2025 (4) TMI 1317 - HC - VAT / Sales Tax

Validity of assessment orders - variation of 317.64 Cubic meters of granite - appeal dismissed on the ground that the said appeals are beyond the period of limitation permissible under the provisions of the A.P. Value Added Tax Act 2005 - HELD THAT - The orders of assessment passed by the Commercial Tax Officer state that the petitioners had not produced any material before the Commercial Tax Officer to demonstrate that there was no variation in the quantity of granite quarried and the quantity of granite sold by the petitioners. On that basis the Assessing Officer had passed the orders of assessment. The petitioners do not choose to file any appeals against the said orders of assessment within the period of limitation stipulated under the provisions of the VAT Act. The appeals were filed with an inordinate delay and beyond the period of time which could be condoned by the appellate authority. The maximum period within which the appeals could have been filed and the further period which can be condoned by the Appellate Authority had expired even before the Covid outbreak in March 2020. As such the order of the Appellate Authority also cannot be faulted. Conclusion - The writ petitions are clearly barred on account of laches. Apart from that no cogent reasons are set out for challenging the orders of assessment or the orders of appeal. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in these writ petitions are:

(a) Whether the assessment orders dated 16.08.2019 and 19.08.2019 passed by the Commercial Tax Officer, demanding tax based on alleged variation in granite quantities, were arbitrary and unsustainable.

(b) Whether the appeals filed against these assessment orders, which were dismissed as barred by limitation, were rightly rejected, particularly in light of the petitioners' contention that the delay was due to the Covid-19 pandemic.

(c) Whether the subsequent demand notices issued in 2024 and 2025, seeking payment of tax amounts that appear inconsistent with earlier assessments, are legally valid and enforceable.

(d) Whether the writ petitions are maintainable given the delay and laches on the part of the petitioners in challenging the assessment and appellate orders.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Validity and sustainability of the assessment orders dated 16.08.2019 and 19.08.2019

The legal framework governing these assessments is the Andhra Pradesh Value Added Tax Act, 2005 (VAT Act). Under this Act, the Commercial Tax Officer is empowered to assess tax liability based on available evidence, including inspection reports.

Precedents emphasize that assessments must be based on relevant material and that taxpayers should be given an opportunity to present evidence.

The Court noted that the Regional Vigilance and Enforcement Officer had inspected the petitioners' granite cutting and polishing units and found discrepancies in the quantity of granite, which were forwarded to the Commercial Tax Officer for tax assessment.

The Commercial Tax Officer's orders stated that the petitioners failed to produce any material to rebut the alleged variation in granite quantities.

The petitioners contended that the assessments were arbitrary and did not consider their objections. However, the Court found that the petitioners did not file any appeals within the prescribed limitation period and did not provide evidence before the assessing authority to counter the findings.

The Court applied the law to the facts and concluded that the assessment orders were validly passed based on the material available and the petitioners' failure to contest the findings in a timely manner.

The petitioners' argument that the assessments were arbitrary was rejected due to lack of supporting evidence and procedural compliance on their part.

Issue (b): Dismissal of appeals as barred by limitation and effect of Covid-19 pandemic

The VAT Act prescribes strict limitation periods for filing appeals against assessment orders.

The petitioners filed their appeals beyond the prescribed period, and the Appellate Deputy Commissioner dismissed them on 09.02.2021, citing limitation.

The petitioners argued that the delay was attributable to the Covid-19 pandemic and that the benefit of extension of limitation granted during the pandemic should apply.

The Court examined the timeline and noted that the assessment orders were passed and served in August 2019, and the limitation period, including any condonable extension, expired before the onset of the pandemic in March 2020.

Therefore, the Court held that the pandemic-related extension of limitation was inapplicable to these appeals.

The Court found no error in the appellate authority's dismissal of the appeals on limitation grounds.

Issue (c): Validity of demand notices issued in 2024 and 2025

The petitioners challenged the demand notices dated 31.12.2024 and 02.01.2025, which sought payment of tax amounts that appeared inconsistent and duplicative compared to earlier assessments.

The Court observed that the petitioners' contention regarding the lack of clarity and basis for the two separate amounts claimed for the same assessment period was a matter that should be addressed before the assessing authority.

The Court declined to adjudicate on the validity of these demands in the writ petitions but left it open for the petitioners to seek detailed explanations and justifications from the authorities.

The authorities were directed to provide the petitioners with particulars of the amounts claimed and the basis thereof.

Issue (d): Maintainability of writ petitions in light of delay and laches

The Court noted that after dismissal of the appeals in February 2021, the petitioners remained silent for approximately four years before approaching the Court only after receiving the demand notices.

The Court held that such delay amounted to laches and barred the writ petitions.

There were no cogent reasons advanced for the delay in challenging the assessment and appellate orders earlier.

The Court emphasized the principle that delay and acquiescence can be fatal to the maintainability of writ petitions seeking to challenge tax assessments.

3. SIGNIFICANT HOLDINGS

The Court held:

"The appeals were filed, with an inordinate delay, and beyond the period of time, which could be condoned by the appellate authority. The contention that the appeals could not be filed on account of the outbreak of Covid-19 and that the benefit of extension of limitation given in relation to this period would have to be given to the petitioners, cannot be accepted."

"The petitioners, who were aware of the order of dismissal of the appeals, dated 09.02.2021, have chosen to remain silent for the next four years and approached this Court only after the notices of demand, have been served on them. The explanation given for such delay cannot be accepted."

"In such circumstances, the writ petitions are clearly barred on account of laches. Apart from that, no cogent reasons are set out for challenging the orders of assessment or the orders of appeal."

"The contention of the learned counsel for the petitioners that the demands raised in the demand notices, dated 31.12.2024 and 02.01.2025, do not have any basis for the assessment years, is an issue which can be raised by the petitioners before the Assessing Officer himself."

"Accordingly, these writ petitions are disposed of leaving it open to the petitioners to seek details of the amounts being claimed under the demand notices and the respondent authorities are bound to give such details demonstrating the basis for such claims."

The core principles established include the strict adherence to limitation periods under the VAT Act, the non-applicability of Covid-19 related limitation extensions to appeals whose limitation expired before the pandemic, and the importance of timely challenging tax assessments to avoid dismissal on laches.

Final determinations were that the assessment orders and appellate dismissals were valid and sustainable, the writ petitions were barred by delay, and issues concerning the recent demand notices must be pursued before the assessing authority rather than through writ petitions.