2016 (5) TMI 735 - SC - VAT and Sales Tax

Retrospective Amendment Extends Assessment Time Limit: Impact on Tax Liability and Penalties

The Supreme Court allowed the appeals, finding that the retrospective amendment under Section 11-CC of the Punjab General Sales Tax Act, 1948, extended ... Demand of interest - Period of limitation - Assessment of sales tax for the year 2001-2002 - Assessment not made till the last date i.e. 30th April,2005 - Held that:- amendment was made by the State Legislature vide Punjab General Sales Tax (Amendment and Validation) Act, 2005 whereby Section 11-CC was added after Section 11-C. This amendment was retrospective in nature and covered the period in question. As per the aforesaid amendment, the period of limitation got extended from three years to five years. In the instant case, assessment order was made on 10.07.2006 which was within the limitation as was provided by amended Section 11-CC Therefore, in view of the statutory provision, the judgment of the High Court holding that the assessment was validly made within the period of limitation is clearly unsustainable. Since the assessment is saved by the subsequent amendment and that too by making it retrospective, the assessee shall pay only principal amount of sales tax and no interest or penalty shall be paid. Decided in favour of revenue Issues:1. Interpretation of the Punjab General Sales Tax Act, 1948 regarding the time-limit for completing assessments.2. Validity and effect of the retrospective amendment introduced by the Punjab General Sales Tax (Amendment and Validation) Act, 2005.3. Assessment of sales tax for the Assessment Year 2001-2002 under the amended provision.Analysis:The Supreme Court addressed multiple appeals concerning the Assessment Year 2001-2002 under the Punjab General Sales Tax Act, 1948. The main issue revolved around the time-limit for assessment under Section 11(3) of the Act, which required assessments to be completed within three years from the end of the year. However, Section 11(1) empowered the Commissioner to extend this period. The case involved an amendment through the Punjab General Sales Tax (Amendment and Validation) Act, 2005, introducing Section 11-CC, which extended the assessment period to five years for certain financial years, including 2001-2002. The retrospective nature of this amendment was crucial in determining the validity of the assessment made on 10.07.2006, which fell within the extended limitation period.The Court found that the retrospective amendment under Section 11-CC was applicable to the Assessment Year 2001-2002, effectively extending the time-limit for assessments from three to five years. Consequently, the assessment made on 10.07.2006 was within the extended limitation period provided by the amendment. The Court emphasized that the High Court's judgment, which upheld the validity of the assessment within the period of limitation, was unsustainable. Therefore, the appeals were allowed based on the statutory provision introduced by the retrospective amendment.In conclusion, the Court clarified that due to the retrospective nature of the amendment saving the assessment, the assessee was only liable to pay the principal amount of sales tax. No interest or penalty was to be imposed, considering the assessment's validity under the amended provision. This comprehensive analysis by the Supreme Court highlighted the significance of statutory amendments in extending time-limits for assessments and their retrospective application in resolving disputes related to tax assessments under the Punjab General Sales Tax Act, 1948.