2024 (2) TMI 494 - HC - VAT and Sales Tax

Validity of SCN issued - barred by limitation under Section 31 of the Bihar Value Added Tax Act, 2005 or not - HELD THAT - It has to be noticed that the show-cause notice is totally without jurisdiction since the limitation prescribed as per the Statute has expired. The contours of the jurisdiction under Article 226 of the Constitution of India to interfere with appellable orders laid down by the Hon ble Supreme Court in State of H.P Ors. v. Gujarat Ambuja Cement Limited Anr.; (2005) 6 SCC 499 2005 (7) TMI 353 - SUPREME COURT is noticed - It has been held that if an assessee approaches the High Court without availing the alternate remedy, it should be ensured that the assessee has made out a strong case or that there exist good grounds to invoke the extraordinary jurisdiction. While reiterating that Article 226 of the Constitution confers very wide powers on the High Court, it was clarified that nonetheless the remedy of writ is an absolutely discretionary remedy. The High Court, hence, can always refuse the exercise of discretion if there is an adequate and effective remedy elsewhere. Article 226 can definitely be invoked by the assessee, since the re-assessment notice is after the limitation period - the Assessing Officer-respondent no. 2 in both the writ petitions is restrained from proceeding against the assessee based on the impugned show-cause notices - The writ petitions, hence, are allowed.

Summary

Issues:
The judgment deals with the challenge to a reassessment order passed in 2018 for the years 2005-06 and 2006-07 under the Bihar Value Added Tax Act, 2005, on the grounds of being barred by limitation under Section 31.

For the assessment year 2005-06:
The petitioner filed its return for the period 2004-06 on time, leading to a self-assessment under Section 26. The Department issued a show-cause notice within the limitation period based on an audit objection, which was responded to by the petitioner. The Assessing Officer found the objection unsustainable and passed an order. Subsequent attempts at reassessment were made, but the original self-assessment remained valid. The impugned notice for reassessment in 2018 was deemed grossly delayed as it was issued long after the limitation period.

For the assessment year 2006-07:
Similarly, for this year, the petitioner filed a proper return on time, resulting in a self-assessment under Section 26. A reassessment was carried out based on an objection, but after appeal and acceptance of returns, the impugned notice for reassessment in 2018 was issued beyond the limitation period.

Interpretation of Sections 26 and 31:
The Court interpreted that the reassessment attempts made after the original self-assessment did not nullify the limitation period, and the Department was not permitted to proceed with the assessment due to the delay. The Court emphasized that the show-cause notice lacked jurisdiction as the limitation had expired, and the jurisdiction under Article 226 of the Constitution of India was invoked to restrain the Assessing Officer from proceeding against the assessee based on the impugned notices.

Conclusion:
The writ petitions were allowed, and the Assessing Officer was restrained from further action based on the reassessment notices issued after the limitation period, in accordance with the principles of natural justice and the discretionary power of the High Court under Article 226 of the Constitution.