2010 (4) TMI 993 - HC - VAT and Sales Tax

Whether, in the facts and the circumstances of the case, the assessment (original as well as assessment on remanded case) of the dealer framed by the Assessing Authority is assessment under section 11(4) of the Punjab General Sales Tax Act, 1948 and therefore time barred having been completed beyond the period of five years prescribed under the said sub-section? Held that - The impugned assessment orders passed after the expiry of the period of five years are timebarred and cannot legally be enforced, in the obtaining circumstances of the case. Therefore, the impunged question is answered in favour of the assessees and against the Revenue

Summary

Issues Involved:
Determining the legality of assessment orders passed beyond the prescribed period under the Punjab General Sales Tax Act, 1948.

Detailed Analysis:

1. Background of the Case:
The case involves reference petitions filed by two petitioner-assessees, engaged in the business of iron and steel, under the Punjab General Sales Tax Act, 1948. The assessment orders for the years 1987-88, 1988-89, and 1989-90 were challenged through various appeals and petitions.

2. Assessment Orders and Appeals:
The Deputy Excise and Taxation Commissioner created additional demands for the mentioned assessment years, which were upheld by subsequent orders. Appeals filed by the assessees were partially accepted by the Sales Tax Tribunal, leading to further petitions and references to higher courts.

3. Questions Referred for Opinion:
The Sales Tax Tribunal referred several questions of law for opinion, including issues related to liability for tax, assessment under specific sections of the Act, and the legality of the assessment orders.

4. Legal Arguments:
The counsel for the assessees argued that the assessment orders, passed beyond seven years, were illegal and void. They cited relevant case laws and judgments to support the contention that assessments should be completed within a reasonable period, typically not exceeding five years.

5. Court's Analysis and Rulings:
The court considered the absence of a specific limitation period during the relevant assessment years but noted that a three-year limitation was later prescribed. Relying on legal precedents, the court concluded that assessments should generally be completed within three to five years. The court emphasized that the assessment orders, passed beyond the five-year limit, were illegal and could not be enforced.

6. Final Decision:
The court held that the impugned assessment orders, passed after the expiry of five years, were time-barred and legally unenforceable. Consequently, the court ruled in favor of the assessees, accepting all reference petitions and deciding in their favor.

In summary, the judgment focused on determining the legality of assessment orders passed beyond the prescribed period under the Punjab General Sales Tax Act, 1948. The court ruled that assessments should generally be completed within three to five years, and any orders passed beyond the five-year limit were deemed illegal and unenforceable.