2009 (7) TMI 1158 - HC - VAT and Sales Tax

Whether the limitation of 12 months will apply in a case where review proceeding is initiated on the basis of sanction accorded by the Commissioner under the said Rules? Held that - The orders passed by the Commissioner for reviewing the assessment orders for the financial years 2002-03 and 2003-04 are barred by limitation and also mala fide and without jurisdiction. Hence, the impugned order of sanction and the notice issued for review of the assessment orders for the financial years 2002-03 and 2003-04 are quashed. So far the assessment order for the financial year 2004-05 is concerned, it appears that sanction was accorded by the Commissioner within three years from the date of assessment order and consequently review notice was issued to the assessee, find no reason to interfere with the notices issued for review of the assessment order for the financial year 2004-05 which shall stand. Appeal allowed in part.

Issues Involved:
1. Legality of the order issued by the Joint Commissioner, Commercial Taxes, for reviewing the assessment orders.
2. Validity of the notices issued by the Assessing Commissioner for reviewing the assessment orders.
3. Applicability of the 12-month limitation period for review under Section 47 of the Bihar Finance Act, 1981, and Rule 32 of the Bihar Sales Tax Rules, 1983.
4. Determination of whether the actions taken by the respondents were mala fide and without jurisdiction.
5. Applicability of Article 137 of the Limitation Act, 1963, to the Commissioner's power to accord sanction for review.

Detailed Analysis:

1. Legality of the Order Issued by the Joint Commissioner:
The petitioner challenged the order dated November 11, 2008, issued by the Joint Commissioner, Commercial Taxes, which sanctioned the review of the assessment orders for the years 2002-03, 2003-04, and 2004-05. The petitioner argued that this order was illegal, without jurisdiction, and mala fide, citing that no sanction for review can be accorded after 12 months from the date of the assessment order.

2. Validity of the Notices Issued by the Assessing Commissioner:
The petitioner also contested the notices issued by the Assessing Commissioner, Commercial Taxes, for reviewing the assessment orders for the years 2003-04 and 2004-05. These notices were issued following the Joint Commissioner's sanction for review.

3. Applicability of the 12-Month Limitation Period:
The court examined Section 47 of the Bihar Finance Act, 1981, and Rule 32 of the Bihar Sales Tax Rules, 1983. Section 47 allows the authority to review any order if there is an apparent mistake from the record. Rule 32(2) states that no review can be done after 12 months from the date of the order without the previous sanction of the Commissioner. The court noted that the Commissioner or an authority authorized by him could review the order beyond 12 months, but this power should not be unrestricted and must be exercised within a reasonable time frame, as guided by Article 137 of the Limitation Act, 1963.

4. Determination of Mala Fide Actions:
The court found that the assessment orders for the financial years 2002-03 and 2003-04 were passed on December 17, 2004, and March 7, 2005, respectively, and the sanction for review was accorded on November 11, 2008. This was beyond the three-year limitation period, indicating that the actions taken were not only mala fide but also biased. The respondents had failed to process the petitioner's refund applications and only acted after the petitioner filed a writ petition.

5. Applicability of Article 137 of the Limitation Act:
The court referred to previous judgments, including the Supreme Court's interpretation in Indian Copper Corporation Ltd. v. State of Bihar and the Division Bench's decision in Shivam Coke Industries v. State of Jharkhand. It was held that the Commissioner's power to accord sanction for review should be exercised within three years from the date of the order sought to be reviewed, as per Article 137 of the Limitation Act, 1963.

Conclusion:
The court concluded that the orders passed by the Commissioner for reviewing the assessment orders for the financial years 2002-03 and 2003-04 were barred by limitation, mala fide, and without jurisdiction. Therefore, the impugned order of sanction and the notices for review of these years were quashed. However, for the financial year 2004-05, the sanction was accorded within three years, and the review notice was valid. The writ petition was allowed in part, quashing the sanctions and notices for 2002-03 and 2003-04, while dismissing the petition concerning the assessment order for 2004-05. The petitioner was directed to appear before the reviewing authority for the financial year 2004-05.

Separate Judgment:
Mrs. Jaya Roy, J., concurred with the judgment.

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