2019 (6) TMI 1133 - HC - VAT and Sales Tax

Time limitation - validity of assessment order - HELD THAT - The provision under subsection (6) of Section 42 of the OVAT Act including the proviso, it can be safely said that the notice period had already expired when the extension for time to complete the assessment was sought for. The same was done much after six months of expiry of the period of limitation in January, 2008 but the extension is sought for in June, 2008. The notice is without jurisdiction - petition allowed.

Summary

Issues Involved:
1. Extension of time for completion of assessment under Section 42(6) of the Orissa Value Added Tax Act (OVAT Act).
2. Validity of the assessment order passed by the Assistant Commissioner of Sales Tax.

Issue-Wise Detailed Analysis:

1. Extension of Time for Completion of Assessment:
The petitioner argued that the extension of time for completing the assessment was sought beyond the permissible period, rendering the assessment order time-barred. The Audit Visit Report (AVR) was submitted on 01.06.2007, and the Assistant Commissioner of Sales Tax received it on 05.07.2007. Notice under Section 42 of the OVAT Act was issued on 04.10.2007, received by the petitioner on 10.10.2007, requiring appearance on 13.11.2007. The petitioner contended that the limitation period expired on 04.01.2008 or 09.04.2008, six months from the issuance of the notice. However, the extension was sought on 07.06.2008 and granted on 26.06.2008, beyond the six-month limitation period.

Legal Provisions and Interpretation:
Sections 41 and 42 of the OVAT Act were examined. Section 42(6) mandates that an assessment must be completed within six months from the receipt of the AVR, with a possible extension of another six months by the Commissioner. The petitioner relied on the Supreme Court's judgment in State of Punjab and Ors. v. Shreyans Indus Ltd. and Ors., which emphasized that once the limitation period expires, the right to make an assessment is extinguished, and any extension must be sought within the original limitation period.

Court's Findings:
The Court agreed with the petitioner, noting that the extension was sought after the six-month period had expired. Citing the Supreme Court's decision in Shreyans Indus Ltd., the Court held that once the limitation period expired, the right to assess was extinguished, and any subsequent extension was invalid. The Court concluded that the notice was without jurisdiction.

2. Validity of the Assessment Order:
Given the finding on the first issue, the Court did not need to address other contentions. The assessment order dated 02.07.2008, imposing tax and penalty, was quashed as it was issued without jurisdiction due to the invalid extension of time.

Conclusion:
The writ petitions were allowed based on the first issue. The Court held that the extension of time for completing the assessment was sought beyond the permissible period, rendering the assessment order invalid. The assessment order was quashed, and no other contentions were considered.