2016 (7) TMI 439 - HC - VAT and Sales Tax

Validity of assessment order - period of limitation - Section 41(3) of the Gujarat Sales Tax Act, 1969 - Held that - it is clear that this court has already answered the said question of law by way of Sales Tax Reference No. 2 of 2004. This Court has held that it cannot be said that merely because a mode was undertaken under Section 41(7) of the Act, the limitation provided under Section 42(1) of the Act for completing the assessment would not be applicable. The reference is therefore required to be answered accordingly in favour of assessee and against the State.

Summary

Issues Involved:

1. Amendment of Respondent's Name
2. Time-Barred Assessment under Gujarat Sales Tax Act, 1969
3. Procedural Requirements for Notice Service
4. Tribunal's Decision on Assessment Order
5. Legal Interpretation of Sections 41 and 42 of the Gujarat Sales Tax Act, 1969

Issue-Wise Detailed Analysis:

1. Amendment of Respondent's Name:
The Court granted leave to amend the name of the respondent in the cause title of the appeal. The name of the respondent was corrected to read as M/s. Unitor Engineering Products.

2. Time-Barred Assessment under Gujarat Sales Tax Act, 1969:
The primary legal question was whether the assessment order passed under Section 41(3) of the Gujarat Sales Tax Act, 1969, was time-barred in view of the provisions of Section 41(3) read with Section 42(1) of the Act. The Tribunal had previously held that the assessment order was time-barred, and this decision was challenged by the State of Gujarat.

3. Procedural Requirements for Notice Service:
The State of Gujarat argued that the Tribunal erred in holding the assessment order as time-barred, emphasizing that the service of notice was a procedural requirement. The State contended that the Tribunal wrongly set aside the notice issued by the Sales Tax Officer.

4. Tribunal's Decision on Assessment Order:
The Tribunal had set aside the assessment order and the orders of the Assistant Commissioner of Sales Tax, which had confirmed the assessment. The Tribunal's decision was based on the interpretation that the assessment order was time-barred under the relevant provisions of the Act.

5. Legal Interpretation of Sections 41 and 42 of the Gujarat Sales Tax Act, 1969:
The Court referred to a previous judgment in Sales Tax Reference No. 2 of 2004, which discussed the mechanism for assessment under Sections 41 and 42 of the Act. Section 41 outlines various scenarios for tax assessment, including when the Commissioner is not satisfied with the declarations or returns and when the dealer fails to comply with notices or does not file returns. Section 42 provides the time limits for completing assessments, generally three years from the end of the year in which the last return is filed, with exceptions for cases involving unregistered dealers or fraud.

The Court reiterated that the time limit for assessments under Section 41(3) or (4) is three years, and this applies even if the assessment is made under Section 41(5). The Court rejected the State's argument that Section 41(7) provides an independent mode of assessment without a time limit, clarifying that Section 41(7) is a procedural step within the broader assessment framework.

The Court concluded that the Tribunal correctly held the assessment order as time-barred, as the limitation period under Section 42(1) of the Act was applicable. The reference was answered in favor of the assessee and against the State.

Conclusion:
The Court upheld the Tribunal's decision that the assessment order was time-barred under the provisions of the Gujarat Sales Tax Act, 1969. The procedural requirements for notice service and the legal interpretation of Sections 41 and 42 were central to this judgment. The reference was answered accordingly, affirming the Tribunal's interpretation of the time limits for completing tax assessments.