Court invalidates assessment, rules against extended period use. Orders set aside, petition allowed.

The Court held that the reopening of the assessment by invoking the extended period of six years was bad in law. The impugned assessment orders dated 18th January 2018, and the notices dated 11th October 2017, were set aside. The petition was allowed, and no orders as to costs were made. The pending application was disposed of accordingly.

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Issues Involved:
1. Validity of the impugned order of default assessment of tax, penalty, and interest.
2. Applicability of the limitation period for framing assessment under Section 34(1) of the DVAT Act.
3. Adequacy of the reasons provided for invoking the extended period of limitation.
4. Legality of combining DVAT and CST assessments into one order.
5. Justification for reopening the assessment based on the DGCEI report.

Detailed Analysis:

1. Validity of the Impugned Order of Default Assessment of Tax, Penalty, and Interest:
The Petitioner, a private limited company engaged in the business of ferrous and non-ferrous metals, challenged the impugned order dated 18th January 2018, passed by the Assistant Value Added Tax Officer (AVATO) under Sections 32 and 33 of the DVAT Act. The Petitioner argued that the assessment was beyond the statutory limitation period and lacked justification for invoking the extended period of limitation.

2. Applicability of the Limitation Period for Framing Assessment Under Section 34(1) of the DVAT Act:
The Petitioner contended that under Section 34(1) of the DVAT Act, the AVATO was required to frame the assessment within four years from the end of the tax period, which expired on 31st March 2016. The notice issued on 11th October 2017 was beyond this four-year period. The Respondent argued that proper approval was obtained on 9th October 2017 from the Commissioner of VAT to invoke the extended period of limitation.

3. Adequacy of the Reasons Provided for Invoking the Extended Period of Limitation:
The Court examined whether the reasons to believe that tax was not paid due to concealment, omission, or failure to disclose material particulars were adequately recorded. The Court referred to the legal position established in H M Industries v. Commissioner of Value Added Tax, which mandates that the Commissioner must form "reasons to believe" and record them in writing. The reasons must have a live link with the failure to pay tax due to concealment, omission, or failure to disclose material particulars.

4. Legality of Combining DVAT and CST Assessments into One Order:
The Respondent admitted that combining the local and central turnover in the same default notice was an inadvertent error and a "technical problem." The Court held that combining DVAT and CST assessments into one order was not merely a technical problem but a significant legal issue. The Respondent's request to issue separate orders at this stage was deemed time-barred and not permissible.

5. Justification for Reopening the Assessment Based on the DGCEI Report:
The reopening of the assessment was based on a report from the Director General of Central Excise Intelligence (DGCEI), which alleged that the Petitioner, along with other firms, passed on inadmissible CENVAT credit without physical delivery of goods. The Court noted that the DGCEI report alone, without further independent inquiry, could not form the basis for reopening the assessment. The Court emphasized that "reason to believe" is different from "reason to suspect" and that the statutory requirement of forming a subjective satisfaction based on concrete evidence was not met.

Conclusion:
The Court held that the reopening of the assessment by invoking the extended period of six years was bad in law. The impugned assessment orders dated 18th January 2018, and the notices dated 11th October 2017, were set aside. The petition was allowed, and no orders as to costs were made. The pending application was disposed of accordingly.

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