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TMI Blog2022 (7) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... n is whether the power of the Commissioner to allow further time of six months to the Assessing Authority to complete the audit assessment must be exercised before the Assessing Authorities time to conclude the proceedings expire. The second question is whether an Assessing Authority could pass the assessment order after the period of six months in expectation of the Commissioner extending the time. The third and the last question is whether a Commissioner could grant post-facto extension, ratifying the assessment order passed beyond the period of six months. We may clarify here itself that it is nobody's case that the powers could be exercised by the Commissioner after one year (initial period of six months for Assessing Authority coupled with the power of the Commissioner to allow further six months). Statutory Position 3.1 For proper appreciation of the issue, it is necessary to refer to the relevant provisions of the Act. Section 41 prescribes the procedure for conducting the assessment proceeding. Section 41(2) empowers the Commissioner to direct that a tax audit be conducted in respect of certain dealer(s) as selected by him. Section 41(4) provides that after completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and documents. (3) If the dealer fails to appear or cause appearance, or fails to produce or cause production of the books of account and documents as required under sub-section (1), the assessing authority may proceed to complete the assessment to the best of his judgement basing on the materials available in the Audit Visit Report and such other materials as may be available and after causing such enquiry as he deems necessary. (4) Where the dealer to whom a notice is issued under sub-section (1), produces the books of account and other documents, the assessing authority may, after examining all the materials as available with him in the record and those produced by the dealer and after causing such other enquiry as he deems necessary, assess the tax due from that dealer accordingly. (5) Without prejudice to any penalty or interest that may have been levied under any provision of this Act, an amount equal to twice the amount of tax assessed under sub-section (3) or sub-section (4) shall be imposed by way of penalty in respect of any assessment completed under the said sub-sections. (6) Notwithstanding anything contained to the contrary in any provision under this Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Instalaciones Y Servicios S.A., the High Court has also calculated the six-month period from the date of receipt of the AVR by the Assessee. So, the six months period calculated from 14.05.2007 ended on 13.11.2007. Before the expiry of the said period, the Assessing Authority made an application dated 24.10.2007 to the Commissioner seeking extension of time by six months under the Proviso to Section 42(6). The extension was granted on 16.11.2007, that is three days after the initial period of six months. Thereafter, the Assessing Authority, proceeded further and passed the assessment order on 31.12.2007. We may note that the assessment order dated 31.12.2007 is in any event within a period of one year commencing from 14.05.2007. The assessment order found tax due amounting to Rs. 4,67,96,731/-. 4.2 It is this assessment order which was challenged before the High Court and the High Court allowed the Writ Petition on the sole ground that the extension of time was granted by the Commissioner over telephone. Disapproving this method of extending time, High Court held that the Commissioner was obliged to consider the request for extension on case-to-case basis depending on merit of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete assessment expired on 31.03.2013. The order of assessment was not passed within that date, but an application for extension was made before the expiry of the six months period i.e., on 25.03.2013. Eventually, the assessment order came to be passed on 15.05.2013, which nevertheless, is within a period of one year commencing from 01.12.2012. It is after the said order that the Commissioner in exercise of his powers under the Proviso to Section 42(6) granted post-facto extension by six months on 20.07.2013. The assessment order dated 15.05.2013 was challenged in the Writ Petition. The High Court considered the matter in detail and held that the Assessing Authority could not have presumed that the Commissioner would grant an extension and, therefore, could not have passed the assessment order in advance. Further, it was held that the Commissioner has to exercise the power after applying its mind to the facts of the case before mechanically granting an extension. Importantly, the High Court found no difficulty in applying the decision of this Court in the case of Shreyans (supra) and held that the Commissioner should have exercised the power of extension before the original period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court has not considered the issue that is raised and argued before us. For this reason, we have to necessarily decide the issue in other Special Leave Petitions. 10. In all the Special Leave Petitions, apart from the first case of Essel Mining, we have noticed that the High Court disposed of the Writ Petitions by following the decision of this Court in the case of Shreyans Industries (supra). The most important question for consideration is whether the issue arising for consideration in these Special Leave Petitions are covered by the decision of this Court in Shreyans Industries (supra). It is therefore necessary for us to consider the ratio in Shreyans Industries (supra) and to see if it covers the issues arising in these batch of cases. 11. Decision in Shreyans Industries (supra) is by a Bench of three judges. The case arose out of proceedings under the Punjab General Sales Tax Act, 1948. The issue was whether the power to extend time is to be necessarily exercised before the normal expiry of the said period of three years ran out. 12. Before we proceed further to appreciate the ratio, it is necessary to refer to Section 11 of the Punjab General Sales Tax Act, 1948 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Black's Law Dictionary in the given situation, which is dealt with in the instant appeals. 22. Even otherwise, it is important to understand the ratio laid down in the judgment of the Karnataka High Court in BHEL [BHEL v. CCT, (2006) 143 STC 10 (Kar)]. The issue in the said case before the Karnataka High Court was as to whether the power to pass a deferment order is to be exercised even after the expiry of the period of limitation which was answered in the negative. The reasons given in support of this conclusion are as follows: (STC pp. 15-16, para 8) "8. ... Deferment of assessment has the effect of enlarging the period of limitation which did not expire by the time the deferment order is contemplated to be passed. When once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Resort to deferment provisions does not retrieve the situation. There is no question of deferring assessment which had already become time-barred. The provision for exclusion of time in computing the period of limitation of deferment of assessment is meant to prevent further running of time against the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 'extension', the purpose is only to grant further time to the Assessing Authority to complete the assessment. Therefore, there is no purpose in drawing a distinction in the power of extension by referring to the specific expressions used in different statutes provisioning extending the time. The ratio of the judgment is that, upon the lapse of period provided for the AO to make the assessment, the right of the department to assess gets extinguished. This extinguishment also gives rise to a valuable right to the assessee. Once the right to make assessment extinguishes there is no question of extension of time when the assessment has become time barred. This is the broad principle laid down in Shreyans Industries (supra) decided by the three Judges Bench. 15. Shri Rakesh Dwivedi, learned Senior Counsel advanced submissions on behalf of the Petitioner-State and has also filed written submissions. It is his case that the decision in Shreyans Industries (supra) cannot be made applicable to these batch of cases for the following reasons: (i) While all these cases arise under Section 42(6) of the Orissa Value Added Tax Act, 2004, the decision in Shreyans Industries (supra) concerns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can straightaway disapply Shreyans Industries to the facts of the present case. The principle laid down in Shreyans Industries is wide enough and requires a critical and detailed consideration. As we are sitting in the strength of two judges, we consider it appropriate that the matter be taken up by a Bench of an equal strength and therefore refer the matter to a three Judge Bench where there will be a possibility to hear the parties on the applicability of Shreyans Industries. There is yet another reason. 17.1 There are certain alternative perspectives based on the interpretation, as well as on the principle of administrative law. 17.2 On interpretation, the following perspectives may be noted: (i) While sub-section (6) of Section 42 relates to the power of the Assessing Authority, Proviso to sub-section (6) relates to the power of the Commissioner. These are two distinct officers, exercising different powers. As we are to examine the power of the Commissioner, the scope and ambit of such power must be located within the proviso, which alone speaks of the power of the Commissioner. (ii) In the said Proviso, there is no limitation upon the commissioner to exercise such power ..... X X X X Extracts X X X X X X X X Extracts X X X X
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