2015 (8) TMI 1060 - HC - VAT and Sales Tax

Validity of Revisional notice issued by the Commissioner Barred by Limitation Doctrine of merger - Original Assessment order was passed as on 12.1.2006 - Addl. Commissioner passed the revision order passed on 28.8.2006 period of 3 years to be computed from the date of order order or first revision order - Revenue contended that revision was not barred by limitation as assessment order and revision order was merged by applying principle of merger. Held that - As per section 57, Commissioner may on his own motion, call for and examine record of any order (including an order passed in appeal) Proviso mandates that no notice shall be served by Commissioner after expiry of three years from date of communication of order which is sought to be revised and no order in revision shall be made by him after expiry of five years of said date Principle of merger was clearly inapplicable Though, it is true that order was scrutinized by Additional Commissioner but he formed opinion that there is impropriety allegedly committed in allowing G-I form Principle could have been applied provided assessment order made originally had merged in revisional order after noticing that revisional order also deals with such exemption issue Thus, notice was barred because order of assessment was sought to be revised and that was made prior to more than three years from issuance of notice dated 13.7.2009 No perversity on part of Tribunal nor order passed can be termed as erroneous in law Decided against revenue.

Summary

Issues Involved:
1. Whether the Tribunal was justified in holding that the order of Assessment has not merged in the Order of Revision dated 28.08.2006 passed by the Joint Commissioner of Sales Tax (Adm), Pune.
2. Whether the Tribunal was justified in holding that there is no merger of assessment with the Revision Order passed by the Joint Commissioner of Sales Tax (Adm), Pune and hence, the Revision order passed by the Additional Commissioner of Sales Tax (VAT1), Mumbai dated 02.07.2011 was barred by limitation.

Issue-wise Detailed Analysis:

Issue 1: Merger of Assessment Order with Revision Order
The Tribunal held that the assessment order for the period 2001-02, passed on 12.1.2006 and communicated on 22.2.2006, did not merge with the revision order dated 28.8.2006 by the Joint Commissioner of Sales Tax (Administration), Pune. The Joint Commissioner had revised the taxable turnover by disallowing credit notes and increasing the turnover, resulting in an increased demand. However, the Additional Commissioner sought to withdraw the sales tax exemption on sales against G-1 form to M/s. Gharda Chemicals, which was not addressed in the original revision order. The Tribunal found that the principle of merger was inapplicable because the revision order did not deal with the exemption issue. This was a new aspect introduced by the Additional Commissioner, and therefore, the assessment order did not merge into the revision order.

Issue 2: Limitation on Revision Order
The Tribunal concluded that the revision order dated 02.07.2011, issued by the Additional Commissioner of Sales Tax (VAT1), Mumbai, was barred by limitation. The Additional Commissioner issued a notice on 13.7.2009, which was beyond the three-year limitation period from the date of communication of the original assessment order (22.2.2006). The Tribunal found that the principle of merger could not save the bar of limitation because the revision order dated 28.8.2006 did not address the exemption issue. The Tribunal relied on the proviso to Section 57(1) of the Bombay Sales Tax Act, 1959, which mandates that no notice shall be served after the expiry of three years from the date of communication of the order sought to be revised, and no order in revision shall be made after the expiry of five years from such date. The Tribunal's finding was that the notice dated 13.7.2009 was issued beyond the permissible period, making the revision exercise barred by limitation.

Legal Provisions and Precedents:
The Tribunal and the Court referred to Section 57 of the Bombay Sales Tax Act, 1959, which confers revisional powers on the Commissioner subject to certain limitations. The proviso to Section 57(1) specifies the time limits for issuing notices and passing revision orders. The Court also discussed the principle of merger, citing the Supreme Court's judgments and the case of "Kirloskar Oil Engines Ltd." to elucidate the relevant tests for applying the principle of merger. The Court found that these tests were not satisfied in the present case, as the revision order did not address the exemption issue, and the notice was issued beyond the limitation period.

Conclusion:
The Court dismissed the Revenue's application, agreeing with the Tribunal's findings that the principle of merger was inapplicable and that the revision notice was barred by limitation. The Court refrained from expressing any opinion on whether the Additional Commissioner could revise the order of the Joint Commissioner, leaving this question open for future cases. The application was dismissed as no substantial questions of law were found to arise from the Tribunal's decision.