2015 (10) TMI 110 - HC - VAT and Sales Tax

Challange to assessment of tax and levy of penalty - Bar of limitation - Whether the limitation for reassessment under section 34 of the act is to be counted in relation to the period in which the return/revised return is filed or whether the same is counted in relation to the period to which the return/revised return relates to - Held that - Rule 36 mandates that where the Commissioner makes a default assessment of tax under Section 32 or an assessment of penalty under Section 33 of the Act, he shall record the order in Form DVAT-24 and DVAT-24A respectively and such notice of assessment or notice of assessment of penalty shall be served in the manner prescribed in Rule 62. The daily order-sheet recorded on 31.03.2015 is not in Form DVAT-24 or DVAT-24A, though the impugned notices dated 01.04.2015 are in Form DVAT-24 and DVAT-24A - Since the daily order sheet is not in the Form as mandated by Rule 36, it cannot be countenanced that merely because the orders based on which the online orders were issued on 01.04.2015 were factually recorded in the order sheet dated 31.03.2015, there was sufficient compliance with Rule 36 and Section 34. Rule 36 also mandates that the order is to be served on the dealer in the manner prescribed under Rule 62. The daily order sheet recorded on 31.03.2015 is not a notice of default assessment, which could have been served on the dealer in the manner prescribed under Rule 62. - Since the impugned notice of default assessment of tax and interest and the impugned notice of assessment of penalty dated 01.04.2015 have been issued beyond the statutory period, the same cannot be sustained and are accordingly quashed. - Decided in favour of assessee.

Summary

Issues:
Impugned notice of default assessment of tax and interest beyond limitation period under Section 34 of Delhi Value Added Tax Act, 2004.

Analysis:
The petitioner challenged the notice of default assessment of tax and interest, along with the notice of assessment of penalty, issued beyond the extended period of limitation of 6 years under Section 34 of the Act for the financial year 2008-09. The petitioner contended that the impugned notices were issued after the statutory period of 6 years from the relevant year, ending on 31.03.2015. The respondents argued that the notices were well within time as they were based on orders recorded on 31.03.2015. However, the impugned notices were issued on 01.04.2015, which was beyond the extended limitation period of 6 years as per the proviso under Section 34.

The key question for consideration was whether the limitation for reassessment under Section 34 should be counted concerning the period of filing the return or the period to which the return relates. Section 34(1) of the Act lays down the limitation on assessment and reassessment, extending the period to six years in case of concealment or failure to disclose material particulars. The section was amended in 2013, changing the period of limitation to the end of the year comprising tax periods for which the return was furnished. The impugned notices in this case were issued after the expiry of the extended 6-year period, making them unsustainable.

Rule 36 of the Delhi Value Added Tax Rules 2005 mandates the recording of default assessment orders in Form DVAT-24 and DVAT-24A for tax and penalty assessments, respectively. The impugned notices were issued on 01.04.2015, not in compliance with the rule as the daily order sheet recorded on 31.03.2015 was not in the prescribed form. The daily order sheet did not serve as a notice of default assessment, as required by Rule 62. As a result, the impugned notices of default assessment and penalty, being issued beyond the statutory period, were quashed by the court.

In conclusion, the writ petition was allowed, and the impugned notices were deemed unsustainable due to being issued beyond the statutory limitation period. The parties were left to bear their own costs, and all pending applications were disposed of accordingly.