2023 (9) TMI 635 - HC - VAT and Sales Tax

Unreasonable delay in completion of reassessment - reassessment have been completed after almost 10 years after the deemed order of assessment - whether this Court in exercise of its jurisdiction under Article 226 of the Constitution of India can determine as to what would constitute reasonable period for passing orders under Section 27 of the TNVAT Act or should it be left to the assessing authorities to decide the same? HELD THAT - It would be useful to refer to the judgment of the Hon'ble Supreme Court in the case of STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. 2007 (10) TMI 300 - SUPREME COURT , wherein question arose as to what would constitute a reasonable period for exercising revisional jurisdiction in the absence of limitation provided under the Act and whether it could be left to the statutory authorities to decide the same. It was held the authorities under the Act being creatures of the statute would not be able to determine the same. Thus, it is for this Court in exercise of its plenary jurisdiction under Article 226 of the Constitution of India, to determine what would constitute reasonable period for passing orders under Section 27 of the TNVAT Act - A reading of the above judgment would show that it is for this Court to decide as to what would constitute reasonable time for taking actions or passing order in the absence of statutory prescription of limitation. It is thus clear that even if the notice was issued within the prescribed period of limitation, inordinate/unreasonable delay in completing the proceedings would vitiate the same. In the present case, there is no explanation as to why it has taken more than six years after the issuance of the first notice on 23.07.2014 to issue the second notice on 23.06.2020 while proceeding to pass the impugned order on 05.02.2021 after almost 10 years from the deemed assessment - This Court in the case of J.M.Baxi 2016 (6) TMI 813 - MADRAS HIGH COURT found that failure to explain the delay of 5 years after initiation would vitiate the proceeding on the ground of unreasonable delay. This Court is of the view that the impugned order of reassessment cannot be sustained and is liable to be set aside - Petition allowed.

Summary

Issues Involved:
1. Delay in reassessment beyond the prescribed limitation period.
2. Validity of reassessment notice issued under a misquoted statutory provision.
3. Determination of "reasonable period" for completing reassessment in absence of statutory limitation.

Summary of Judgment:

1. Delay in reassessment beyond the prescribed limitation period:
The petitioner challenged the reassessment order for the year 2010-11, arguing it was completed almost 10 years after the deemed order of assessment, thus vitiated by unreasonable delay. The initial deemed assessment was made on 29.04.2011. A notice was issued on 23.07.2014 under Section 84 of the TNVAT Act, which was followed by another notice on 23.06.2020 invoking Section 27(1)(a). The petitioner contended that the reassessment should be initiated within 6 years from the date of the deemed assessment, making the 2020 notice barred by limitation.

2. Validity of reassessment notice issued under a misquoted statutory provision:
The respondent argued that the 2014 notice, although referencing Section 84, was intended for reassessment under Section 27. They asserted that misquoting the provision did not affect the validity of the proceedings, and once reassessment was initiated, there was no limitation for completing it.

3. Determination of "reasonable period" for completing reassessment in absence of statutory limitation:
The court acknowledged that while there is no statutory limitation for completing reassessment, actions must be taken within a "reasonable time." Citing precedents, the court emphasized that unreasonable delay, even after initiating reassessment within the prescribed period, would vitiate the proceedings. The court noted that the delay of over 6 years between the 2014 and 2020 notices was arbitrary and unreasonable.

Conclusion:
The court held that the reassessment proceedings were unsustainable due to the unreasonable delay and lack of explanation for the prolonged period between notices. Consequently, the impugned reassessment order was set aside, and the writ petition was allowed.