2020 (8) TMI 28 - HC - VAT and Sales Tax

Validity of assessment order - time limitation for completion of Best Judgement Assessment - contention is that in as much as the petitioner has a period till 31st of December, following the end of the financial year, for preferring the annual returns, the said period must also been seen as the date from which alone the respondents could proceed to complete the best judgment assessment, under Section 62 of the Act - HELD THAT - The reference to Section 44 of the Act, in Section 62, is only for the purpose of determining the five year period within which the assessing officer has to complete the best judgment assessment. It does not mandate that the steps for completing the best judgment assessment should be initiated only after 31st December, following the end of the financial year, in which the default as regards filing of monthly returns occured. Section 62 of the Act must be seen as enabling an Assessing Officer to proceed to assess the tax liability of a person, who has not furnished the returns inter alia under Section 39, even after service of notice under Section 46, on best judgment basis, and thereafter issue the assessment order within a period of five years from the date indicated under Section 44 for furnishing of the annual returns. Hence, while the best judgment assessment can be done immediately after detection of the failure to file the returns despite service of notice, the outer time limit for completing the best judgment assessment is five years from the date specified under Section 44 of the Act. In the instant case, it is not in dispute that the petitioner did not furnish a valid return within 30 days from the service of the assessment orders under Section 62(1) of the Act. That being the case, it would follow that the petitioner cannot obtain the benefit under Section 62(2) of the Act, for deeming the assessment orders already passed on best judgment basis as withdrawn. The writ petition in its challenge to the assessment orders therefore fails and is dismissed.

Summary

Issues:
Challenge to assessment orders passed under Section 62 of the Goods and Services Tax Act. Interpretation of Section 62 in relation to Section 44 for completing best judgment assessment.

Analysis:
The petitioner challenged assessment orders passed under Section 62 of the Goods and Services Tax Act, claiming that returns were submitted after the receipt of the orders. However, the returns were not filed within 30 days from the date of service of the assessment orders, hence not qualifying for the benefit under Section 62(2) of the Act. The petitioner argued that the best judgment assessment should be completed only after December of the financial year, as mentioned in Section 44 of the CGST Act. The court considered the arguments and held that Section 62 enables the assessing officer to proceed with the best judgment assessment immediately after detecting the failure to file returns, with a time limit of five years from the date specified under Section 44 for furnishing annual returns.

The court rejected the petitioner's contention that the best judgment assessment should commence only after December following the financial year. It clarified that the outer time limit for completing the best judgment assessment is five years from the date specified under Section 44 of the Act. The court emphasized that the five-year limit is the maximum duration for the assessing authority to exercise its power, not a specific starting point after detecting the default. As the petitioner failed to file valid returns within 30 days of the assessment orders, the benefit under Section 62(2) was not applicable, leading to the dismissal of the challenge against the assessment orders.

Acknowledging the petitioner's intention to appeal the assessment orders, the court directed to halt recovery proceedings for six weeks to allow the petitioner to approach the Appellate Authority. The petitioner was instructed to provide a copy of the writ petition along with the judgment to the respondents for further action.