2019 (11) TMI 719 - HC - VAT and Sales Tax

Time limitation - scope of the term assessment - whether the impugned notices are liable to be interfered with on the ground that they are barred by limitation as provided under Section 24(5) of the PVAT Act, 2007? - HELD THAT - A careful perusal of provision under Section 24(5) would show that the term assessment alone is used and not an order of assessment . The term assessment is defined under Section 2(e) as extracted supra. It means determination of business turnover of a dealer in prescribed manner to ascertain the tax liability under the said Act by self assessment, re-assessment and assessment by scrutiny and best judgment assessment. Therefore, the term assessment cannot be construed only as an order of assessment and on the other hand, the said term assessment consists several process commencing from the issuance of notice to passing of the order of assessment. Thus, the term assessment includes passing of an order of assessment as well and thus, it does not mean the order of assessment as such. Needless to say that for determination of business turnover of a dealer in the prescribed manner and to ascertain the tax liability, the Assessing Officer has to undertake a series of exercise commencing from the issuance of notice, conducting enquiry and thereafter to pass order of assessment. The phrase used under Section 24(5), viz., no assessment under the Section for any year shall be made after a period of three years cannot be considered as the one of passing the assessment order itself within three years and on the other hand, if the process of making the assessment begins by issuing a notice within the period of three years, the assessment order passed later, even after the expiry of three years, cannot be hit by the period of limitation, as provided under Section 24(5). In this case, it is seen that summons in Form-PP for the years 2011-12 to 2013-14 were issued on 07.11.2014 and again on 04.01.2016, wherein and whereby the assessee was called upon to produce certain documents with reference to an enquiry under the PVAT Act, 2007, in respect of assessment years 2011-12 to 2014-15. Therefore, the above summons, which is otherwise called as notice calling upon the petitioner to produce the documents for the purpose of assessment in respect of those assessment years, are to be construed as the commencement of assessment proceedings - When the above said notices were issued before the expiry of three years, this Court is of the view that the consequent Pre-assessment notices impugned in these writ petitions are not barred by limitation and therefore, Section 24(5) is not attracted in these cases in any manner. Petition dismissed granting liberty to the petitioner to give reply/objection to the notice of proposal within a period of two weeks from the date of receipt of a copy of this order.

Summary

Issues Involved:
1. Validity of the impugned notices based on the limitation period under Section 24(5) of the PVAT Act, 2007.
2. Jurisdiction of the second respondent in issuing the impugned notices.
3. Determination of tax liability for the assessment years 2011-2012 to 2014-2015.

Issue 1: Validity of the Impugned Notices Based on the Limitation Period

The petitioner contended that the pre-assessment notice issued on 28.05.2018 for the assessment years 2011-12 to 2014-15 was time-barred under Section 24(5) of the Puducherry VAT Act, 2007, which stipulates that no assessment for any year shall be made after a period of three years from the end of the year to which the return relates. The petitioner argued that since the notice was issued beyond this period, it was illegal and without jurisdiction.

The court examined the relevant provisions of the PVAT Act, specifically Section 2(e) defining "assessment" and Section 24(5). The court noted that the term "assessment" includes the entire process of determining the business turnover and tax liability, which begins with the issuance of a notice and ends with the passing of the assessment order. The court referenced multiple precedents, including the Full Bench decision in M.Gulam Mohideen vs. The Commissioner of Agricultural Income Tax Board of Revenue, which established that initiating assessment proceedings within the prescribed period suffices, even if the final order is passed later.

The court concluded that the term "assessment" encompasses the initiation of proceedings within the limitation period. Since the summons for the relevant assessment years were issued on 07.11.2014 and 04.01.2016, within the three-year limitation period, the subsequent pre-assessment notices were not barred by limitation.

Issue 2: Jurisdiction of the Second Respondent

The petitioner questioned the jurisdiction of the second respondent in issuing the impugned notices. The court found that the second respondent had issued summons and notices within the statutory period, thereby commencing the assessment process within the limitation period. The issuance of summons on 07.11.2014 and 04.01.2016 was deemed as the initiation of assessment proceedings, validating the jurisdiction of the second respondent.

Issue 3: Determination of Tax Liability

The petitioner argued that the demand for differential tax at 12.5% for domestic and commercial LPG cylinders was based on surmises and conjectures. The court, however, did not delve into the merits of the tax liability. Instead, it focused on the procedural aspect, emphasizing that the petitioner must participate in the assessment process by filing objections and presenting contentions before the Assessing Officer.

Conclusion:

The court dismissed the writ petitions, affirming the validity of the impugned notices. It granted the petitioner the liberty to submit objections to the notice of proposal within two weeks. The Assessing Officer was directed to provide an opportunity for a personal hearing and pass an order of assessment on merits within six weeks thereafter. No costs were imposed, and the connected miscellaneous petitions were closed.