2023 (10) TMI 488 - HC - VAT and Sales Tax

Time Limitation - Point of initiation of re-assessment/revision of assessment under the provisions of Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT - The judgement in Bhatinda District Co-ooperative Milk Producers Union 2007 (10) TMI 300 - SUPREME COURT was rendered in the context of the exercise of power of suo motu revision under Section 21 of the Punjab General Sales Tax Act, 1948. No time limit had been set out for exercise of suo motu revision. However, in view of the provision for completion of assessment within three years in cases falling under sub-section 11(1) or 11(3) and within 5 years in cases falling under subsection 11(6), the Bench held that revisional jurisdiction should ordinarily be exercised within three years and, in no circumstance, beyond five years. The Allahabad High Court in Mass Awash Private Limited 2017 (7) TMI 664 - ALLAHABAD HIGH COURT considered the question relating to limitation for completion of proceedings under Section 201(1)/201(1A) of the Income Tax Act, 1961. No period of limitation was prescribed under Section 201 for exercise of power thereunder and the argument of the assessee was that if no period was prescribed, then such power could be exercised only within reasonable time and not thereafter. Several decisions were cited in support of that proposition. In those decisions, the Court had held that limitation of four years should be taken as reasonable for exercise of power under Section 201(1) / 201 (1A). An assessment under the sales tax laws relates to the period commencing from the 1st of April of a particular year till 31st of March of the next year. The usage of the phrase after completion of that year in Section 22(4) means that an assessment under that Section shall be completed only after the 31st of March of the assessment period. Any such assessment, if framed after 31.10.2017 would supersede the assessment deemed to have been made under Section 22(2) on or before 31.10.2017. This is for the reason that an assessment under Section 22(4) is one framed after enquiry in line with the principles of natural justice - Such an assessment would have to be preferred to a deemed assessment passed under Section 22(2) deeming the returns and annexures to be in order. Under Section 27, the authority may, at any time within a period of six years from the date of assessment, determine to the best of his judgment, turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as he may consider necessary. The reference to assessment in section 27 includes a re-assessment, and can, in my considered view, connote either (i) a speaking, written order of assessment under Section 22(2) (ii) a deemed order of assessment under Section 22(2) (iii) a best judgement assessment under Section 22(4) or (iv) a revision under Section 27 of the Act in respect of subjects different from those dealt with in previous reassessments. These writ petitions are disposed off.

Summary

Issues Involved:
1. Point of initiation of re-assessment/revision of assessment under Section 27 of the Tamil Nadu Value Added Tax Act, 2006.
2. Bar of limitation for passing orders under Section 27.
3. Validity of orders passed beyond the period of limitation.

Summary:

1. Point of Initiation of Re-assessment/Revision of Assessment:
The common question in these cases is the point of initiation of re-assessment/revision of assessment under Section 27 of the Tamil Nadu Value Added Tax Act, 2006. The matters are grouped together and disposed of via this common order. The relevant dates and events are tabulated to aid in setting the context for deciding the legal issue.

2. Bar of Limitation:
In W.P.No.28896 of 2019, the challenge is to an order dated 18.03.2019 for the period 2011-12. The primary ground is the bar of limitation. The petitioner contends that the impugned order under Section 27 should have been passed within six years from the date of deemed assessment, i.e., by 31.10.2018. The first notice for revision of assessment was issued on 24.12.2018, beyond the six-year period, making the impugned order liable to be quashed. The respondent argues that the period of six years should run from the date of the regular assessment order, i.e., 25.03.2014.

3. Validity of Orders Passed Beyond Limitation:
The provisions of Section 27 provide for a six-year period from the date of assessment for revision. The question is whether this period commences from the date of deemed assessment under Section 22(2) or from a regular assessment under Section 22(4). The petitioners argue for the former, while the revenue contends the latter. The court addresses that unlimited revisions of assessment availing the benefit of limitation under Section 27 would result in no finality of assessment. Every new round of re-assessment must relate to an issue not addressed in prior assessments.

4. Relevant Case Laws:
The petitioners rely on orders in Indian Commerce Industries Co. Pvt Ltd. and Tvl. Pupa Lineraa, where the court held that limitation for revision commences from the date of deemed assessment. The revenue cites decisions from the Supreme Court and High Courts, arguing that limitation should commence from the date of reassessment.

5. Court's Findings:
The court concludes that:
- Commencement of limitation for revision of assessment is 31st October of the succeeding period.
- Limitation for passing an order under Section 22(4) is subject to the limitation under Section 22(2).
- Once an order of assessment is deemed to have been passed under Section 22(2), passing an order under Section 22(4) thereafter does not arise.

6. Final Order:
The court disposes of the writ petitions in terms of this order, directing consequential orders based on the conclusions. Penalties levied under the impugned orders are canceled. Connected miscellaneous petitions are closed with no order as to costs.