2015 (4) TMI 170 - HC - VAT and Sales Tax

Classification of goods - Classification of shalimar oil - Oil partly used as edible oil partly as hair oil - Rate of tax @ 12% or 4% - Bar of limitation - Held that - no assessment could be made under section 17 of the AGST Act after expiry of 3 years from the end of the year in respect of which or part of which the assessment is made. In other words, under section 19(1) of the AGST Act, for the assessment year 1999-2000, the limitation period would expire on 31.03.2003 and for the assessment year 2000-2001, the limitation period would expire on 31.03.2004. It is not necessary to delve into the other part of sub-section (1) or the proviso thereto or sub-section (2), since no defence has been put up by the respondents on the basis of the said provisions. The power to make a reference must be traced to a valid source of law which is not available in the AGST Act. Section 19(3) or section 73A of the AGST Act cannot be construed to be provisions providing for a reference . There is another aspect. Limitation period prescribed for completion of assessment or re-assessment is for a definite purpose. An assessee cannot be subjected to assessment or re-assessment proceeding for an indefinite period. If the contention of the respondents, as advanced, is accepted, it would lead to a situation where an Assessing Officer would have the liberty to seek clarification from the Commissioner in the garb of reference thereby extending the limitation for framing assessment for an indefinite period and the Commissioner can also without any limitation of time provide the clarification whereafter the extended limitation of 2 years would commence from the end of the year in which the clarification is received by the Assessing Officer. This will certainly lead to an absurd situation and confer unfettered limitation on the Assessing Officers while framing assessment or re-assessment. - impugned notices dated 10.02.2009 and 17.02.2009 are clearly unsustainable being beyond the period of limitation and are accordingly adjudged void ab initio. Consequently, those are set aside and quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Bar of limitation in concluding assessment for the assessment years 1999-2000 and 2000-2001 under the Assam General Sales Tax Act, 1993.
2. Legality and validity of notices dated 10.02.2009 and 17.02.2009 issued by the Superintendent of Taxes, Guwahati.

Detailed Analysis:

1. Bar of Limitation in Concluding Assessment:
The primary issue in the writ petitions was whether the assessment for the years 1999-2000 and 2000-2001 was barred by limitation under the Assam General Sales Tax Act, 1993 (AGST Act). The petitioner contended that under section 19 of the AGST Act, no assessment could be made after the expiry of three years from the end of the year in respect of which the assessment was made. Therefore, the limitation period for the assessment years 1999-2000 and 2000-2001 had expired on 31.03.2003 and 31.03.2004, respectively.

The respondents argued that a reference was made to the Commissioner of Taxes seeking clarification on the taxability of coconut oil, and the clarification was received on 21.11.2006. Under section 19(3) of the AGST Act, the assessment could be made within two years from the end of the year in which the order in appeal, revision, or reference was communicated to the Assessing Officer. Thus, they contended that the assessment for the years in question would become time-barred on 31.03.2009.

2. Legality and Validity of Notices:
The petitioner received notices dated 10.02.2009 and 17.02.2009 from the Superintendent of Taxes, Guwahati, asking for the production of books of accounts for the assessment years 1999-2000 and 2000-2001. The petitioner challenged these notices on the ground of being time-barred.

Court's Analysis:

Clarification and Reference:
The court examined whether the letter written by the Assessing Officer to the Commissioner seeking clarification on the taxability of coconut oil could be treated as a "reference" within the meaning of section 19(3) of the AGST Act. The court noted that the AGST Act did not provide for any statutory provision for reference. The term "reference" used in section 19(3) was interpreted in conjunction with the words "appeal" and "revision," which are statutorily recognized remedies under the AGST Act. The court concluded that an internal request for clarification could not be construed as a "reference" in law.

Limitation Period:
The court referred to section 19 of the AGST Act, which prescribes the time limit for completion of assessment and re-assessment. Under section 19(1), no assessment could be made after the expiry of three years from the end of the year in respect of which the assessment is made. The court emphasized that the limitation period prescribed for completion of assessment or re-assessment is for a definite purpose, and an assessee cannot be subjected to assessment or re-assessment proceedings for an indefinite period.

Conclusion:
The court held that the impugned notices dated 10.02.2009 and 17.02.2009 were clearly unsustainable as they were beyond the period of limitation. The court adjudged the notices void ab initio and set them aside.

Judgment:
Both writ petitions were allowed, and the impugned notices were quashed. No costs were awarded.