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2025 (3) TMI 1094 - HC - VAT / Sales TaxUnreasonable delay in completing the reassessment proceedings - manifest arbitrariness thereby falling foul of Article 14 of the Constitution or not - HELD THAT - It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time. It may be relevant to note that this Court had held that though the issuance of notice was within the period of limitation however if the orders are not made within a reasonable time mere issuance of show cause notice would not by itself provide immunity to the assessment orders being challenged as having been made beyond reasonable period thereby suffering from the vice of arbitrariness. It is thus clear that even if the notice was issued within the prescribed period of limitation inordinate/unreasonable delay in completing the proceedings would vitiate the same. In the present case there is no explanation as to why it has taken more than 16 years after the issuance of the first notice on 12.11.2004 to issue the hearing notice on 08.07.2021 while proceeding to pass the impugned order on 02.09.2021 after almost 16 years from the date of deemed assessment. This Court in the case of J.M.Baxi 2016 (6) TMI 813 - MADRAS HIGH COURT found that failure to explain the delay of 5 years after initiation would vitiate the proceeding on the ground of unreasonable delay. In view of the same and following the above orders of this Court and in particular the case of Kanthimathy Estate vs. The Assistant Commissioner Commercial Taxes 2019 (7) TMI 1991 - MADRAS HIGH COURT wherein it was held that failure to complete the reassessment proceedings within a reasonable time after initiation of proceedings within the prescribed period would vitiate the reassessment this Court is of the view that the impugned order of reassessment cannot be sustained and is liable to be set aside. Conclusion - It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time. Petition allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Delay in Reassessment Proceedings Relevant legal framework and precedents: The Court considered precedents establishing that actions or orders must be completed within a reasonable time when no specific limitation period is prescribed. Key cases referenced include J.M.Baxi and Co. vs. UOI and J.Sheik Parith vs. Commissioner of Customs. Court's interpretation and reasoning: The Court emphasized that unreasonable delay in completing proceedings, even if initiated within the limitation period, can render the proceedings arbitrary and invalid. The Court noted that the delay of over 16 years in this case was unexplained and excessive. Key evidence and findings: The petitioner highlighted that the reassessment proceedings were initiated in 2004, but the hearing notice was issued only in 2021, with no substantial activity in between. Application of law to facts: The Court applied the principle that proceedings must be concluded within a reasonable time, finding the 16-year delay unjustified and arbitrary. Treatment of competing arguments: The respondent argued that the delay was due to the petitioner's lack of response, but the Court found this unpersuasive as the respondent failed to provide evidence of attempts to expedite the process. Conclusions: The Court concluded that the delay was unreasonable and violated the principles of fairness and justice, thus invalidating the impugned order. 2. Reliance on Non-Existent Legal Provision Relevant legal framework and precedents: The Court examined the legislative history of Section 12(2)B of the Act, noting its retrospective omission. Court's interpretation and reasoning: The Court found that relying on a provision that was retrospectively omitted is a fundamental error, rendering the order flawed. Key evidence and findings: The respondent's reliance on Section 12(2)B was deemed erroneous as the provision was effectively non-existent. Application of law to facts: The Court held that the impugned order was based on a legal provision that had no effect, further invalidating the order. Treatment of competing arguments: The respondent did not effectively counter the argument that the provision was non-existent. Conclusions: The reliance on a non-existent provision was a critical error, contributing to the decision to set aside the order. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Court stated, "It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders, it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time." Core principles established: The judgment reinforced the principle that administrative actions must be completed within a reasonable time, and reliance on non-existent legal provisions is impermissible. Final determinations on each issue: The Court set aside the impugned order due to the unreasonable delay and reliance on a non-existent legal provision, allowing the writ petition.
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