Limitation for belated tax assessment cannot be extended merely because no return was filed, Madras HC rules.

Limitation under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 barred a belated assessment where the importer had not filed a return. Section 8(5) was read as fixing a three-year period from the last date for filing the relevant return, and the absence of a return did not itself extend that period. The HC followed the jurisdictional precedent that, without an express statutory power to assess a non-filer beyond time, the assessing authority could not rely on later-acquired knowledge to make an assessment after limitation. The assessment and consequential penalty order were quashed as unsustainable.

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Issues: Whether the assessment and consequential penalty proceedings under the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 were barred by limitation and liable to be quashed when no return had been filed by the importer.

Analysis: Section 8(5) prescribes a three-year limit for passing an assessment order from the last date prescribed for filing the return of the relevant period. The dispute turned on whether that limitation could be displaced merely because no return had been filed. The Court followed the jurisdictional precedent which held that, in the absence of an express provision enabling assessment of a person who failed to furnish a return, the assessing authority had no power to make a belated assessment by resorting to knowledge acquired later. The Court preferred that line of authority over contrary views from other jurisdictions and held that the statute did not confer power to proceed beyond the prescribed period even where returns were omitted.

Conclusion: The assessment and the impugned order were held to be unsustainable and were quashed.

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