2022 (12) TMI 267 - HC - VAT and Sales Tax

Jurisdiction and Validity/legality of re-assessment order - time limitation - sale of hair - genuineness of H Forms - denial of exemption on the ground that Forms were not issued by their Officers - It is claimed that the verification of Forms also ought to have been completed before the expiry of four years from the date of the assessment year - validity of revision of the order, five years after passing of the original order - violation of principles of natural justice - HELD THAT - It is no doubt true that Government of India, Ministry of Finance has issued Circular dated 20.7.2021 extending the time limit for filing appeals by the Revenue, before quasi-judicial authorities or Courts in terms of the Supreme Court s order. In S. Kasi s case 2020 (6) TMI 727 - SUPREME COURT , the Hon ble Supreme Court was dealing with an issue namely, as to whether limitation for filing charge sheet can be extended, thereby denying benefit under Section 167(2) Cr.P.C. Dealing with the same, the Apex Court, having regard to the factual situation and taking into consideration the liberty of an individual, did not agree with the argument of the respondents that statutory period for filing charge sheet under Section 167 Cr.P.C. also stands extended during the pandemic. As held by the Hon ble Apex Court in S. Kasi s case, the limitation for filing petitions/ applications/ suits/ appeals/ all other proceedings was extended only to obviate lawyers/litigants to come physically to file such proceedings in respective Courts/Tribunals. The order was passed to protect the litigants/lawyers whose petitions/applications etc., would become time barred if they are not being able to physically come to file such proceedings. The order was to the benefit of the litigants, who have to take recourse of law, as per the applicable statute. The law of limitation bars the remedy but not the right. The Division Bench of this Court in V-Guard Industries Limited 2022 (1) TMI 1012 - ANDHRA PRADESH HIGH COURT extended the period of limitation even in respect of orders to be passed by statutory authorities also. Further, as the State is also a litigant, and if orders could not be passed within the time prescribed due to the prevailing pandemic, coupled with the difficulties faced by the authorities in passing orders due to pandemic, they would be barred by limitation - the Division Bench of this Court extended the period of limitation even in respect of orders to be passed by statutory authorities also. Further, as the State is also a litigant, and if orders could not be passed within the time prescribed due to the prevailing pandemic, coupled with the difficulties faced by the authorities in passing orders due to pandemic, they would be barred by limitation. Apart from that, when the assesses are permitted to file their returns beyond the period prescribed due to pandemic, in view of the judgment of the Hon ble Supreme Court and circulars issued, we feel that the authorities also should be given time to pass orders during the pandemic. While negativating the argument advanced by the petitioner with regard to limitation and having regard to the finding given in this Judgment, the Re-assessment Order, dated 24.02.2022, passed by Respondent No.1 is set aside and the matter is remitted back to the assessing authority to pass orders afresh after hearing the petitioner, in accordance with law, as early as possible - petition disposed off.

Summary

Issues Involved:
1. Barred by limitation.
2. Violation of principles of natural justice.
3. Genuineness of "H" Forms.
4. Applicability of extended limitation due to COVID-19 pandemic.

Detailed Analysis:

1. Barred by Limitation:

The petitioner argued that the reassessment proceedings were barred by limitation, citing Rule 14-A(5-A) of the CST Rules, which presumes that an assessment is finalized within four years if not completed within that period. The petitioner contended that the reassessment, initiated five years after the original assessment order, was thus invalid. The respondent countered by invoking the Supreme Court's orders extending the limitation period due to the COVID-19 pandemic.

The court acknowledged that the Government of India had issued notifications extending the time limits for various legal proceedings due to the pandemic. The Supreme Court's orders in Suo Motu Writ Petition (C) No.3 of 2020 extended the limitation period from 15th March 2020 until further notice to mitigate the difficulties faced by litigants during the pandemic. The court agreed with the respondent's argument that these extensions applied to the reassessment proceedings, thereby rejecting the petitioner's claim that the reassessment was barred by limitation.

2. Violation of Principles of Natural Justice:

The petitioner claimed that the reassessment order was passed without proper notice and without providing an opportunity to be heard, which violated the principles of natural justice. The petitioner argued that the notice sent by registered post was returned with the endorsement "no such person available," and questioned why the notice was not served through the same mode as the reassessment order, which was served via email and personal delivery.

The court found merit in the petitioner's argument, noting that the reassessment order was served five years after the original assessment without proper notice. The court emphasized that the petitioner should have been given an opportunity to explain the genuineness of the disputed "H" Forms, especially given the significant time lapse and the disputed nature of the reports on which the reassessment was based.

3. Genuineness of "H" Forms:

The reassessment was initiated based on a verification report from the Assistant Commissioner (ST), Pallavaram Circle, Chennai, which stated that the "H" Forms submitted by the petitioner were not issued by the Department. The petitioner challenged the validity of this report, arguing that the forms were issued at Tambaram, and thus the Assistant Commissioner, Pallavaram Circle, was not competent to verify their genuineness.

The court noted the petitioner's contention and found that an opportunity should have been provided to the petitioner to address the genuineness of the "H" Forms. The court highlighted the need for a fair hearing, especially when the reassessment was based on disputed reports and involved a significant time lapse since the original assessment.

4. Applicability of Extended Limitation Due to COVID-19 Pandemic:

The respondent argued that the Supreme Court's orders extending the limitation period due to the COVID-19 pandemic applied to the reassessment proceedings. The court referred to the Supreme Court's orders, which extended the limitation period from 15th March 2020 to 2nd October 2021, and subsequent orders extending the period further.

The court also cited a Division Bench judgment in V-Guard Industries Limited vs. The Commercial Tax Officer, which held that the extended limitation period applied to statutory proceedings as well. The court agreed with this view, noting that the pandemic affected both the State and individual litigants, and thus the extended limitation period applied to the reassessment proceedings.

Conclusion:

The court set aside the reassessment order dated 24.02.2022 and remitted the matter back to the assessing authority to pass a fresh order after providing the petitioner an opportunity to be heard. The court emphasized the need for adherence to principles of natural justice and the applicability of the extended limitation period due to the COVID-19 pandemic. The writ petition was disposed of with no order as to costs, and any pending miscellaneous petitions were closed.