2022 (4) TMI 248 - HC - VAT and Sales Tax

Exercise of Revisional Jurisdiction after seven years - Non-application of Section 46 (1) of the VAT Act, 2005 - Whether the saving clause provided under Section 64 (3) of the VAT Act, 2005 would apply to those proceedings also, which were initiated after coming into force of the Himachal Pradesh Value Added Tax Act, 2005? - HELD THAT - There is no dispute as to fact situation that the Appellate Authority had passed the order under Section 30 of the HPGST Act, 1968 on 10.10.2002 and the Revisional Authority had initiated suo motu revisional proceedings in the year 2009 i.e. after lapse of a period of seven years - The VAT Act, 2005 came into force on 31st day of March, 2005. The HPGST Act, 1968 was repealed from the date of coming into force of the VAT Act, 2005. Such repeal, however, was subject to certain savings as provided in Section 64 of the VAT Act, 2005. On the date of coming into force of the VAT Act, 2005, admittedly no proceedings under the HPGST Act, 1968 were pending against the petitioner. Sub section (3) of Section 64 of the VAT Act, 2005 saved only those proceedings relating to assessment, appeal, revision or other proceeding arising under the HPGST Act, 1968 or the rules made thereunder which were pending before the competent authority under the said Act on the date of coming into force of the VAT Act, 2005 - the bar of limitation, to initiate revisional jurisdiction under Section 46 (1) of the VAT Act, 2005 within five years of the notice of order sought to be revised, clearly applied to the facts of the instant case. The Revisional Authority could not revise the order dated 10.10.2002 passed by the Appellate Authority by exercising revisional jurisdiction initiated after lapse of five years. In the facts of the instant case, the exercise of revisional jurisdiction after seven years by the Revisional Authority cannot be said to be reasonable period by any stretch of imagination. Revision Petition is allowed.

Summary

Issues:
1. Validity of the revisional authority's order under the Himachal Pradesh General Sales Tax Act, 1968.
2. Interpretation of Section 46(1) of the Himachal Pradesh Value Added Tax Act, 2005 regarding the limitation period for revisional powers.
3. Application of the saving clause under Section 64(3) of the VAT Act, 2005 to proceedings initiated after the Act came into force.

Analysis:
1. The petitioner supplied steel to contractors under work-contracts, and the Assessing Authority burdened them with sales tax liability. The Appellate Authority set aside this order, ruling that no sale or transfer of goods occurred between the petitioner and the contractor. However, the Revisional Authority, in 2009, set aside the Appellate Authority's order, upholding the demand created by the Assessing Authority in 2001.

2. The petitioner challenged the Revisional Authority's order before the Tribunal, arguing that the revision was barred by Section 46(1) of the VAT Act, 2005, which limits revisional powers after five years. The Tribunal rejected this, stating that the HPGST Act, 1968's revisional power was saved under Section 64(3) of the VAT Act, 2005, and thus, the limitation under the VAT Act did not apply.

3. The High Court held that the Tribunal misinterpreted Section 64(3) of the VAT Act, 2005. The provision saved only proceedings pending under the HPGST Act, 1968 at the time of the VAT Act's enforcement. Since no proceedings were pending against the petitioner under the HPGST Act, the Revisional Authority's action was not covered by the saving clause, rendering it illegal.

4. Regarding the limitation period under Section 46(1) of the VAT Act, 2005, the High Court emphasized the importance of exercising revisional jurisdiction within a reasonable time. Citing a Supreme Court judgment, the Court stated that revisional powers should not be exercised after an unjustified delay, as it may cause prejudice. In this case, the Revisional Authority's revision after seven years was deemed unreasonable.

5. Consequently, the High Court allowed the Revision Petition, setting aside the Tribunal's order and the Revisional Authority's decision. The Court highlighted the need for timely exercise of revisional powers and emphasized the importance of avoiding unjustified delays in revisiting settled matters.