2021 (6) TMI 339 - HC - VAT and Sales Tax

Validity of assessment order - time limitation - delay in service of demand notice - proper explanation for the delay or not - HELD THAT - It is not in dispute that the petitioner was a dealer registered under the provisions of Jharkhand Value Added Tax Act, 2005 (JVAT Act) and Central Sales Tax, Act, 2006 (CST Act) and the petitioner filed application for surrender of the registration certificates before the Commercial Tax department w.e.f. March, 2015 for which acknowledgements regarding submission of such applications have been annexed as annexure 1 and 1/1 of each of the writ petitions. The petitioner was regularly filing its returns to the respondent-Commercial Tax department and its regular assessment proceedings were completed - The petitioner was served with four demand notices for the assessment years, 2009-10 and 2010-11 , both CST and JVAT through e-mail on 03.08.2018 wherein the date of payment has been notified as 13.08.2018, i.e., after expiry of more than four years from the alleged date of demand notices. In the present cases, the notices of demand have been communicated after expiry of the period of limitation for assessments but certainly within the period of limitation for recovery of demands. As per the order sheets, the notice for hearing for the purposes of assessment were issued under form JVAT 302 pursuant to which the petitioner appeared through his counsel with books of account and other documents /statutory forms but notice of demand was not issued to him, though they were prepared, corresponding entries were made in register VI and also in the dispatch register in continuity but were not dispatched to the petitioner and it has been stated in the counter affidavit that at best it is a clerical error of non- dispatch of the demand notices which may have happened due to inadvertence. Time limitation - HELD THAT - Passing of order of assessment and issuance of demand notice are two different stages. Passing of assessment order is followed by verification of payments made by the assessee , preparation of demand notice, entry made in dispatch register and issuance of demand notice to the assessee and this is also coupled with entry in register VI. The limitation for completion of assessment is three years from the end of the financial year under section 35(8) but demand is recoverable as an arrear of land revenue under rule 17(4) and section 51 provides that for limitation for recovery of tax as 12 years from the date of relevant assessment - Rule 38 of the JVAT rules provides that all records specified in the said rule shall be retained and made available for inspections/audit/verifications for a period of five years, after the end of the year. In the present cases the order sheets reveal that the date on which the impugned orders of assessments were passed, the petitioner not only appeared through an advocate but even its liability was quantified and mentioned in the order sheets after passing the orders of assessment in separate sheets. The writ petitions being devoid of any merit, are hereby dismissed.

Issues Involved:
1. Validity of assessment orders allegedly passed beyond the period of limitation.
2. Validity of demand notices served after a significant delay.
3. Alleged antedating of assessment orders and demand notices.
4. Prejudice caused to the petitioner due to delayed service of demand notices.
5. Requirement of communication of assessment orders to the petitioner.
6. Burden of proof regarding allegations of mala fides.

Issue-wise Detailed Analysis:

1. Validity of Assessment Orders Allegedly Passed Beyond the Period of Limitation:
The petitioner argued that the assessment orders for the years 2009-10 and 2010-11 were passed beyond the statutory period of three years as prescribed under the Jharkhand Value Added Tax Act, 2005 (JVAT Act). The court examined the order sheets and found that the assessment orders were indeed passed within the statutory period. The assessment orders recorded the appearance of the petitioner’s counsel along with the books of accounts and other documents, which were duly considered by the assessing officer.

2. Validity of Demand Notices Served After a Significant Delay:
The petitioner claimed that the demand notices were served after more than four years from the date they were allegedly issued, which caused serious prejudice. The court noted that the demand notices were indeed served after a significant delay, but the delay was explained by the respondents as a clerical error of non-dispatch due to inadvertence. The court found this explanation satisfactory and held that the delay did not invalidate the assessment orders.

3. Alleged Antedating of Assessment Orders and Demand Notices:
The petitioner alleged that the assessment orders and demand notices were antedated to save the period of limitation. The court examined the order sheets, attendance records of the petitioner’s counsel, and the entries in Register VI and the dispatch register. It found no evidence of antedating and concluded that the assessment orders were passed on the dates mentioned and were followed by the necessary entries in the official records.

4. Prejudice Caused to the Petitioner Due to Delayed Service of Demand Notices:
The petitioner argued that the delayed service of demand notices caused prejudice as they could not retain records beyond five years, making it impossible to contest the demands. The court held that the petitioner had participated in the assessment proceedings and produced the necessary records at that time. It was also noted that the limitation period to challenge the assessment orders commences from the date of service of demand notices, not from the date of the assessment orders. Therefore, the petitioner was not prejudiced by the delay in service of demand notices.

5. Requirement of Communication of Assessment Orders to the Petitioner:
The petitioner contended that the assessment orders were not communicated to them, making the orders ineffective. The court clarified that there is no provision under the JVAT Act and Rules requiring separate communication of the assessment orders to the assessee. The information about the passing of the assessment orders is conveyed through the service of demand notices. Since the demand notices were served, the assessment orders were deemed communicated.

6. Burden of Proof Regarding Allegations of Mala Fides:
The petitioner alleged mala fides on the part of the respondents in antedating the assessment orders and demand notices. The court referred to the judgments of the Supreme Court, which state that the burden of proving mala fides is very heavy on the person who alleges it. The petitioner failed to provide specific materials or tangible evidence to substantiate the allegations. The court found no merit in the allegations of mala fides.

Conclusion:
The court dismissed the writ petitions, finding no merit in the allegations of antedating and delayed service of demand notices. The assessment orders were passed within the statutory period, and the delay in serving the demand notices was satisfactorily explained. The petitioner was not prejudiced by the delay, and the allegations of mala fides were unsubstantiated.

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