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TMI Blog2021 (5) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... the order was passed manually mentioning the date and that it was served on the dealer on the particular date. As per instructions contained in the internal circular No.4A of 2020 dated 20.03.2020, it is specifically stated that assessment orders passed manually shall not be served electronically to the dealers as the speaking orders have to be delivered to the dealers manually. Printout of assessment orders passed manually and entered into the system should not be taken out as it would not be a proper assessment order but just a document created for the purpose of data entry. The assessment order passed manually has to be served manually in which event signature of the person to whom the order is so served has to be obtained as acknowledgment of service and the date of such manual service will be considered for all legal consequences. Such signature or endorsement has to be on the original order or on a separate slip. At least one thing is certain and that is that the assessment orders were stated to have been passed manually on 20.03.2020 under section 23(2) of the MVAT Act and under section 9(2) of the CST Act read with section 23(2) of the MVAT Act for the assessment per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner is that it is a company incorporated under the Companies Act, 1956 and is engaged in the business of providing specialized services to persons involved in exploration and production of oil and natural gas. The services include carrying of man and material between offshore rigs/installations and on shore using vessels of the petitioner and providing drilling services by using the vessels owned or chartered by the petitioner. Customers of the petitioner include public sector undertakings such as Oil and Natural Gas Corporation Ltd. (ONGC) as well as private entities such as Reliance Industries Ltd. etc. Petitioner has given details of the scope of work and the nature of services provided by it in the writ petition. 4. It is stated that being a service provider, petitioner had discharged service tax under the Finance Act, 1994 at the prevailing rate during the financial year 2015-16. Total service tax paid by the petitioner during the said year was ₹ 208,98,43,288.00. 5. For the said financial year 2015-16, respondent No.3 issued notice of assessment dated 01.02.2018 calling upon the petitioner to produce relevant documents and also to show cause as to why it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016. 10. It is stated that the impugned orders were digitally signed on 22.07.2020 and were served on the petitioner via email on 23.07.2020. Further, the order details were uploaded on the official website of MVAT only on 02.08.2020 though the same could not be downloaded. In such circumstances, it is contended that the limitation for passing the assessment orders for the financial year 2015-16 having expired on 31.03.2020 and there being no provision for extension of the period of limitation, those were clearly barred by limitation. 11. It is with the above grievance that the present writ petition came to be filed seeking the relief as indicated above. 12. This Court by the order dated 15.09.2020 had issued notice and passed an interim order to the effect that no coercive action should be taken by the respondents against the petitioner on the basis of the impugned assessment orders. 13. Thereafter petitioner filed an additional affidavit to bring on record certain subsequent developments and also made a prayer for amendment of the writ petition which was granted whereafter amendments were carried out. 14. In the additional affidavit petitioner has stated that it r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of the critical covid-19 situation. 18.1. Respondents have explained that petitioner is under an erroneous impression that assessing authority had served two different assessment orders on two different occasions i.e. on 23.07.2020 and 22.09.2020. However, the assessment orders were the same which were already served on the petitioner on 23.07.2020 and which were passed on 20.03.2020. Explaining further, it is stated that the assessment orders were passed manually on 20.03.2020 which was well within the period of limitation. Thereafter those were uploaded on the SAP (System Applications and Products) system. 18.2. Asserting that the impugned assessment orders were passed well within the prescribed time limit as provided under the MVAT Act, those had to be passed as per best judgment as nobody had attended the office of respondent No.3 for final hearing. It is stated that the best judgment orders were passed on the basis of relevant legal provisions and decisions of the first appellate authority as well as of the Maharashtra Sales Tax Tribunal and judgments of the High Court. 18.3. It is submitted that if the petitioner is aggrieved by the orders of assessment, it sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions/agreements entered into by the petitioner are in the nature of lease activity and not rendition of pure services which was the view taken in the earlier orders of assessment covering previous periods which have been upheld by the first appellate authority as well as by the Maharashtra Sales Tax Tribunal. 18.9. At another portion of the reply affidavit, it is stated that the assessment orders were uploaded on SAP system on 14.07.2020. Those were downloaded, digitally signed and attached in order to email to the petitioner. However, due to technical issues, the assessment orders were attached without content and emailed to the petitioner. The contents were immediately emailed when this issue came to notice. Petitioner was already aware of the facts and circumstances present in the content because same facts and circumstances were already communicated in the previous assessment orders. 18.10. Thus, in the facts and circumstances of the case, respondents contend that petitioner should be relegated to the forum of alternative remedy provided under the MVAT Act and therefore the writ petition should be dismissed. 19. Petitioner has filed rejoinder affidavit. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till 17.11.2020, though the orders under the MVAT Act and CST Act were purportedly dated 14.07.2020. Only the order under the CST Act bore the digital signature of 02.08.2020; the order under the MVAT Act remained unsigned. It is asserted that the orders were uploaded on the SAP system on 14.07.2020 but those were created with the file extension pdf only on 21.07.2020. On that basis, it is contended that to state as has been stated by respondent No.3 that the orders were uploaded on the SAP system on 14.07.2020 is glaring untrue deposition of fact. 19.3. On merit, petitioner has asserted that it has duly discharged service tax liability for the financial year 2015-16 amounting to ₹ 208,98,43,288.00. No sale had taken place. MVAT Act provides for levy of tax on sales and not levy of tax on services which is within the sole jurisdiction of the central government and cannot be usurped by the state authorities. Therefore, no tax under the MVAT Act and under the CST Act are payable by the petitioner. 19.4. In so far alternative remedy is concerned, it is contended that while for previous years petitioner has filed appeal before the appellate authority, that would not estop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Such orders should not be served electronically but delivered manually. On the above basis, he submits that the orders of assessment emailed to the petitioner on 23.07.2020 could not have been passed on or before 31.03.2020 and hence are without jurisdiction being beyond limitation. 20.2. Referring to the reply affidavit of the respondents, learned senior counsel submits that on going through the averments made therein, it is evident that the assessment orders were not passed on 20.03.2020 as asserted by respondent No.3 but was subsequently ante-dated. Respondent No.3 himself has admitted that the scanned copies of the assessment orders were not properly readable or legible; therefore, he claimed to have downloaded clear legible copies of the orders passed in the month of March, 2020, signed those digitally and emailed to the petitioner, further stating that assessing authority tried his best to provide legible copies of the assessment orders to the petitioner. From this itself, it is evident that respondent No.3 is trying to make out a case of having passed the assessment orders on 20.03.2020 which in fact he had not. When admittedly the orders of assessment were passed manua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of the CST Act. After passing of the orders entries were made in the daily book of assessment and also in the monthly summary. The assessment orders were subsequently served upon the petitioner after scanning the order copies and sending to the petitioner. As the scanned copies of assessment orders were not properly readable or legible, the assessing authority downloaded clear legible copies of the orders from the system, signed those digitally and emailed those to the petitioner on 23.07.2020. From this, he contends that assessing authority tried his level best to provide proper legible copies of the assessment orders to the petitioner. The manual assessment orders were passed well within the prescribed period and then uploaded on SAP system. The date of uploading automatically gets embossed on the assessment order. The assessment orders were uploaded on the system on 14.07.2020. 21.1. Mr. V. A. Sonpal has submitted a compilation of documents and submits therefrom that the difficulties arose because of the pandemic and the related restrictions imposed by the government including functioning of government offices with minimal strength. 21.2. Referring to rule 87 of the Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties have been duly considered. Also perused the materials on record as produced by Mr. Sonpal. 24. From the rival pleadings and the submissions made in support thereof, the following issues arise for consideration of the Court :- I) Whether the orders of the assessment were passed or signed by respondent No.3 on 20.03.2020 as asserted by respondent No.3 or on any date prior to 31.03.2020 ? II) Whether an order of assessment is required to be communicated or kept on the file ? 25. To answer the above questions, it would be apposite to first dilate on the relevant legal provisions. Chapter V of the MVAT Act comprising sections 20 to 28A deals with returns and assessment etc. Section 23 provides for assessment. As per sub section (1), where a registered dealer fails to file a return in respect of any period by the prescribed date, the Commissioner may assess the dealer in respect of the said period to the best of his judgment without serving a notice for assessment and without affording an opportunity of being heard. However, as per the first proviso, such an assessment order can be cancelled and the dealer may be assessed afresh, if he submits the return after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such an order of assessment has to be made within four years failing which the returns shall be deemed to have been accepted. 25.3. Sub section (3) of section 23 provides that where a registered dealer has not filed the return in respect of any period by the prescribed date, then the Commissioner may serve on the dealer a notice requiring him to attend on a date and at a place specified therein and after giving the dealer a reasonable opportunity being heard, proceed to assess to the best of his judgment, the amount of tax due from him. As per the proviso, no such order of assessment shall be made after expiry of five years from the end of the year containing the said period. Thus, sub section (3) of section 23 provides for a situation where the Commissioner may pass an order of assessment to the best of his judgment in a case where a registered dealer has not filed the return but the limitation period for passing of such an order is five years from the end of the year containing the said period. 26. Section 26 of the MVAT Act deals with appeals. As per sub-section (4), such an appeal is required to be filed within sixty days from the date of communication of the order appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in guidelines regarding best judgment assessment. Referring to section 23 of the MVAT Act, it says that best judgment assessments are inevitable in certain circumstances as specified in section 23 of the MVAT Act. Clause 2 of the said circular deals with service of notice. As per clause 2.7, at least one reminder should be given to the dealer before an ex-parte show-cause notice is issued to the dealer and as per clause 2.8, ex-parte show-cause notice should be accompanied by working of tax liability to the best of the judgment of the assessing officer. The quantum of disallowances and reasons for the same should be mentioned appropriately in the said working. While clause 4.1 says that ordinarily adjournments should not be granted for a period of more than ten days, clause 6.1 highlights or provides for procedural safeguards while passing ex-parte best judgment assessment orders. It says that where the dealer or his representative has not appeared or no record has been produced, in such cases, the assessing officer should take the administrative approval of the immediate supervisory authority while issuing the ex-parte best judgment detailed working show cause notice. Further, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be in Form 303 under MVAT Act and in Form VIIB under CST Act. Formats of the orders are attached to this circular. The attached forms are in word format and can be edited to enter the details pertaining to the case. 3. The assessment orders so issued must be sealed, dated, stamped and signed by the issuing authority before delivering it to the assessee but the stamps and seals must not be carried home by the officers. They can get the orders and demand notices stamped on the day they attend the office. 4. Regarding the service of the said orders and demand notices, officers shall follow the provisions of law diligently. 5. No order should be served on the dealer without taking entry into the DBA. 6. The DBA entries of the orders passed manually should be marked as Manual in the DBA itself. This entry should contain date of passing of order and date of service of order. 7. The list of all the orders which are passed manually should be submitted with the KKPI for the month of March 2020. 8. Data entry of all the orders which are passed manually is required to be taken in the system database. There is no provision of data entry in the system hence the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring to the assessee, but the stamps and seals should not be carried home. The assessment orders and the demand notices can be stamped on the day the assessing officer attends office. Service of assessment orders and demand notices must be in accordance with the provisions of law and must be followed diligently. While entering the contents of assessment order the assessing officer shall invariably write that the order was passed manually mentioning the date and that it was served on the dealer on the particular date. As per instructions contained in the internal circular No.4A of 2020 dated 20.03.2020, it is specifically stated that assessment orders passed manually shall not be served electronically to the dealers as the speaking orders have to be delivered to the dealers manually. Printout of assessment orders passed manually and entered into the system should not be taken out as it would not be a proper assessment order but just a document created for the purpose of data entry. Further the date of manual service of the assessment orders will be considered for all legal matters involved in such assessment. 32.2. Take away from the above is that assessment order passed manually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first appellate authority for the period 2008-09 and the statement submitted by the dealer regarding revenue details of hiring of vessels and rigs for the period 2015-16 he passed the assessment orders on the basis of available record produced earlier under section 23(2) of the MVAT Act and section 9(2) of the CST Act read with section 23(2) of the MVAT Act. It was recorded that assessment orders were passed and demand notices issued. 33.1. From the above what is discernible is that according to respondent No.3 the dealer and his representative did not respond to the phone calls made and did not attend the office of respondent No.3. As the assessments were getting time barred in the month of March 2020, he passed the assessment orders considering the order of the first appellate authority for the period 200809 and submissions of the dealer made earlier. Though not explicitly stated, what transpires from the note is that two assessment orders were passed, one under section 23(2) of the MVAT Act and the other under section 9(2) of the CST Act read with 23(2) of the MVAT Act. Though it is stated that assessment orders were passed, there is no mention as on what page of the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the state sales tax law, in this case section 23(2) of the MVAT Act, the same therefore assumes significance. As per sub section (2) of section 23 if the dealer does not appear on the date specified in the notice as also does not comply with the terms of the notice, the Commissioner shall assess the dealer to the best of his judgment. The limitation for passing of such assessment order is four years from the end of the year containing the period to which the return relates. Since the assessment period is 01.04.2015 to 31.03.2016, the four year limitation period would expire on 31.03.2020. Therefore, if the assessment order was required to be passed under section 23(2) of the MVAT Act for the aforesaid assessment period, it had to be passed on or before 31.03.2020. 35. We have further noted that once an assessment order is passed as above, under section 32(4) of the MVAT Act the concerned person is liable to pay the tax, interest and penalty into the government treasury within thirty days from the date of service of notice issued by the Commissioner. 36. Further, rule 26 mandates that an assessee is entitled to a certified copy of an order of assessment free of charge al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated to have been passed also on the same day i.e. 20.03.2020 in terms of the said circular which does not at all appear to be practically feasible. Though petitioner has alleged that respondent No.3 had passed ten similar such assessment orders to highlight the impossibility of the situation, we need not go that far as what is staring us in the face itself appears to be highly improbable. 39.1. Clause (III) of the internal circular dated 20.03.2020 lays down the procedure for manual issuance of assessment orders. Petitioner s assertion that respondent No.3 worked from home on 20.03.2020 has not been denied by respondent No.3. Rather that has been acknowledged by respondent No.3 in the reply affidavit (paragraph 16) wherein he stated that petitioner s letter dated 20.03.2020 was not received till September 2020 since the office was closed due to covid 19. As per clause III (3), the stamps and seals could not be carried home by the officer though the assessment orders passed manually must be sealed, dated, stamped and signed by the issuing authority before delivering those to the assessee. The assessment orders and demand notices could be stamped on the day the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 was prohibited from serving the petitioner copies of the assessment orders and demand notices by email, since the assessment orders were passed manually. Secondly, uploading of the assessment orders on the system on 14.07.2020 which date is embossed on the emailed copies of the assessment orders can lead to the only rational inference that those were passed on 14.07.2020. Even those emailed copies of the assessment orders were not accompanied by the contents of assessment which is admitted by respondent No.3 in paragraph 30 of the reply affidavit. However, he has tried to justify this by saying that because of some technical issues, the assessment orders were emailed without content and that petitioner was already aware of the contents because of similar nature of assessment orders passed for previous periods. Such a bizare explanation is no explanation at all and only goes to show the improbability what respondent No.3 is trying to prove. 41. From the above, the only logical and rational inference that one can draw is that the impugned orders of assessment could not have been passed manually on 20.03.2020 or on any date prior to 31.03.2020. 42. In M. Ramaishtaiah (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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