2024 (4) TMI 957 - HC - VAT and Sales Tax

Validity of assessment order - Levy of penalty u/s 53(1)(ii) of the AP VAT Act - wilful evasion of tax or not - SCN also do not categorically mention that it was a case of wilful evasion of tax - SCN barred by time limitation - Section 21(4) of AP VAT Act, 2005 - HELD THAT - As seen from the show cause notice dated 24.06.2021 there is a mention of under declaration of 14.5% purchases during the year 2016-17. It is also mentioned that penalty proceedings would also be issued separately as the dealer was found to have committed offence under the provision of AP VAT Act. In the revised show cause notice also it is mentioned that the petitioner consumed lot of time and avoided production of records in-time. Provisions of Section 21(5) of the Act were made applicable to the facts of the case. Now coming to the applicability of the extension of period of limitation by the Hon ble Supreme Court in view of the then prevailing Covid situation. The Hon ble Supreme Court in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2021 (3) TMI 497 - SC ORDER has considered the difficulties that may be faced by the litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings and extended the period of limitation in all such proceedings irrespective of limitation prescribed under the general law or special laws whether condonable or not. The period of limitation has to be extended to all proceedings including the issuance of show cause notice or passing of assessment orders or filing of appeals before the Appellate Tribunals against the orders which arise out of the show cause notices and the assessment orders - That apart, Section 21(5) of the AP VAT Act would entitle the authorities to conduct the assessment within a period of six years of the date of filing of the return or the first return relating to such offence. It is explicitly mentioned in the show cause notice dated 24.06.2021 that it was the case of under declaration of purchases during the year 2016-17. In our considered opinion this would suffice for proceeding with the assessment within a period of six years from the date of filing of the return or first return relating to such offence. That apart on these grounds the writ petitions deserves to be dismissed. There is an efficacious, alternate and statutory remedy available for the petitioner. Petition dismissed.

Summary

Issues involved: Challenge to assessment and penalty orders under the AP VAT Act, 2005, based on alleged under-declaration of purchases and transfer of stock between branches.

Summary of the judgment:

1. Assessment Order Challenge (WP No. 2099 of 2023):
The petitioner challenged the assessment order and penalty imposed by the 3rd respondent, contending that the stock transfer to Khammam branch was from purchases made outside the State. The 3rd respondent upheld the assessment, citing Rule 21(5) of the Rules. The petitioner argued that the show cause notice was time-barred, relying on Section 21(4) of the AP VAT Act.

2. Appeal Against Assessment Order (WP No. 2158 of 2023):
The petitioner disputed the penalty order imposed by the 3rd respondent, invoking Section 53(1)(ii) of the AP VAT Act. The 2nd respondent upheld the penalty, and the petitioner contended that there was no willful tax evasion and the notice was time-barred under Section 21(4) of the Act.

3. Extension of Limitation and Legal Precedents:
The petitioner relied on the extension of limitation due to the Covid-19 situation as per the Suo Motu Writ Petition (C). No. 3 of 2020. The Court considered precedents like Mohinder Singh Gill case and K.G.F. Cottons case regarding statutory functions and willful tax evasion allegations in show cause notices.

4. Court's Decision and Reasoning:
The Court noted that the extension of limitation by the Supreme Court applied to all legal proceedings, including quasi-judicial functions. It emphasized the applicability of Section 21(5) of the Act for assessing under-declaration of purchases within six years. The Court dismissed the writ petitions, citing the availability of an appeal to the VAT Appellate Tribunal.

5. Conclusion:
The Court held that the extension of limitation covered assessment orders and appeals arising from show cause notices. It considered the impact of Covid-19 on administrative functions and upheld the assessment based on under-declaration of purchases. The writ petitions were dismissed, and the parties were directed to pursue statutory remedies.

In summary, the Court dismissed the writ petitions challenging assessment and penalty orders under the AP VAT Act, emphasizing the extension of limitation to all legal proceedings and the applicability of Section 21(5) for assessing under-declaration of purchases.