2017 (2) TMI 82 - HC - VAT and Sales Tax

Precedent Upheld: Extended Limitation & Tax Issues Clarified in Landmark Decision

M/s Dhingra Jardine Infrastructure Pvt. Ltd. Versus The State of Haryana and others

M/s Dhingra Jardine Infrastructure Pvt. Ltd. Versus The State of Haryana and others - [2017] 101 VST 34 (P&H) Issues Involved:1. Revisional power based on the Supreme Court judgment in K. Raheja Development Corporation.2. Applicability of extended period of limitation for revisional jurisdiction.3. Validity of show cause notice lacking basic facts for invoking exception clause.4. Invocation of exception clause for revisional jurisdiction beyond the normal period.5. Binding nature of departmental circulars.6. Vires of Explanation (i) to Section 2(1)(zg) of the Act.7. Levy of tax on builders in the absence of machinery provisions.8. Assessment framed in the name of a dissolved company.Detailed Analysis:Issue No. 1: Revisional Power Based on K. Raheja Development Corporation JudgmentThe court held that the judgment of the Supreme Court in K. Raheja Development Corporation was a binding precedent and declared the law on the subject at that time. This judgment remained binding until it was reconsidered by a larger bench in L&T's 2nd case, which upheld the law declared in K. Raheja Development Corporation's case. Therefore, authorities could take action based on this judgment.Issue No. 2: Applicability of Extended Period of Limitation for Revisional JurisdictionThe court ruled that the extended period for revisional jurisdiction applies only to cases where the period prescribed before the amendment had not expired. A dead claim cannot be revived by the amendment. The amendment cannot inject life into claims where the limitation period had already expired before the amendment.Issue No. 3: Validity of Show Cause Notice Lacking Basic Facts for Invoking Exception ClauseThe court did not delve into this issue in detail as the orders had already been passed and were under consideration. The significance of the show cause notice's contents was deemed less relevant at this stage.Issue No. 4: Invocation of Exception Clause for Revisional Jurisdiction Beyond the Normal PeriodThe court opined that the exception clause for invoking extended limitation should be used only in exceptional circumstances. Generally, the event justifying the exception should occur after the normal limitation period has expired. However, if the event occurs just before the expiry and action is taken within a reasonable time or the delay is satisfactorily explained, the exception can be invoked.Issue No. 5: Binding Nature of Departmental CircularsThe court held that departmental circulars are binding on the departmental authorities but not on the courts, especially if there is a contrary judicial pronouncement. Circulars contrary to statutory provisions have no legal existence.Issue No. 6: Vires of Explanation (i) to Section 2(1)(zg) of the ActThe court upheld the vires of Explanation (i) to Section 2(1)(zg) of the Act, referring to a previous judgment in CHD Developers Limited's case. The explanation was deemed a definition clause and not a charging section, thus not unconstitutional.Issue No. 7: Levy of Tax on Builders in the Absence of Machinery ProvisionsFor the period up to 16.5.2010, the court found that there were no machinery provisions for calculating taxable turnover in the Act or Rules, making the levy unenforceable. From 17.5.2010 onwards, with the amended Rules in place, the levy was sustained.Issue No. 8: Assessment Framed in the Name of a Dissolved CompanyThe court held that no assessment could be framed against a company that had been dissolved after merging with another company. The assessment order against M/s Sukh Realtors Pvt. Ltd., which had merged with M/s S. S. Group Pvt. Ltd., was set aside.Relief:The court disposed of the writ petitions by addressing each legal issue comprehensively, providing clarity on the application of the law in the context of the Haryana Value Added Tax Act, 2003.