2023 (3) TMI 225 - HC - VAT and Sales Tax

Finalisation of assessment and creation of extra demand - extension of the period of limitation - main grievance of the appellant is that the initial assessment order dated 19.11.2015 which he received on 21.01.2016 was void ab initio as the assessment framed was barred by time - HELD THAT - The assessment order was passed on 19.11.2015 and as per the amendment made in Section 29(4) of the Punjab Vat Act, an assessment order under sub- section (2) or sub-section (3) can be passed by the Commissioner within a period of six years after the date when the annual statement was filed or due to be filed whichever is later. Even the amended sub-section(2) or sub-section (3), also extended time for passing the assessment order for the assessment year 2006-07 till 20.11.2014. In the present case, the assessment year is 2008-09 and the assessment order was passed on 19.11.2015. The period of six years would come to an end in the year 2016. Since the period of limitation got extended from three years to five years and the assessment order with respect to assessment year 2001-02 was made on 10.07.2006 which was held to be within the limitation as provided by amended Section 11-CC. Therefore, the appeal filed by the State of Punjab was dismissed, however, it was held that the assessee was liable to pay only the principal amount of sales tax and no interest of penalty was to be paid by him. Thus, the amendment in Section 29(4) of Punjab VAT Act was made by notification No. 49-Leg./2013 (Punjab Act No. 38 of 2013) dated 15.11.2013. Even the proviso of Section 29(4) had extended the period of limitation for the assessment year 2006-07 till 20.11.2014. In the present case, since the assessment year is 2008-09, the period of limitation of 6 years had not expired when the proceedings were pending before the Commissioner when he passed order dated 28.04.2016. The Tribunal, vide order dated 26.11.2021 had rightly partly allowed the appeal of the assessee by setting aside the order of the Designated Officer imposing interest u/s 32(3) amounting to Rs.15624220/- and the imposition of penalty u/s 53 to the tune of Rs.20832293/- and the tax calculated had to be paid by the assessee. Appeal dismissed.

Summary

Issues:
1. Validity of assessment order under Punjab VAT Act.
2. Interpretation of Section 29(4) of the Punjab VAT Act.
3. Application of retrospective amendments to assessment orders.
4. Assessment timeline and limitation period under the Act.
5. Judicial precedents on retrospective amendments and limitation periods.

Issue 1: Validity of assessment order under Punjab VAT Act:
The appellant challenged the assessment orders dated 19.11.2015, 29.04.2016, and 26.11.2021 passed by various authorities under the Punjab VAT Act. The main contention was that the initial assessment order was void ab initio due to being time-barred and violating statutory provisions. The Tribunal partly allowed the appeal, setting aside interest and penalty but upheld the tax liability.

Issue 2: Interpretation of Section 29(4) of the Punjab VAT Act:
The crux of the matter revolved around the interpretation of Section 29(4) of the Punjab VAT Act, specifically concerning the timeline for assessments. The section was amended on 15.11.2013, extending the assessment period to six years. The Tribunal referred to a Supreme Court judgment emphasizing the impact of retrospective amendments on tax liabilities.

Issue 3: Application of retrospective amendments to assessment orders:
The judgment highlighted the application of retrospective amendments to assessment orders, drawing parallels with previous legal decisions. The assessment order in question for the year 2008-09 was examined in light of the retrospective nature of the legislative changes, emphasizing the impact on assessment timelines and tax obligations.

Issue 4: Assessment timeline and limitation period under the Act:
The assessment timeline and limitation period under the Punjab VAT Act were crucial in determining the validity of the orders. The judgment analyzed the timeline of assessments, considering the amended provisions and the extended limitation periods provided under the Act for different assessment years.

Issue 5: Judicial precedents on retrospective amendments and limitation periods:
Various judicial precedents were cited to support the interpretation of the law, especially regarding retrospective amendments and limitation periods. The judgment referenced a Supreme Court case involving retrospective amendments to emphasize the legal principles applicable to the present case.

In conclusion, the High Court dismissed the appeal, finding it devoid of merit. The assessment orders were upheld within the statutory limitation period as per the amended Section 29(4) of the Punjab VAT Act. The Tribunal's decision to set aside interest and penalty while affirming the tax liability was deemed appropriate in light of the legal provisions and judicial precedents cited during the proceedings.