Central Sales Tax Act, challenging the judgment of the Punjab Value Added Tax Tribunal. The Tribunal had granted an extension of time for assessment beyond the period of limitation. The assessee argued that the extension order was beyond the period of limitation and objected to it. The Tribunal justified the extension citing the pendency of the assessee's case for the year 1999-2000. The High Court analyzed the provisions and held that the power of extension must be exercised before the assessment becomes time-barred. The Court referred to a Karnataka High Court judgment and concluded that the extension after the assessment period is impermissible. Issue 2: Requirement of Following Principles of Natural Justice The assessee contended that the principle of natural justice should have been followed in granting the extension of time. The respondent-Revenue argued that as there was no limit for exercising the power of extension, the extension was valid. The High Court observed that the power of extension must be exercised within the period of limitation for assessment. The Court emphasized that the administrative power of extension should also adhere to principles of natural justice, especially when affecting civil rights. The Court held that the extension order was invalid due to being granted after the assessment period had lapsed. Issue 3: Permissibility of Exercising Power of Extension After Assessment Becomes Time-Barred The central issue was whether the power of extension of time for assessment could be exercised after the assessment had become time-barred. The High Court, relying on the Karnataka High Court judgment, concluded that the power of extension must be exercised before the assessment period expires. The Court highlighted that the extension cannot be used to overcome the period of limitation by unduly extending the power beyond its legitimate purpose. The Court found that the order granting extension of time was unsustainable due to being passed after the assessment period had ended. Issue 4: Interpretation of Relevant Legal Provisions The High Court referred to the provisions of section 11 of the Punjab General Sales Tax Act, 1948, which outlined the assessment procedures and time limits. The Court noted that there was no explicit provision allowing extension after the assessment period had lapsed. By following the Karnataka High Court's precedent, the High Court held that the power of extension must be exercised before the assessment becomes time-barred. The Court emphasized the importance of adhering to legal provisions and precedents in interpreting and applying the law. In conclusion, the High Court allowed the appeal, setting aside the impugned order due to the invalidity of the extension granted after the assessment period had expired. The judgment underscored the necessity of following legal procedures, including principles of natural justice, and interpreting legal provisions in line with established precedents.
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