2017 (8) TMI 625 - HC - VAT and Sales Tax

Time Limitation - Interpretation of Statute - Sub-sections (3) and (4) of Section 77 and Section 30(2) of the PVAT Act - The petitioner s case is that for the assessment year 2008-2009, if at all, the Assessing Officer seeks to re-open the assessment, it should have been done before 31.03.2014 and likewise, for the assessment year 2009-2010, it will be 31.03.2015 and for the assessment year 2010-11, it will be 31.03.2016. The impugned notices issued on 28.02.2017, are beyond the five year period, as stipulated under Section 30(2) of the PVAT Act and therefore, they are liable to be set aside on the ground of lack of jurisdiction - Held that - The authority for Clarification and Advance Ruling has issued a clarification on 23.09.2013 stating that the said goods were residual goods and liable to be taxed at 12.5% upto 31.12.2011 and at 14.5% with effect from 01.01.2012 under Entry No.1 of Part A of Fourth Schedule of PVAT Act. Thus, by referring to the said Clarification and Advance Ruling, the respondent has issued the impugned notices on 28.02.2017 and would state that in view of the embargo placed under Sub-section (3) of Section 77 of the PVAT, the respondent cannot take a decision on the said issue and the issue having been decided by the Advance Ruling authority only on 23.09.2013, the impugned notices issued on 28.02.2017 are well within the period of limitation, which expires only on 22.09.2017. Hence, it is the contention of the learned Government Advocate that the limitation for reopening the assessment should be computed from 23.09.2013 and therefore, the impugned notices are not time barred. The crucial words to be interpreted are an application and an applicant occurring in sub-section (3) of Section 77 of PVAT Act. In my considered view, in the present factual matrix, both these expressions can refer to only the assessee/dealer, who has approached the authority under Section 77 of the PVAT Act. If any other interpretation is to be given, then it would be expanding the scope of Sub-section 3 of Section 77 of the PVAT Act and would be directly in conflict with Section 30(2) of the PVAT Act, which prescribes an outer time limit for the Assessing Officer to re-do an assessment in the event he comes to a conclusion that the assessee has been assessed to lower rate of tax. In other words, if the interpretation given by the respondent is to be accepted, the finality attached to an order of assessment itself would be lost, as sub-section (2) of Section 30 of the PVAT Act would be rendered otiose. Admittedly, the respondent has already assessed the petitioner to tax in respect of the three assessment years and what the Assessing Officer seeks to do by issuing impugned notices is to revise the assessment, that too, based upon a Clarification given by the Advance Ruling authority at the instance of third party dealers. Therefore, the respondent cannot be given the advantage of reopening the assessment under the guise that the Advance Ruling authority has given a clarification, which will bind the goods dealt with by the petitioner - If the interpretation given by the respondent is to be accepted once again, this will run counter to the finality attached to an order of assessment as mentioned in Section 30(2) of the PVAT Act. This Court is of the clear view that the impugned notices are clearly barred by limitation and the respondent is not entitled to reopen the assessment beyond the expiry of 5 years in respect of each of the assessment years, namely, 2008-09, 2009-10 and 2010-11, which came to an end on 31.03.2014, 31.03.2014 and 31.03.2016 respectively - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to pre-assessment notices under CST Act for assessment years 2008-09, 2009-10, and 2010-11 on the ground of limitation under Section 30(2) of PVAT Act.

Analysis:
1. The petitioner contested the pre-assessment notices issued under the CST Act for the mentioned assessment years, arguing that they were beyond the five-year limitation period as per Section 30(2) of the PVAT Act. The notices issued on 28.02.2017 exceeded the statutory time limit, which led to the jurisdictional challenge.

2. The Revenue contended that under Sub-sections (3) and (4) of Section 77 of the PVAT Act, the Assessing Officer couldn't decide on issues pending under Section 77 applications. The impugned notices were issued based on a clarification by the Authority for Clarification and Advance Ruling, binding the petitioner to a revised tax rate, justifying the notices within the limitation period.

3. The interpretation of Section 77(3) and Section 30(2) of the PVAT Act was central to the case. The court referenced precedents to establish that a clarification or ruling binds the applicant but doesn't restrict the assessing authority from independent decision-making. The finality of an assessment order and the limitation period for reassessment were crucial considerations.

4. The court analyzed the impact of a clarification issued by the Advance Ruling authority on the petitioner's assessments. It concluded that the impugned notices were time-barred, emphasizing that the limitation for reassessment is fixed at five years from the expiry of the relevant assessment year, not from the date of the clarification.

5. Ultimately, the court allowed the writ petitions, quashing the pre-assessment notices and ruling in favor of the petitioner, highlighting that the respondent was not entitled to reopen the assessments beyond the statutory limitation period for each assessment year. The judgment clarified the interplay between Section 77 provisions and the limitation period under Section 30(2) of the PVAT Act, ensuring adherence to legal principles and protecting the petitioner's rights.