2014 (8) TMI 293 - HC - VAT and Sales Tax

High Court Upholds Fair Decision on Recovery Reminder Dispute

The High Court balanced equities by ensuring a decision on merits rather than default in a case involving the validity of a recovery reminder. A ... Bombay Sales Act, 1959 - Section 33D - non production of documents - Whteher in case the communication issued by the AO is construed as being with respect to the assessment orders under both the Acts, the respondents' right to assess would be barred by limitation - Whether in case it is construed as applicable only to the assessment order under the BST Act, the assessees would be faced with an assessment order which it never had an opportunity of challenging - Held that:- subject itself refers to the cancellation of the assessment orders under the BST Act as well as under the CST Act, 1956. The petitioner proceeded on the basis that by the said order, the assessment orders under the BST Act as well as under the CST Act had been cancelled. In view of the applicability of the provisions of the BST Act to the CST Act, in certain respects, it is possible that the petitioner genuinely believed that its applications for setting aside the assessment orders were considered to be applications in respect of the assessment orders under both the Acts and not merely under the BST Act. No application was made in form VII(BB) in respect of the assessment orders passed under the CST Act. The application was only in form N-30AA, which is prescribed in respect of the applications for setting aside the assessment orders under the BST Act. However, a fair reading of the letter dated 10.01.2008 definitely indicates that the assessment orders under both the Acts were cancelled. The net result is that the assessment under the CST Act has not been decided on merits. If the communication dated 10.01.2008 is construed as being with respect to the assessment orders under both the Acts, the respondents' right to assess would be barred by limitation. The prescribed period of limitation is eighteen months. On the other hand, if it is construed as applicable only to the assessment order under the BST Act, the petitioners would be faced with an assessment order which it never had an opportunity of challenging - The ends of justice therefore, would be served by disposing of this writ petition by treating the communication dated 10.01.2008 to be an order cancelling the assessment orders under the CST Act as on the date of this order. The respondents shall therefore, have a further period of eighteen months commencing from the date of this order for carrying out the assessment under the CST Act for both the said periods - Decided partly in favour of assessee. Issues:1. Validity of recovery reminder and its quashing.2. Misunderstanding between parties regarding assessment orders under BST and CST Act.3. Proper form for setting aside assessment orders under CST Act.4. Interpretation of communication canceling assessment orders.5. Implications of cancellation on limitation period for assessment under CST Act.6. Consideration of evidence availability for fresh assessment orders.Analysis:1. The petitioner sought a writ to prohibit the respondents from acting on a recovery reminder and to quash it. The High Court balanced the equities by ensuring a decision on merits rather than by default.2. Two assessment orders were passed for the petitioner under the Bombay Sales Tax Act (BST) and Central Sales Tax Act (CST) for different periods. The petitioner applied for setting aside these orders, leading to a misunderstanding between the parties.3. The applications for setting aside the orders were made in Form N-30AA, meant for BST Act, instead of Form VII(BB) for CST Act. Despite this technical error, the communication from the Deputy Commissioner indicated cancellation of orders under both Acts.4. The Court noted the confusion caused by the communication and clarified that the cancellation applied to CST Act as well. This decision was made to prevent injustice to either party, allowing a fresh assessment under CST Act within the limitation period.5. The judgment ensured that the respondents have eighteen months from the order date to carry out the assessment under CST Act. The petitioner's concerns about evidence availability after several years were acknowledged, emphasizing that non-production of documents may not be held against them.6. The writ petition was disposed of by deeming the communication as canceling assessment orders under CST Act. The respondents were directed to provide a hearing before passing a fresh assessment order, keeping all contentions open and bearing no costs.