2017 (5) TMI 1543 - HC - VAT and Sales Tax

Jurisdiction of revisional authority - time limitation - suo motu revision under Section 49 (3) of the Chhattisgarh VAT Act. Held that - The Commissioner, who is a revisional authority, either may act suo motu or on the information received and he is empowered to pass order exercising, modifying, cancelling or directing fresh assessment, but he must pas that order within one calendar year from the date of initiation of the proceeding. What is required and condition precedent for initiation of proceeding by invoking Section 49 (3) of the Chhattisgarh Value Added Tax, 2005, would be initiation of proceeding under Section 49 (3) of the Act, 2005 and initiation can be done only when the revisional authority applies its mind to the facts of the case of his own motion or on the information received. Once there is application of mind by the revisional authority for suo motu proceeding or on the basis of the information received and he decides to issue notice as contemplated in Rule 61 of the Chhattisgarh Valued Added Tax Rules, 2006, then the exercise of initiation is complete and initiation cannot be said to be made only when the notice is received under Rule 61 by the assessee - Once the proceeding is initiated by the revisional authority / Commissioner under Section 49 (3) of the Chhattisgarh VAT Act by applying its mind and he directs issuance of notice, then further duty imposed by the legislature under Section 49 (3) is to pass the order enhancing, modifying or cancelling the order of assessment within one calendar year from the date of initiation of the proceeding. It is settled law that if the statutory provision as to time is a condition for exercise of a statutory power as distinguished from a duty, the prescription as to time will be construed as mandatory. In the present case, it has already been held that the date of initiation of the proceeding would be the date on which the revisional authority applies its mind to the facts and circumstances of the case which in this case, the 14th of July, 2015 (in all the six writ petitions herein), the date on which the notice was issued to the petitioners after applying its mind. Thus, computing one calendar year as employed in Section 49 (3) of the Chhattisgarh VAT Act from the date of initiation of proceeding, one calendar year would end on 31st of December, 2016, whereas the impugned order was passed on 28-11-2016 prior to completion of one calendar year i.e 31-12-2016. -Thus, the notice in question would be found to be within the time stipulated under the above stated provision and it is held that the revisional authority has passed order under Section 49 (3) of the Chhattisgarh VAT Act on 28-11-2016 (in all the six writ petitions herein) within one calendar year from the date of initiation of the proceeding. It cannot be said that the exercise of jurisdiction by the learned revisional authority under Section 49 (3) of the Chhattisgarh VAT Act is beyond jurisdiction and the order has not been passed within one calendar year. Petition dismissed.

Issues Involved:
1. Whether the order passed by the Additional Commissioner under Section 49(3) of the Chhattisgarh VAT Act was within the prescribed one calendar year from the date of initiation of the proceeding.
2. Interpretation of the term "initiate" or "initiation" as used in Section 49(3) of the Chhattisgarh VAT Act.
3. Definition and computation of "calendar year" as per Section 49(3) of the Chhattisgarh VAT Act.
4. Whether the provisions of Section 49(3) of the Chhattisgarh VAT Act are mandatory or directory in nature.
5. Applicability of precedents and principles from other statutes and judgments to the interpretation of Section 49(3) of the Chhattisgarh VAT Act.

Issue-Wise Detailed Analysis:

1. Whether the order passed by the Additional Commissioner under Section 49(3) of the Chhattisgarh VAT Act was within the prescribed one calendar year from the date of initiation of the proceeding:
The court determined that the initiation of the proceeding occurred on 14th July 2015, when the revisional authority issued the notice after applying its mind to the facts of the case. The impugned order was passed on 28th November 2016, which was within one calendar year from the date of initiation, as the calendar year ended on 31st December 2016. Hence, the order was deemed to be within the prescribed time limit.

2. Interpretation of the term "initiate" or "initiation" as used in Section 49(3) of the Chhattisgarh VAT Act:
The court referred to various dictionaries and legal interpretations to define "initiate" as to begin, commence, or set going. It concluded that initiation of the proceeding is when the revisional authority applies its mind and decides to issue a notice, not when the notice is received by the assessee. This interpretation aligns with the Supreme Court's ruling in Pallav Sheth v. Custodian, where initiation is marked by the court's or authority's decision to issue a notice.

3. Definition and computation of "calendar year" as per Section 49(3) of the Chhattisgarh VAT Act:
The court referred to dictionary definitions and previous judgments to conclude that a "calendar year" means a period from January 1 to December 31. The Full Bench decision of the Madhya Pradesh High Court in Kanhayyalal Shivasahay Sharma v. Deputy Commissioner of Sales Tax was cited, which held that "three calendar years" means three calendar years calculated from the first of January following the calendar year in which the assessment period expired. The court rejected the petitioners' argument that a calendar year could start at any point other than January 1.

4. Whether the provisions of Section 49(3) of the Chhattisgarh VAT Act are mandatory or directory in nature:
The court held that the provision to pass an order within one calendar year is mandatory. It cited the Supreme Court's decisions in M/s. Onkarmal Nathmal Trust and M/s. M.M. Rubber and Co., which emphasized that statutory provisions as to time are mandatory when they are a condition for the exercise of statutory power. The court concluded that the order must be passed within the stipulated time to be valid.

5. Applicability of precedents and principles from other statutes and judgments to the interpretation of Section 49(3) of the Chhattisgarh VAT Act:
The court relied on various precedents, including the Supreme Court's rulings and Full Bench decisions of the Madhya Pradesh High Court, to interpret the terms "initiate" and "calendar year." It emphasized that these interpretations are binding and provide a clear framework for understanding the statutory provisions of the Chhattisgarh VAT Act.

Conclusion:
The court dismissed the writ petitions, holding that the revisional authority exercised its jurisdiction within the prescribed one calendar year from the date of initiation of the proceeding. The orders passed by the Additional Commissioner were deemed to be within jurisdiction, and there was no jurisdictional error. The parties were directed to bear their own costs.

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