2012 (11) TMI 1048 - HC - VAT and Sales Tax

Whether the assessment order passed on February 18, 2008 in respect of the assessment year 2001-02 where the return had been filed on April 30, 2002 was within limitation and further that the Commissioner on January 7, 2009 could validly extend the limitation up to March 31, 2009? Held that - Find no merit in the appeal. Section 11(3) of the Punjab General Sales Tax Act provides for a period of limitation for framing of assessment whereby the assessing authority can pass an order of assessment within a period of three years from the last date prescribed for furnishing the last return in respect of any period. Thus, under the circumstances valid assessment could be framed up to April 30, 2005 as the last date for filing the return in the present case was April 30, 2002. The assessment having been framed on February 18, 2008 was, therefore, clearly beyond limitation as no order extending the limitation had been passed by any competent authority before the expiry of period of limitation. Any subsequent order extending the period of limitation passed by the Commissioner would not clothe the assessing officer with jurisdiction to frame assessment which could be held to be within limitation. The issue stands settled by the decision of this court in Shreyans Industries Limited s case 2008 (8) TMI 806 - PUNJAB AND HARYANA HIGH COURT wherein held that there is no express mention of any power to grant extension after the assessment has become time-barred.

Summary

Issues:
1. Sustainability of the order passed by the VAT Tribunal
2. Character of the prescribed period under the Punjab General Sales Tax Act
3. Interpretation of the term 'assessment'
4. Justification of setting aside the original assessment order by the VAT Tribunal

Analysis:
1. The State filed an appeal challenging the VAT Tribunal's order dated March 15, 2010, raising substantial questions of law. The Tribunal set aside the assessing authority's order dated February 18, 2008, due to limitation issues. The State argued that the assessment was within limitation as extended by the Commissioner, but the Tribunal erred. The issue was whether the assessment order was timely for the year 2001-02.

2. The Punjab General Sales Tax Act's section 11(3) prescribes a three-year limitation for assessment. The assessing authority must pass an assessment order within three years from the last date for filing the return. In this case, the assessment order of February 18, 2008, for the year 2001-02 was beyond the limitation period. The Commissioner's subsequent extension of the limitation did not validate the assessment as it was passed after the expiry of the limitation period.

3. The court referred to a previous judgment and held that the power to extend the time for assessment must be exercised before the assessment becomes time-barred. The court emphasized that no extension can be granted after the assessment is already time-barred. Therefore, the assessment order in question was rightly set aside by the VAT Tribunal due to being beyond the limitation period.

4. The appeal was dismissed on both merit and limitation grounds. The court noted that the appeal was also barred by limitation due to a significant delay. The plea for condonation of delay was not considered sufficient cause under the Limitation Act. The court highlighted the importance of adhering to limitation periods to prevent dilatory tactics and ensure timely legal remedies.

In conclusion, the court upheld the VAT Tribunal's decision to set aside the assessment order due to limitation issues and dismissed the appeal on both merit and limitation grounds, emphasizing the significance of adhering to statutory limitation periods.