2008 (7) TMI 864 - HC - VAT and Sales Tax

Court emphasizes time limit for revisional authority, quashes VAT Tribunal orders.

Guru Nanak Dev Rice Mills Versus State of Punjab and others

The court held that the revisional authority was not justified in revising the assessment after more than six years, emphasizing the importance of ... Whether the learned AETC was within its power to assume jurisdiction of revision, after the expiry of five years from the date of assessment period or from the passing of the original order of the Assessing Authority? Held that:- In the facts and circumstances of the case, the revising authority was not justified in exercising the revisional power after the expiry of more than six years, particularly when the revising authority was aware of the said judgment of Veerumal Monga's case [2000 (7) TMI 939 - PUNJAB AND HARYANA HIGH COURT] in the year 2000 itself. The revising authority neither in its notice nor in its order nor the counsel for the State before this court assigned any reason as to why such notice was being issued after a period of six years. There was no reason or justification with the department to explain this delay of six years, therefore, in this case the revisional authority has not exercised the revisional jurisdiction under section 21(1) of the Act within a reasonable period. Thus, the orders passed by the revising authority as well as the VAT Tribunal are liable to be quashed. Issues Involved:Assessment revision under Punjab General Sales Tax Act, 1948 after the expiry of six years.Analysis:The case involved an appeal against the order passed by the VAT Tribunal dismissing the revision filed by the assessee under section 21(3) of the Punjab General Sales Tax Act, 1948. The revisional authority had revised the assessment of the appellant after more than six years based on a judgment regarding the liability to pay purchase tax on paddy. The assessee objected to the reopening of the assessment on grounds of limitation and applicability of the judgment. The revisional authority raised a demand of Rs. 90,702, later rectified to Rs. 71,185. The assessee challenged the revisional authority's jurisdiction after the expiry of the limitation period.The substantial question of law raised was whether the revisional authority could assume jurisdiction after the expiry of five years from the date of assessment. The court considered the arguments of both parties. The appellant argued that while no limitation period was prescribed under the Act, the revisional authority should exercise its power within a reasonable period. Reference was made to previous judgments outlining principles for exercising revisional power.The respondent argued that the revisional authority was justified in revising the assessment even after the limitation period based on relevant judgments establishing the liability to pay purchase tax on paddy. The court analyzed the provisions of section 21 of the Act, highlighting the absence of a prescribed limitation period for exercising revisional power. It referenced a Supreme Court judgment stating that such power must be exercised within a reasonable period, not exceeding five years.The court ultimately held that the revisional authority was not justified in revising the assessment after more than six years, especially when the relevant judgment was known to the department earlier. It emphasized the importance of exercising revisional jurisdiction within a reasonable period. Consequently, the orders passed by the revising authority and the VAT Tribunal were quashed, restoring the original assessment order passed by the assessing officer.