Allowed

M/s. The Punganur Cold Storage Pvt. Ltd. v. The Commercial Tax Officer

Telangana HC4 Feb 2013WP/39379/2012

Case brief

AI extract

What is this about?

Three writ petitions challenging reassessment orders exceeding the statutory three-year limitation period. The Court held reassessment orders were void and barred by limitation under AP GST and VAT Acts, quashing appellate diversion mandating de novo assessment.

What did the court decide?

Impugned order of 9.11.2012 to the extent directing de novo assessment of 1st respondent was quashed and 1st respondent restrained from further proceedings.

M/s. The Punganur Cold Storage Pvt. Ltd. Vs The… — GST and Indirect Tax | Telangana HC (2013)

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THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO

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WP Nos.39372, 39375, 39379 of 2012

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Common Order : ( Per Sri MSR, J )

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The 2^nd petitioner in these writ petitions is a Director in M/s.Murugan Cold Storage(P) Ltd., ( which is the 1^st petitioner in W.P.No.39372 of 2012 ) and in M/s. Punganur Cold Storage Pvt. Ltd., ( which is the 1^st petitioner in W.P.No.39375 of 2012 and in W.P.No.39379 of 2012).

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In W.P.No.39372 of 2012, the petitioners submit that on the basis of a report of Regional Vigilance and Enforcement Office, Tirupathi dated 24.5.2002 (whose officers had inspected the premises of the 1st petitioner on 6.5.2002), an ex-parte assessment order dated 31.3.2006 was passed by the 1^st respondent; that the 1^st petitioner challenged it by way of appeal before the 2^nd respondent; by order dated 30.12.2008, for years 2002-03 and 2004-05 , he set aside the assessment order and remanded the matter for fresh disposal by 1^st respondent; this order was received by the 1^st respondent on 18.2.2009; the 1^st respondent, without

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making any further investigation and enquiry as directed by the 2^nd respondent, completed re-assessment and confirmed the levy of tax, by order dated 31.8.2012; that the said order of re-assessment ought to have been passed within a period of three years from the date of receipt of such order by 1st respondent i.e. on or before 17.2.2012 as mandated by Section 24-A of the Andhra Pradesh General Sales Tax Act, 1957 ; that the reassessment order passed by 1^st respondent is barred by limitation; that the order of the 1^st respondent was again challenged before the 2^nd respondent in appeal and a specific plea of bar of limitation was raised before the 2^nd respondent; but the 2nd respondent, by order dated 9.11.2012, rejected the said plea of limitation and remanded the matter back to the 1^st respondent to cause a thorough enquiry on all aspects, verify books of accounts and other records and pass orders de novo; that this order is unsustainable and ought to be quashed on the ground that it is without jurisdiction.

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In W.P.No.39375 of 2012, the petitioners submit that on the basis of a report of Regional Vigilance and Enforcement Office, Tirupathi dated 2.5.2002 (whose officers had inspected the premises of the 1st petitioner on 16.4.2002) , an ex-parte assessment order dated

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31.3.2006 was passed by the 1^st respondent; 1^st petitioner challenged it by way of appeal before the 2^nd respondent; by order dated 30.12.2009, for years 200203, 2005-06 & and 2006-07, he set aside the assessment order and remanded the matter for fresh disposal by 1^st respondent; this order was received by 1^st respondent on 10.2.2009; the 1^st respondent, without making any further investigation and enquiry as directed by 2^nd respondent, completed re-assessment and confirmed the levy of tax, by order dated 31.8.2012; the said order of re-assessment ought to have been passed within a period of three years from the date of receipt of such order by 1st respondent i.e. on or before 10.2.2012 as mandated by Section 24-A of the Andhra Pradesh General Sales Tax Act, 1957 ; the re-assessment order passed by the 1^st respondent is barred by limitation; that the order of the 1^st respondent was again challenged before 2^nd respondent in appeal and a specific plea of bar of limitation was raised before 2^nd respondent; but the 2nd respondent, by order dated 9.11.2012, rejected the said plea of limitation and remanded the matter back to the 1^st respondent to cause a thorough enquiry on all aspects, verify books of accounts and other records and pass orders de novo; that this order is unsustainable

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and ought to be quashed on the ground that it is without jurisdiction.

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In W.P.No.39379 of 2012, the petitioners submit that on the basis of a report of Regional Vigilance and Enforcement Office, Tirupathi dated 29.8.2006 (whose officers had inspected the premises of the first petitioner on 17.4.2006), an assessment order dated 25.3.2008 under the Andhra Pradesh General Sales Tax Act, 1957 and Andhra Pradesh Value Added Tax Act, 2005 was passed by the 1^st respondent; the 1^st petitioner challenged it by way of appeal before the 2^nd respondent; by order dated 30.12.2009, for years 200203 to 2006-07 , he set aside the assessment order and remanded the matter for fresh disposal by the 1^st respondent; this order was received by 1^st respondent on 10.2.2009; the 1^st respondent, without making any further investigation and enquiry as directed by the 2^nd respondent, completed re-assessment and confirmed the levy of tax by order dated 31.8.2012; the order of reassessment ought to have been passed within a period of three years from the date of receipt of such order by the 1st respondent i.e. on or before 10.2.2012 as mandated by Section 37 of A.P.Value Added Tax Act,2005 ; the re-assessment order passed by the 1^st

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respondent is barred by limitation; the order of 1^st respondent was again challenged before the 2^nd respondent in appeal and a specific plea of bar of limitation was raised before the 2^nd respondent; but the 2nd respondent, by order dated 9.11.2012 , rejected the said plea of limitation and remanded the matter back to the 1^st respondent to cause a thorough enquiry on all aspects, verify books of accounts and other records and pass orders de novo; this order is unsustainable and ought to be quashed on the ground that it is without jurisdiction.

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Heard Sri S.R.R. Viswanath, learned counsel for the petitioners and Sri P. Balaji Varma, learned Special Government Pleader for Commercial Taxes. The learned counsel for the petitioners contended

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that the orders of re-assessment passed by the 1^st respondent beyond the period of three years from the date of receipt by him of the respective orders of appellate authority (2^nd respondent) (remitting the matter to the 1^st respondent) as required under Section 24-A of the Andhra Pradesh General Sales Tax Act, 1957 and Section 37 of the Andhra Pradesh Value Added Tax Act, 2005 are barred by limitation; that this point was specifically raised before the 2^nd respondent

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in the appeal filed before him by the petitioners against the orders of re-assessment, but he erroneously rejected the said contention; that the 2^nd respondent could not have relied upon Section 20(5) of the Andhra Pradesh General Sales Tax Act, 1957 or Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 and instead should have considered Section 24-A of the Andhra Pradesh General Sales Tax Act, 1957 and Section 37 of the Andhra Pradesh Value Added Tax Act, 2005 ; that the orders dt.9.1.2012 f the 2^nd respondent impugned in the writ petitions are required to be quashed as they are without jurisdiction. He relied upon the decisions in K.MOHD. OSMAN SAHEB & CO. V.

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STATE OF ANDHRA PRADESH^[1] and THE CEMENT DISTRIBUTORS (P) LTD v. THE DY. CTO & OTHERS [2] . He also contended that the 2^nd respondent by the impugned order could not have conferred jurisdiction on the 1^st respondent to pass orders beyond limitation, contrary to the above provisions of law and direct him to make fresh de novo assessments , and relied upon P. VITTAL PAI AND OTHERS V. AGRICLUTURAL INCOME TAX OFFICER, PUTTUR^[3] , HOPE TEXTILES LTD AND ANOTHER V. UNION OF INDIA^[4] and

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BENGAL TEA AND FABRICS LTD V. ASSISTANT COMMISSIONER OF TAXES^[5] .

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S.20(5) of the Andhra Pradesh General Sales Tax Act, 1957 reads :

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“ Sec.20. (5): Where an order passed under this Section has been set aside by any Court or other competent authority under this Act for any reason the period between the date of such order and the date on which it has been so set aside shall be excluded in computing the period of four years specified in sub-section (3) for the purpose of making a fresh revision if any, under this Section.”

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S.24-A of the Andhra Pradesh General Sales Tax Act, 1957 enacts:

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“ Sec.24-A. Limitation in respect of certain assessments or reassessments ordered :

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Notwithstanding anything in Sections 14 and 20 where an assessment, re-assessment, rectification in or revision of an assessment is made in respect of an assessment or any person, in pursuance or in consequence of or to give effect to any finding or direction contained in an order under Section 19, Section 20, Section 21, Section 22 or Section 23 or in an order of any Court in a proceeding, otherwise than by way of appeal or revision under this Act, such assessment, re-assessment, rectification in or revision of an assessment shall be made within three years from the date of receipt of such order by the assessing or revising authority, as the case may be.”

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Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 reads as follows :

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“ Sec.21(4): The authority prescribed may, based on any information available or any other basis, conduct a detailed scrutiny of the accounts of any VAT dealer or TOT dealer and where any assessment as a result of such scrutiny becomes necessary, such assessment shall be made within a period of four years from the end of the period for which the assessment is to be made.”

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S.37 of the Andhra Pradesh Value Added Tax Act, 2005 reads:

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“ Sec.37. Limitation in respect of certain assessments or re-assessments ordered : Notwithstanding anything in Sections 21 and 32 where an assessment, re-assessment, rectification or revision of an assessment is made in respect of a dealer or any person, in pursuance or in consequence of or to give effect to any finding or direction contained in an order under Sections 31,32,33,34 and 35 or in an order of any court in a proceeding, otherwise than by way of appeal or revision, such assessment, reassessment, rectification in or revision of an assessment shall be made within three years from the date of receipt of such order by the prescribed or revising authority as the case may be :

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Provided that if such an appeal order or order of any court has been subjected to further appeal, either partially or entirely, and if there are orders of stay prohibiting the authority concerned to pass consequential orders, the period of three years shall get extended by the period during which such stay orders were in force:

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Provided further that if the subsequent appeal results in modification of such appeal, order or order of any court which is subject to further appeal, either partially or wholly, the period of three years shall be computed from the date of receipt of subsequent order of appeal but not from the date of receipt of the original appeal order or order of any court which was subjected to further appeal.”

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A reading of the above provisions of law would indicate that Section 20(5) of the Andhra Pradesh General Sales Tax Act, 1957 would apply only where the Commissioner of Commercial Taxes exercises revisional powers under Section 20 and such order is set aside by any Court or other competent authority, but would not apply, where an order of assessment of the Assessing Authority is set aside in appeal by the appellate authority under the Act, and de-novo assessment is directed in of or in pursuance consequence of or to give effect to any finding or direction contained in an order under Section 19 . In such a situation only Section 24-A is attracted.

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Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 would apply only for normal assessment made for the first time by the assessing officer , but where an order of assessment of the Assessing Authority is set aside in appeal by the appellate authority under the Act, and de novo assessment is directed in pursuance of or in consequence of or to give

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effect to any finding or direction contained in an order under Section 31, only Section 37 is attracted.

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In this view of the matter, it is clear that in the

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impugned orders, the 2^nd respondent had incorrectly relied upon Section 20(5) of the Andhra Pradesh General Sales Tax Act, 1957 and Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 to sustain the orders of reassessment made by the 1^st respondent. We are of the view that the orders of reassessment passed by the 1^st respondent are beyond the period of three years from the date of receipt of the orders of the 2^nd respondent in all the cases, and therefore, the 1^st respondent had no jurisdiction to pass the said orders.

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In K.MOHD. OSMAN SAHEB AND CO. ( 1 supra ), where a notice proposing fresh assessment as well as the order of assessment is passed beyond the period of four years prescribed in Section 14(1) of the Act, it was held to be without jurisdiction and barred by time.

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In HOPE TEXTILES LTD (4 supra ), the Supreme Court held that the High Court cannot give a direction to an authority under the Income Tax Act, 1961 to ignore the period of limitation prescribed under the said Act to make an order of assessment. In the said case, for the

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assessment year 1971-72, the appellant company filed a return on the basis of which an order of assessment was made on March 27, 1974, accepting certain losses disclosed by it. On February 21, 1976, a reassessment notice was issued under section 148 of the Income Tax Act, 1961, pursuant to which the company filed a return disclosing further losses. No orders were passed till September 1981. The appellant company filed a writ petition in the High Court for a mandamus to the Income Tax Officer to pass orders in pursuance of the said notice. The High Court dismissed the writ petition holding that no mandamus could be issued compelling Income Tax Officer to make an order of assessment beyond the period of limitation prescribed by Section 153(2). The appellant company preferred an appeal to the Supreme Court. The Supreme Court dismissed the appeal, observing that sub-clause (ii) of Section 153(3) could not be understood as empowering the High Court to give a direction to the authority under the Act to ignore the period of limitation prescribed under the Act.

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The learned Special Government Pleader for Taxes did not dispute the above legal position.

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On the aforesaid analysis, we are of the view that orders of the 1^st respondent as confirmed by the

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2^nd respondent are barred by limitation prescribed under Section 24-A of the Andhra Pradesh General Sales Tax Act, 1957 and Section 37 of the Andhra Pradesh Value Added Tax Act, 2005 and hence, are without jurisdiction. Consequently, the writ petitions are allowed and the orders dt. 9.11.2012 of the 2^nd respondent , to the extent he directed the 1^st respondent to make de-novo assessments, is quashed and the 1^st respondent is restrained from proceeding any further in the matter. No Costs.

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JUSTICE GODA RAGHURAM

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JUSTICE M.S. RAMACHANDRA RAO

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Kk/ DT; 4-2-2013

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THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO

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WP Nos.39372, 39375, 39379 of 2012

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Dt : 4-2-2013