2024 (8) TMI 842 - HC - VAT and Sales Tax

Challenge to order of re-assessment - escapement of assessment - reason to believe that the turnover of the petitioner s business assessable to tax for the assessment period from 2014 2015 has escaped assessment as the petitioner has failed to deposit VAT on transmission charge - HELD THAT - The monthly returns for the annual year 2014 - 2015 was not submitted within the 21st day of the succeeding month, in other words, it was not submitted within the time prescribed under 17 (1) of the said Rules, 2005, which is within next 21 days of the succeeding months. Reference is made to the decisions of the Division Bench of this Court in the case of INDIAN OIL CORPORATION LTD. VERSUS STATE OF ASSAM AND OTHERS 2012 (8) TMI 872 - GAUHATI HIGH COURT wherein it has been held that when the time limit for completion for assessment has been indicated and after expiry of the said period no assessment can be made. Reference is made to the decision of the Apex Court in the case of Vs. Regional Assistant Commissioner Of Sales Tax Nagar 1963 (8) TMI 2 - SUPREME COURT , wherein the Apex Court held that unless return is filed within the time limit, there cannot be an assessment. Section 39 of the said Act, 2003 provides that no assessment shall be completed after the expiry of five years from the end of the year to which the assessment relates and as evident from the above, in the present case, no assessment under section 34, 35, 36 or 37 of the Act, 2003 was completed by the assessing authorities. Therefore, assessment for the year 2014 2015 ought to have been completed within 5 years from the end of the year in respect of which the assessment relates. In terms of Section 39 of the said Act, 2003, assessment for the assessment year 2014 2015 got barred by limitation on 31.3.2020 - Since, the time limit for completion of assessment as in terms of Section 39 of the Act expired on 31.03.2020, it appears that the assessing authority did not complete assessment within the prescribed time period. However, assessment was initiated under Section 40 of the Act without completion of assessment under Sections 34, 35, 36 or 37 of the Act, 2003. Since in the facts of the instant case, no self-assessment can be deemed under Section 35 of the Act, 2003 re-assessment under Section 40 of the said Act, 2003 could not have been made under the provisions of the said Act. The existence of assessment is a condition precedent for making a reassessment under Section 40 of the Act, 2003 and if such condition precedent exist, the assessing authorities had no jurisdiction to make the reassessment. As such, without assessment under section 34, 35, 36 or 37 of the Act, 2003, the respondent authorities could not have resorted to the provisions of the reassessment stipulated under Section 40 of the said Act. In the present case, there was no assessment under section 35 of the Act, 2003, made during the prescribed period. Therefore, no assessment can be deemed to have been made in law - the said order of re-assessment having been completed without any assessment made under section 35 of the Act, 2003, the order of reassessment dated 05.03.2022 is absolutely illegal and without jurisdiction. As such, the very initiation of proceedings under section 40 of the Act, 2003 is absolutely illegal, without jurisdiction and not tenable in law - the impugned Order of re-assessment dated 05.03.2022 and the Notice of Demand dated 08.07.2021 are set aside and quashed - Petition allowed.

Issues Involved:
1. Legality of the re-assessment order dated 05.03.2022.
2. Applicability of Section 40 of the Assam Value Added Tax Act, 2003.
3. Compliance with the time limitations under Section 39 of the Act.
4. Validity of self-assessment under Section 35 of the Act.
5. Requirement of prior assessment under Sections 34, 35, 36, or 37 for re-assessment under Section 40.

Detailed Analysis:

1. Legality of the re-assessment order dated 05.03.2022:
The re-assessment order dated 05.03.2022 passed by the Assistant Commissioner of Taxes for the assessment year 2014-2015 was challenged. The petitioner argued that the re-assessment was shown to be completed under Section 40 of the Assam Value Added Tax Act, 2003, but it was, in fact, an audit assessment under Section 36, which became barred by limitation. The court found that the re-assessment was illegal and without jurisdiction as it was not preceded by an assessment under Sections 34, 35, 36, or 37 of the Act.

2. Applicability of Section 40 of the Assam Value Added Tax Act, 2003:
Section 40 deals with turnover escaping assessment and requires that a dealer must have been assessed under Sections 34, 35, 36, or 37. The court held that since no assessment was made under these sections, the re-assessment under Section 40 was erroneous and illegal. The court emphasized that the existence of an assessment is a condition precedent for making a re-assessment under Section 40.

3. Compliance with the time limitations under Section 39 of the Act:
Section 39 stipulates that no assessment shall be completed after the expiry of five years from the end of the year to which the assessment relates. The court noted that the assessment for the year 2014-2015 should have been completed by 31.03.2020. Since the assessment was initiated under Section 40 without completing the assessment under Sections 34, 35, 36, or 37 within the prescribed time, it was barred by limitation.

4. Validity of self-assessment under Section 35 of the Act:
The petitioner argued that no self-assessment could be deemed to have been completed under Section 35 as the tax returns and annual returns were not filed within the prescribed time. The court agreed, stating that the assessing authorities could not have deemed self-assessment to have been completed since the returns were not submitted within the time stipulated under Rule 17 of the Assam Value Added Tax Rules, 2005.

5. Requirement of prior assessment under Sections 34, 35, 36, or 37 for re-assessment under Section 40:
The court reiterated that for invoking the powers under Section 40, a dealer must have been assessed under Sections 34, 35, 36, or 37. Since no such assessment was made in the present case, the re-assessment under Section 40 was without jurisdiction. The court referenced the decision of the Apex Court in Ghanshyamdas Vs Regional Assistant Commissioner of Sales Tax and the Division Bench of this Court in Radheshayam Goyal & Sons Vs State of Assam, which supported the requirement of prior assessment for re-assessment under Section 40.

Conclusion:
The court concluded that the re-assessment order dated 05.03.2022 and the Notice of Demand dated 08.07.2021 were absolutely illegal, without jurisdiction, and not tenable in law. Consequently, the impugned order of re-assessment and the notice of demand were set aside and quashed. The writ petition was allowed and disposed of accordingly.

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