2011 (1) TMI 1263 - HC - VAT and Sales Tax

Whether the Tribunal failed to look into sub-section (3) of section 21 of the Act which provides that if the notice is served within the period provided under sub-section (2) of section 21 of the Act the assessment order may be made within six months after expiration of such period? Held that - Section 21(2) of the Act says that except as otherwise provided in this section, no order of assessment or reassessment be passed after the expiry of two years from the end of such assessment year and further the proviso provided that the Commissioner may authorise the assessing authority to make such assessment or reassessment after the expiration of two years but not after the expiration of six years from the end of such year. Therefore, sub-section (2) provides limitation for eight years for passing the order. Sub-section (2) is subject to the other provision of the section. It is subject to sub-section (3) which provides that if the notice is served within the period specified in sub-section (2) the assessment may be made within six months after the expiration of such period. In this way sub-section (3) extends six months further period for passing the order. In view of the above, the order of the Tribunal is erroneous and liable to be set aside. Thus, the Tribunal is required to decide the appeal on the merits. Revision allowed.

Summary

Issues:
1. Challenge to the order of the Tribunal dated June 12, 2003 for the assessment year 1990-91.
2. Interpretation of Section 21 of the U.P. Trade Tax Act, 1948 regarding the limitation period for passing assessment orders.

Analysis:
1. The revision challenged the Tribunal's order for the assessment year 1990-91. The notice under section 21 of the U.P. Trade Tax Act was served within eight years from the expiry of the financial year, but the assessment order was passed after this period. The Tribunal held the assessment order was beyond the eight-year limit, deeming it barred by limitation under section 21(2) of the Act. However, the standing counsel argued that sub-section (3) of section 21 allows for the assessment order to be made within six months after the specified period, which was the case here. The High Court found merit in this argument, stating that the order passed on September 30, 1999, was within the permissible time frame.

2. Section 21 of the Act outlines the assessment of tax on turnover not previously assessed. Sub-section (2) imposes a limitation of two years for passing assessment or reassessment orders, extendable up to six years under certain circumstances. However, sub-section (3) provides an additional six-month period for passing the order if the notice is served within the time specified in sub-section (2). The High Court emphasized that sub-section (3) extends the time limit for passing the assessment order beyond the two or six-year period mentioned in sub-section (2). Consequently, the Tribunal's decision was deemed erroneous, and the matter was remanded for a fresh consideration on the merits.

In conclusion, the High Court allowed the revision, setting aside the Tribunal's order and remanding the case for a review on the merits. The judgment clarified the interpretation of Section 21 of the U.P. Trade Tax Act, emphasizing the importance of considering sub-section (3) in calculating the limitation period for passing assessment orders.