2019 (10) TMI 1304 - HC - VAT and Sales Tax

Validity of assessment order - time limitation - section 39(1) of the Karnataka Value Added tax Act, 2003 - HELD THAT - The contention of the petitioner that in computing the period of limitation, the period taken for disposal by the appellate authority and revisional authority shall not be taken into account in computing the period for assessment or re-assessment and as such the order impugned is barred by limitation cannot be countenanced for the reason that the reassessment order impugned is passed pursuant to the directions issued by the Commissioner of Commercial Tax exercising the powers under section 64(2) of the Act. In terms of the said provisions, the Commissioner is empowered to pass such order as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment or directing a fresh assessment. A direction issued by the Commissioner to do the fresh assessment would not come within the purview of sub-section (3) of section 40 of the Act. The period of limitation would start running from the date of passing of the order by the Commissioner under section 64(2) of the Act directing the fresh assessment. If that to be considered in terms of sub-section (1) of section 40 of the Act, the order impugned is well within the time prescribed. The arguments advanced by the learned counsel for the petitioner fails and the writ petition is dismissed with liberty to the petitioner to avail the alternative remedy of appeal available under the Act - Petition dismissed.

Summary

Issues:
Assessment barred by limitation under section 40(1) of the Karnataka Value Added Tax Act, 2003.

Analysis:
The petitioner challenged a reassessment order and demand notice dated May 30, 2018, under section 39(1) of the Act, arguing it was time-barred. The petitioner, a private limited company engaged in construction works, had previous assessment disputes. The Deputy Commissioner passed a reassessment order in 2010, later overturned on appeal in 2010. Subsequent revision proceedings were initiated but dropped in 2012. In 2014, the Commissioner set aside previous orders and remanded for fresh assessment, leading to the impugned reassessment in 2018. The petitioner contended that the reassessment was beyond the five-year limitation period under section 40(1) of the Act.

The petitioner's counsel argued that the reassessment was time-barred under section 40(1) as the order dated May 30, 2018, exceeded the prescribed five-year limit. However, the Additional Government Advocate for the Revenue contended that the reassessment was within the time limit as it was in compliance with the Commissioner's 2014 order. The court examined the provisions of section 40(1) and (3) of the Act, which govern the limitation period for assessments and reassessments.

The court noted that section 40(1) prohibits assessments or reassessments after five years from the end of the prescribed tax period. It further explained that under section 40(3), the time taken for disposal of appeals or revisional proceedings should not count towards the limitation period. The court rejected the petitioner's argument that the reassessment was time-barred, emphasizing that the reassessment was based on the Commissioner's direction under section 64(2) of the Act for a fresh assessment. The court clarified that the limitation period starts from the Commissioner's order directing the fresh assessment, not from the original assessment.

In conclusion, the court dismissed the writ petition, stating that the reassessment was not time-barred and advising the petitioner to pursue the available appeal remedy within two weeks. The court directed that the appellate authority should consider the appeal on its merits without raising any limitation objections.

This detailed analysis of the judgment highlights the legal arguments, relevant provisions, and the court's reasoning in resolving the issue of limitation in the reassessment under the Karnataka Value Added Tax Act, 2003.