2023 (5) TMI 181 - HC - VAT and Sales Tax

Delay in Cess Assessment Deemed Unjustified: Court Emphasizes Need for Timely Process

Siemens Limited Versus The State of Maharashtra, Commissioner of Local Body Tax, Navi Mumbai, The Local Body Tax Officer, Navi Mumbai Municipal

The Court found that the delay in completing the assessment of cess under Rule 25 of the Maharashtra Municipal Corporation (Cess on Entry of Goods) Rules, ... Delay of 10 years for adjudicating the case - Liability of cess on bringing goods within the limits of Navi Mumbai Municipal Corporation - Section 152A of Maharashtra Municipal Corporations Act, 1949 - Dealer failed to produce relevant documents in support of the returns as filed - HELD THAT:- It is not in dispute that the petitioner-Company is a ‘dealer’ as defined by Section 2(16A) of the Act of 1949. Section 152A of the Act of 1949 empowers the Corporation to levy cess on the entry of goods specified in Schedule-A at the rates prescribed in the said Schedule. Section 152B indicates the manner in which incidence of cess occurs. The turnover from the first day of April of the financial year in which the Municipal Corporation decides to levy the cess is required to be taken into account. Section 152J prescribes for the production and inspection of accounts and documents as well as search of premises, seizure of books of accounts and goods, etc. Under Section 152K the Commissioner has the powers of a Civil Court. It may be noted that by virtue of Maharashtra Act XLII of 2017 Chapter XI-A and Sections 152A to 152O of the Act of 1949 have been deleted with effect from 01.07.2017. On the Commissioner being satisfied with the returns furnished by a registered dealer for the relevant period he is required to assess the amount of cess due from the dealer on the basis of such returns. Under Rule 25(3) of the Rules of 1996, if the Commissioner is not satisfied with the returns furnished by a registered dealer and he thinks it necessary to require the presence of the dealer or the production of further evidence, he is required to serve on such dealer a notice requiring the dealer to attend and produce or cause to be produced all evidence on which the dealer relies in support of its returns or to produce such evidence specified in the notice - Under Rule 25(11) of the Rules of 1996 the Commissioner is required to issue notice in Form-H to a dealer to show cause why it should not be so assessed. The date for compliance with notice cannot be earlier than fifteen days from the date of service thereof. Once it is shown that sufficient opportunity was given to a dealer to produce evidence on which he relies, the assessment is required to be completed either on the basis of the evidence produced by the dealer or on failure to produce such evidence, to the best of the judgment of the Commissioner. Both the contingencies namely, production of evidence as well as failure to comply with the terms of notice in Form-H, have thus been taken care of - There is no justification indicated by the Municipal Corporation for the failure on the part of the Commissioner to assess the amount of cess due from the Dealer to the best of the Commissioner’s judgment at least from 21.08.2013 till the reminder in Form-H was issued on 24.09.2019. It is necessary for the Municipal Commissioner to complete the assessment under Rule 25(3) of the Rules of 1996 either on the date specified in the notice issued in Form-H or as soon as may be thereafter on the basis of evidence produced by a registered dealer. On failure of a registered dealer to comply with the terms of notice issued under Rule 25(3) of the Rules of 1996, the Commissioner has to assess to the best of his judgment the amount of cess due under Rule 25(4) of the Rules of 1996. Since assessment has to be undertaken at any time within three years from the end of the year in which the relevant period occurs as per Rule 25(5) of the Rules of 1996 if a dealer does not furnish any returns or on failure to apply for registration under Rule 25(7) of the Rules of 1996, it becomes clear that though there is no outer period fixed for completing such assessment, the same has to be completed within reasonable period. In the facts of the present case, the assessment has not been completed for a period of almost ten years from issuance of the initial notice in Form-H - the failure to complete the process of assessment under Rule 25(3) and (4) of the Rules of 1996 for a period of more than ten years from the date of issuance of the initial notice in Form-H would render the process of assessment liable to be quashed on the ground of unreasonableness and failure to complete the assessment for no justifiable reason. On that basis the assessment for the period from 01.04.2008 to 31.03.2009, 01.04.2009 to 31.03.2010, 01.04.2010 to 31.03.2011, 01.04.2011 to 31.03.2012 has not been completed within the aforesaid period of ten years which we have found to be reasonable period for completion of assessment. It is held that since the Commissioner failed to complete the assessment for the relevant years within a period of ten years of issuing the initial notice in Form-H, the notice dated 24.09.2019 is quashed. Since the period of ten years from issuance of notice in Form-H on 30.10.2014 for the year 01.04.2012 to 31.03.2013 is yet to expire, it is held that the Commissioner is free to proceed to complete the assessment expeditiously and in accordance with law. Petition dismissed. Issues Involved:1. Whether the delay in completing the assessment of cess under Rule 25 of the Maharashtra Municipal Corporation (Cess on Entry of Goods) Rules, 1996 was justified.2. Whether the reminder issued in Form-H on 24.09.2019 was valid.3. Whether the assessment process was vitiated due to the unreasonable delay.Summary:1. Delay in Completing the Assessment:The petitioner, a registered dealer, filed returns for the period from 01.04.2008 to 31.03.2013. Notices in Form-H were issued by the Municipal Corporation for each year, but the assessment was not completed for almost ten years. The petitioner argued that the delay rendered the continuation of the assessment process unlawful. The Court noted that Rule 25(3) of the Rules of 1996 requires the Commissioner to assess the amount of cess due either 'on the date specified in the notice or as soon as may be thereafter,' indicating the need for expeditious assessment. The Court found that the Commissioner failed to act within a reasonable time, as the assessment was not completed despite sufficient opportunity being given to the dealer to produce evidence.2. Validity of the Reminder Issued in Form-H on 24.09.2019:The reminder issued on 24.09.2019 referred to Rule 33 of the Maharashtra Municipal Corporation (Local Body Tax) Rules, which was not applicable to the assessment of cess. The Court held that this indicated non-application of mind and was unjustified. The assessment should have been completed under Rule 25 of the Rules of 1996.3. Unreasonable Delay Vitiating the Assessment Process:The Court emphasized that where no period of limitation is prescribed, the assessment must be completed within a reasonable period. The delay of more than ten years in completing the assessment was deemed unreasonable and unjustified. The Court quashed the reminder issued on 24.09.2019 for the periods from 01.04.2008 to 31.03.2012 and allowed the Municipal Corporation to proceed with the assessment for the period from 01.04.2012 to 31.03.2013 within a reasonable time.Conclusion:The Court allowed Writ Petition Nos. 3124 of 2020, 9635 of 2021, 9637 of 2021, and 9638 of 2021, quashing the reminder dated 24.09.2019 for the periods from 01.04.2008 to 31.03.2012. Writ Petition No. 9636 of 2021 was dismissed, allowing the Municipal Corporation to complete the assessment for the period from 01.04.2012 to 31.03.2013 expeditiously.