2017 (5) TMI 1798 - HC - VAT and Sales Tax

Validity of assessment order - Legality and validity of the notice - Power of revision by Commissioner conferred under Section 49 (3) of the Chhattisgarh Value Added Tax Act, 2005 - when the proceeding is deemed to have been initiated under Section 49 (3) of the Act, 2005? - HELD THAT - The word initiate or initiation has not been defined in the Act, 2005. Since it has not been defined in the Act, it would be appropriate to refer the dictionary meaning of the word initiate . In Webster's Third New International Dictionary, the word initiate has been defined as to begin or set going; make a beginning of; perform or facilitate the first actions, steps or stages of. Likewise, in Shorter Oxford English Dictionary, the word initiate has been defined as to begin, commence, enter upon; to introduce, set going, originate - The word initiate has been used in Section 20 of the Contempt of Courts Act, 1971. Section 20 of the Contempt of Courts Act, 1971 provides that no court shall initiate any proceedings for contempt, either on its own motion or otherwise, after the expiry of a period of one year from the date on which the contempt is alleged to have been committed. The aforesaid provision came up for consideration before the Supreme Court in the matter of Pallav Sheth v. Custodian and Others 2001 (8) TMI 1239 - SUPREME COURT . and Their Lordships while considering the scope and meaning of the word initiate under Section 20 of the Contempt of Courts Act, 1971 have held that in the case of suo motu proceedings, contempt proceeding must be initiated by the court by issuing a notice and in other cases initiation can only be by a party filing an application. Further, the Supreme Court clearly held that under Section 20 of the Contempt of Courts Act, 1971, action can be initiated, either by filing an application or by the court issuing notice suo motu, within a period of one year from the date on which the contempt is alleged to have been committed. Thus, in the considered opinion of the Court 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 exercise of suo motu proceeding 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 done only when the notice is received under Rule 61 by the assessee. Service of notice to the assessee is a further step after initiation of suo motu proceeding by the revisional authority to complete and conclude the exercise of suo motu revisional jurisdiction. Whether the revisional authority has initiated proceeding under sub-section (3) of Section 49 of the Act, 2005 well within the period prescribed? - HELD THAT - The penalty proceeding has been closed against the petitioner by order dated 29-7-2013 (Annexure P-2) and three calendar years would expire on 31-12-2016, and in the instant case, the Commissioner, Commercial Tax in exercise of suo motu jurisdiction applied its mind to the facts of the case, it appears, on or before 26-12-2016 and issued notices to the petitioner on 26- 12-2016. Therefore, the proceeding is deemed to have been initiated on or before 26-12-2016 before completion of three calendar years from the date of imposing penalty i.e. 29-7-2013 - the contention of the petitioner that the notice dated 26-12-2016 issued by the revisional authority is without jurisdiction and without authority of law sans merit. The writ petition is dismissed.

Summary

Issues:
Validity of notice issued by Commissioner under Section 49(3) of the Chhattisgarh Value Added Tax Act, 2005.

Analysis:
The petitioner challenged the legality of a notice issued by the Commissioner, Commercial Tax, Raipur, under Section 49(3) of the Act, 2005. The notice was regarding the imposition of a penalty against the petitioner. The petitioner argued that the notice was barred as per proviso (a) to Section 49(3), which states that no proceeding shall be initiated after three years from the date of the order sought to be revised. The petitioner contended that the notice issued on 26-12-2016 was beyond the three-year limit from the order passed on 29-7-2013. The petitioner sought to quash the notice on this ground.

The Court examined the provisions of Section 49(3) of the Act, 2005, which empowers the Commissioner to revise orders if prejudicial to revenue. Proviso (a) to Section 49(3) sets a time limit of three calendar years from the date of the order sought to be revised for initiating proceedings. The Court analyzed the meaning of the term "initiate" in legal context, referring to dictionaries and legal sources. It emphasized that initiation of revisional proceedings occurs when the authority applies its mind to the case and decides to issue a notice to the concerned party.

Drawing parallels with the Contempt of Courts Act, the Court highlighted that initiation of proceedings involves the authority applying its mind and deciding to proceed, not merely the receipt of a notice by the party. The Court clarified that in this case, the revisional authority had initiated proceedings well within the three-year limit from the date of the original order imposing a penalty. The Court dismissed the petition, stating that the notice issued on 26-12-2016 was valid and within the statutory time limit. The Court distinguished cited judgments as not applicable to the present case, concluding that the petition lacked merit and dismissed it at the admission stage without costs.