2022 (4) TMI 644 - HC - VAT and Sales Tax

Maintainability of petition - best judgement assessment - suppression of facts or not - time limitation - periods October 2015 to June 2017 - HELD THAT - The statutory authority has found in Ext.P2 that the assessee had deliberately concealed the fact of payment of freight taxable at their end and concluded that there was an intent to evade service tax and hence the extended period of limitation can be invoked. The consideration in the impugned order of assessment is a mixed question of law and fact and can be revisited only by an appreciation of the various disputed facts. Section 73 provides for a time limit of thirty months to serve notice when there is a short levy or otherwise of service tax. This period will not apply if, there is fraud, collusion, wilful misstatement, suppression of facts, in which case the period will extend to five years. In the impugned order, the assessing officer had concluded that there was suppression and hence the period of thirty months will not apply. In the light of the disputed questions of fact, which are clearly evident from the impugned order of assessment, this is not a fit case to interfere in exercise under Article 226 of the Constitution of India. The writ petition is liable to be dismissed. The writ petition is dismissed.

Summary

Issues:
Challenge to Ext.P2 order on grounds of limitation and perversity under Article 226 of the Constitution of India.

Analysis:
The petitioner contested Ext.P2 order issued by the 1st respondent covering the financial years 2015-2018, claiming it was time-barred and perverse. The petitioner, engaged in manufacturing edible oil and other products, objected to the tax assessment on payments made to truck owners, arguing the transactions were not taxable and the proceedings were time-barred. Despite objections, the respondent proceeded with a best judgment assessment through Ext.P2. The petitioner's counsel argued that Ext.P2 was perverse and sought intervention under Article 226 of the Constitution of India.

The learned Standing Counsel for the respondents argued that the impugned order was appealable and that the petitioner's contentions involved disputed facts, suggesting that the court should not interfere under Article 226.

Upon review, the court found that the statutory authority concluded in Ext.P2 that the petitioner had intentionally concealed freight payments subject to service tax, indicating an intent to evade tax, thus justifying the extended period of limitation. The court noted that the assessment involved a mix of law and fact, requiring a detailed examination of disputed facts. Section 73 of the Act specifies a time limit for serving notices in cases of short levy or non-payment of service tax, with an extended period of five years in cases of fraud, collusion, wilful misstatement, or suppression of facts. The assessing officer determined there was suppression, warranting the longer period.

The court emphasized that the conclusion in Ext.P2 was based on disputed facts, making it unsuitable for interference under Article 226. Consequently, the writ petition was dismissed. However, the petitioner's right to pursue statutory remedies was preserved, allowing all contentions raised in the petition to be considered by the appellate authority without prejudice from the court's judgment.