2017 (7) TMI 374 - HC - VAT and Sales Tax

Whether the assessment proceedings in relation to each of the petitioner can be allowed to continue when the notification for extension of period of assessment under Section 27 (9) of the Chhattisgarh Commercial Tax Act, 1994 (for short the Act, 1994 ) has been issued after expiry of the original period of limitation as provided under Section 27 (8) of the Act, 1994? Held that - Section 27 (8) of the Act, 1994 provides that the assessment shall be made in respect of a registered dealer and a dealer referred to in clause (b) of sub-section (6) within a period of two calender years from the end of the period for which assessment is to be made; and (ii) in respect of a dealer who has failed to apply for registration, within a period of two calender years from the commencement of proceedings under sub-section (6) - In the cases in hand all the petitioners are registered dealers, therefore, they would be covered under Clause (i) of sub-section (8). Sub-section (9) of Section 27 is relevant for decision making. Since admittedly, the notification in respect of the relevant assessment year has been issued after the expiry of original period of limitation, the assessment proceedings have lapsed and the same cannot be revived by issuing notification after the period of limitation is over. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Whether assessment proceedings can continue after the expiry of the original period of limitation under Section 27 (8) of the Chhattisgarh Commercial Tax Act, 1994.

Analysis:
The judgment dealt with the common issue of whether assessment proceedings could continue after the expiration of the original period of limitation under Section 27 (8) of the Chhattisgarh Commercial Tax Act, 1994. The State Government had issued notifications for extension of the assessment period for certain years, but subsequent notifications were issued after the extended period had already lapsed. The relevant provision, Section 27 (9) of the Act, allowed for an extension of the assessment period by the State Government for valid reasons. The Supreme Court's decision in a similar case highlighted the importance of recording reasons for such extensions and ensuring that the power is not abused. The Court emphasized that once the period of limitation expires, the right to assess also expires, and extending the period after expiration would not be valid. The judgment compared provisions from different Acts to establish the essence of the law regarding extensions of assessment periods.

The Court referred to the Supreme Court's decision in a case involving the Punjab Act to draw parallels with the Chhattisgarh Act. The judgment emphasized the significance of the Commissioner recording valid reasons for extending the assessment period and highlighted that the extension cannot be granted after the original period of limitation has expired. The Court reiterated that once the limitation period lapses, the right to assess also extinguishes, and any extension granted thereafter would not be legally sustainable. The judgment concluded that since the notifications for the relevant assessment years were issued after the original period of limitation had expired, the assessment proceedings stood lapsed and could not be revived through subsequent notifications.

In conclusion, the Court allowed all the writ petitions and quashed the assessment proceedings, emphasizing that the notifications issued after the expiration of the original period of limitation could not revive the assessment proceedings. The judgment provided a detailed analysis of the legal provisions, previous court decisions, and the essence of extending assessment periods, ensuring a fair and just interpretation of the law in the context of the Chhattisgarh Commercial Tax Act, 1994.