2021 (6) TMI 764 - HC - VAT / Sales Tax

Penalty Order Under Bihar Finance Act Upheld; Court Rules Two-Year Limitation Period Valid, Petition Dismissed.

M/s. ITC Limited, Versus State of Bihar through the Principal Secretary-cum-Commissioner, Commercial Taxes, Patna., The Commissioner of Commercial Taxes, Bihar, Patna., Joint Commissioner of State Tax, Munger Circle, Munger.

The HC of Patna upheld the penalty order under Section 20(1)(a) of the Bihar Finance Act, 1981, ruling it valid and not time-barred under Section 24. The ... Levy of penalty u/s Section 20(1) (a) of the Bihar Finance Act, 1981 - bar of limitation stipulated under Section 24 of the said Act - HELD THAT:- Taking note of Section 24 of the Act and applying the principles of interpretation it can be said that the period of limitation applicable would not be four but two years, commencing from the date of communication to the assessing authority of the order passed by the revisional authority - It is clarified that the Statute, i.e. Proviso to Section 24 itself, is very clear. It includes an order passed in a revision, in addition to an order passed in any appeal, reference or review. Reliance on the decision of Hon’ble the Apex Court in STATE OF JHARKHAND VERSUS VOLTAS LTD. [2007 (5) TMI 18 - SUPREME COURT] is misconceived, and in any event distinguishable on facts, for the Apex Court was dealing with a case as is evident from paragraph 16 of the report where under the order of remand, the authority did not take any step for completing the proceedings. No proceedings assailing the very same order of remand were pending before any Higher Authority. The order passed under Section 20(1) (a) of the Act imposing a levy of penalty cannot be illegal and invalid given the bar of limitation stipulated under Section 24 of the Act - petition disposed off. Issues Involved:1. Whether the order passed under Section 20(1)(a) of the Bihar Finance Act, 1981, imposing a penalty, is illegal and invalid given the bar of limitation stipulated under Section 24 of the said Act.Issue-Wise Detailed Analysis:1. Introduction and Reliefs Sought:The petitioner sought to quash the penalty order dated 30.03.2019, imposing a penalty of Rs. 40,81,963 under Section 20(1)(a) of the Bihar Finance Act, 1981, for the assessment year 1997-98. Additionally, the petitioner sought to quash the consequential notice of demand dated 17.05.2019.2. Grounds of Challenge:The petitioner challenged the penalty order on the ground of limitation, arguing that the order was passed 13 years after the remand, which is beyond the prescribed period of limitation under Section 24 of the Act. The petitioner relied on the Supreme Court's decision in State of Jharkhand and others Versus Voltas Ltd., East Singhbhum, (2007) 9 SCC 266.3. Examination of Relevant Provisions:- Section 20: Allows the prescribed authority to impose a penalty if a dealer has concealed sales/purchases or furnished incorrect turnover statements.- Section 24: Stipulates a limitation period for completing assessment proceedings, which is four years from the expiry of the relevant period, with a proviso for reassessment proceedings to be completed within two years from the date of communication of the appellate/revisional order.4. Application of Limitation Period:Section 20 does not specify a limitation period for penalty proceedings. However, Section 24's limitation period for assessments is argued to apply to penalty proceedings by analogy. The court noted that Section 24 does not explicitly mention penalties under Section 20.5. Procedural History:- The initial assessment for 1997-98 was completed on 23.08.2001.- The appellate authority set aside this order on 05.04.2002 and remanded the matter.- The petitioner challenged this remand order, but the Tribunal dismissed the revision petition on 09.03.2017.- The penalty order of 14.07.2001 was set aside, and the matter was remanded for fresh consideration on 07.01.2002.- The Tribunal modified the appellate order on 26.04.2017, directing a fresh penalty order within the provisions of the Act.6. Final Penalty Order:The fresh penalty order was passed on 30.03.2019, within two years from the Tribunal's order dated 26.04.2017.7. Legal Precedents and Principles:The court referred to several Supreme Court decisions to clarify the principles of limitation and the distinction between appellate and revisional jurisdictions. It emphasized that the period of limitation should be interpreted to ensure smooth statutory functioning and avoid uncertainty or confusion.8. Conclusion:The court concluded that the period of limitation applicable to the penalty proceedings under Section 20 would be two years from the date of communication of the revisional order to the assessing authority. The penalty order dated 30.03.2019 was within this period and thus valid.9. Decision:The court dismissed the writ petition, upholding the penalty order and the consequential demand notice.10. Disposition of Interlocutory Applications:Any pending interlocutory applications were disposed of.Summary:The High Court of Patna ruled that the penalty order under Section 20(1)(a) of the Bihar Finance Act, 1981, was valid and not barred by the limitation period stipulated under Section 24. The court clarified that the relevant limitation period for penalty proceedings is two years from the date of communication of the revisional order to the assessing authority. The petitioner's challenge was dismissed, and the penalty order, along with the consequential demand notice, was upheld.