2021 (5) TMI 54 - HC - VAT and Sales Tax

Assessment orders quashed due to time limit breach.

Greatship (India) Ltd., Versus State of Maharashtra, Commissioner of State Tax and Assistant Commissioner of State Nodal-4

The court held that the assessment orders and demand notices were passed beyond the limitation period and were not validly communicated to the petitioner. ... Validity of assessment order - orders of the assessment were passed or signed by respondent No.3 on 20.03.2020 as asserted by respondent No.3 or on any date prior to 31.03.2020? - order of assessment is required to be communicated or kept on the file? - HELD THAT:- From a careful analysis of the procedure laid down for manual issuance of assessment orders as contained in clause (III) of the internal circular No.4A of 2020 dated 20.03.2020, we find that particular format is laid down for passing of assessment orders manually. Those must be sealed, dated, stamped and signed before delivering to the assessee, but the stamps and seals should not be carried home. The assessment orders and the demand notices can be stamped on the day the assessing officer attends office. Service of assessment orders and demand notices must be in accordance with the provisions of law and must be followed diligently. While entering the contents of assessment order the assessing officer shall invariably write that the order was passed manually mentioning the date and that it was served on the dealer on the particular date. As per instructions contained in the internal circular No.4A of 2020 dated 20.03.2020, it is specifically stated that assessment orders passed manually shall not be served electronically to the dealers as the speaking orders have to be delivered to the dealers manually. Printout of assessment orders passed manually and entered into the system should not be taken out as it would not be a proper assessment order but just a document created for the purpose of data entry. The assessment order passed manually has to be served manually in which event signature of the person to whom the order is so served has to be obtained as acknowledgment of service and the date of such manual service will be considered for all legal consequences. Such signature or endorsement has to be on the original order or on a separate slip. At least one thing is certain and that is that the assessment orders were stated to have been passed manually on 20.03.2020 under section 23(2) of the MVAT Act and under section 9(2) of the CST Act read with section 23(2) of the MVAT Act for the assessment period 01.04.2015 to 31.03.2016. We have already extracted and discussed about the provisions contained in sub section (2) of section 23 of the MVAT Act as well as section 9(2) of the CST Act. Since the order under section 9(2) of the CST Act is passed by the state tax authority under the state sales tax law, in this case section 23(2) of the MVAT Act, the same therefore assumes significance. As per sub section (2) of section 23 if the dealer does not appear on the date specified in the notice as also does not comply with the terms of the notice, the Commissioner shall assess the dealer to the best of his judgment. The limitation for passing of such assessment order is four years from the end of the year containing the period to which the return relates. Since the assessment period is 01.04.2015 to 31.03.2016, the four year limitation period would expire on 31.03.2020. Therefore, if the assessment order was required to be passed under section 23(2) of the MVAT Act for the aforesaid assessment period, it had to be passed on or before 31.03.2020. The impugned orders of assessment could not have been passed on 20.03.2020 or before 31.03.2020. Those were passed beyond the limitation period of 31.03.2020 and thus are non est in the eye of law. In such a case, question of petitioner not availing the alternative remedy of appeal does not arise - the impugned orders of assessment allegedly dated 20.03.2020 and the related notices of demand also allegedly dated 20.03.2020 are hereby set aside - Petition allowed. Issues Involved:1. Whether the orders of assessment were passed or signed by respondent No.3 on 20.03.2020 or on any date prior to 31.03.2020.2. Whether an order of assessment is required to be communicated or kept on the file.Issue-wise Detailed Analysis:I) Whether the orders of assessment were passed or signed by respondent No.3 on 20.03.2020 or on any date prior to 31.03.2020:The petitioner sought quashing of assessment orders dated 20.03.2020 and consequential demand notices under the Maharashtra Value Added Tax Act, 2002 (MVAT Act) and the Central Sales Tax Act, 1956 (CST Act). The petitioner's case was that the assessment orders were not passed within the limitation period, which expired on 31.03.2020. The orders were allegedly passed manually on 20.03.2020, but were digitally signed and served via email on 23.07.2020, and uploaded on the official website only on 02.08.2020. The petitioner argued that this indicated the orders were not passed within the limitation period.The respondents contended that the orders were indeed passed on 20.03.2020 and were served via email later due to the COVID-19 pandemic. They explained that the orders were uploaded on the SAP system on 14.07.2020, signed digitally, and then emailed to the petitioner. The respondents asserted that the orders were passed within the prescribed time limit and that the petitioner should have exhausted the appellate remedy provided under the MVAT Act.The court examined the original record and noted discrepancies in the sequence of events and the handling of the assessment orders. It found that the orders were purportedly passed manually on 20.03.2020, but there was no clear evidence of manual service on the petitioner. The court also observed that the internal circular No.4A of 2020 dated 20.03.2020 required manual issuance and service of assessment orders, which was not followed. The court concluded that the impugned orders could not have been passed on 20.03.2020 or any date prior to 31.03.2020, and were therefore barred by limitation.II) Whether an order of assessment is required to be communicated or kept on the file:The court discussed the relevant legal provisions, including section 23(2) of the MVAT Act, which requires the Commissioner to serve notice to the dealer and provide an opportunity to be heard before making an assessment. The court also referred to rule 87 of the MVAT Rules, which outlines the methods of serving orders and notices, including by hand delivery or email.The court emphasized that an assessment order must be communicated to the dealer for it to be effective. It cited precedents, including the Supreme Court's decision in Raja Harish Chandra Raj Singh vs. Deputy Land Acquisition Officer, which held that the making of an order must mean either actual or constructive communication to the party concerned. The court noted that mere writing of an order and keeping it on file would not constitute an order in the eye of law.In this case, the court found that the assessment orders were not properly communicated to the petitioner as required by law. The internal circular No.4A of 2020 explicitly stated that manually passed orders should not be served electronically but delivered manually. The court concluded that the impugned orders were not validly communicated to the petitioner and thus were non est in the eye of law.Conclusion:The court held that the impugned assessment orders and related demand notices were passed beyond the limitation period and were not properly communicated to the petitioner. Consequently, the court set aside and quashed the impugned orders and allowed the writ petition.