2019 (4) TMI 1758 - HC - VAT and Sales Tax

Validity of assessment order - time limitation - case of petitioner is that the said orders passed in terms of Section 25B of the KVAT Act/Section 17(7) of the KGST Act are illegal, in that, they have been passed after the expiry of the period of limitation contemplated under Section 25(1) of the KVAT Act as also Section 17 of the KGST Act - HELD THAT - For the assessment year 2007-08, the assessment under the KVAT Act was initially completed by the Assessing Authority, and pursuant to an appeal carried by the petitioner assessee, the matter has now been remanded by the First Appellate Authority to the Assessing Authority. The completion of the assessment, based on the directions of the First Appellate Authority, cannot be affected by any period of limitation prescribed under Section 25(1) of the KVAT Act. However, a notice under Section 25(1) of the KVAT Act has also been issued to the petitioner by the Department. For the assessment year 2008-09, the notice under Section 25(1) was issued on 11.3.2016 well beyond the period of five years contemplated under Section 25(1) of the KVAT Act. Under said circumstances, the said notice as also Ext.P8 order that purports to extent the time limit, cannot be legally sustained - The respondent are directed to proceed with the assessment for the year 2009-10, solely based on the notice dated 10.9.2013 issued to the petitioner. For the assessment year 2010-11, both the notices issued to the petitioner under Section 25(1) of the KVAT Act are dated 10.9.2013 and 11.3.2016, within the time limit of 5 years from the end of the assessment year prescribed under Section 25(1) of the KVAT Act. Inasmuch as the notices were issued within time and did not require any extension for them to be pursued, Ext.P10 order under Section 25B was strictly unnecessary. Petition dismissed.

Summary

Issues:
1. Validity of orders passed under Section 25B of the KVAT Act and Section 17(7) of the KGST Act.
2. Legality of notices issued beyond the prescribed time limit under Section 25(1) of the KVAT Act and Section 17 of the KGST Act.

Analysis:
1. For the assessment year 2007-08, the completion of assessment cannot be affected by the limitation period under Section 25(1) of the KVAT Act due to a remand by the First Appellate Authority. However, notices and orders issued beyond the five-year limit are quashed, allowing assessment based on the Appellate order. The respondent is directed not to consider new facts from the late notices.

2. Concerning the assessment year 2008-09, notices issued after the five-year limit are deemed invalid, following the Supreme Court decision. The orders extending the time limit are quashed, and assessments are to proceed based on the timely notice. For the year 2009-10, the timely notice is valid, but the late notice and order extending time are quashed, directing assessment based solely on the valid notice.

3. In the case of the assessment year 2010-11, notices were issued within the prescribed time limit, rendering the order extending the time unnecessary. The challenge against the order is rejected, and assessment is to proceed promptly. Lastly, for the assessment year 2011-12 under the KGST Act, both notices were within the four-year limit, and the order extending the time was validly issued before the expiry, allowing the Department to complete the assessment based on the extension. The writ petition is disposed accordingly.