2017 (11) TMI 1089 - HC - VAT and Sales Tax

Validity of assessment order - time limitation - case of petitioner is that assessing authority could not have passed the order of assessment in October 2008 for the period for the assessment year 1993-94 - Even the order of assessment was never served to the petitioner - Held that - The case of the petitioner is that he had discontinued the business and left the premises and therefore was neither aware of the pending assessment proceedings nor passing of the final order of assessment, irreparable loss would be caused to the petitioner if the order of assessment is not allowed to be challenged merely on the ground of delay. Further, the petitioner s ground of the assessments being time barred would require a closer examination. The petitioner s appeals before the first appellate authority shall stand revived subject to the petitioner filing applications for and persuading the first appellate authority to condone the delay - petition allowed by way of remand.

Summary

Issues: Assessment order served ex-parte, delay in filing appeal, rejection of delay condonation, substantial tax demands, revival of appeals

Assessment Order Served Ex-parte:
The petitioner, a partnership firm dealing in castor oil and castor cake, claimed that it suffered losses and sold its business to another entity. The Assessing Officer passed an assessment order for the year 1993-94 without serving any notice, leading to the firm being unaware of the assessment. The petitioner only became aware of the assessment when a news item was published in 2017 regarding a sales tax demand of ?2,53,00,000. The firm's partner had left the business for agricultural activities, further complicating the situation.

Delay in Filing Appeal and Rejection of Delay Condonation:
Upon discovering the assessment, the petitioner appealed to the first appellate authority, seeking condonation of the 8-year and 4-month delay in filing the appeal. However, the appellate authority rejected the delay condonation application, citing insufficient grounds for the delay. The petitioner then appealed to the VAT Tribunal, which also rejected the appeal due to the lack of a separate application for condonation of delay supported by an affidavit explaining the prolonged delay.

Substantial Tax Demands and Revival of Appeals:
The tax demands against the petitioner were substantial, causing concern for the firm, which had ceased operations and was unaware of the pending assessment proceedings. The High Court acknowledged the potential irreparable loss to the petitioner if the order of assessment was not challenged due to the delay. Consequently, the Court allowed the petitioner to approach the first appellate authority afresh by filing an application for condonation of delay with detailed grounds before 30.10.2017. The High Court set aside the appellate orders and permitted the revival of the petitioner's appeals, subject to the satisfactory explanation of the delay.

In conclusion, the High Court's judgment addressed the issues of an ex-parte assessment order, delay in filing appeals, rejection of delay condonation, substantial tax demands, and the revival of appeals by providing the petitioner with an opportunity to present a valid explanation for the delay in challenging the assessment order.