2024 (6) TMI 901 - HC - VAT and Sales Tax

Assessment orders issued beyond limitation period under Section 21(3) and 21(4) held invalid

M/s. ABB India Limited Versus Commercial Tax Officer and another, State of Telangana.

The HC allowed writ petitions challenging show-cause notices and assessment orders issued under the Telangana Value Added Tax Act, 2005. The court held ... Time limitation - Sustainability of SCN or the assessment orders - specific period of limitation prescribed under Section 21 (3) and Section 21 (4) of the Telangana Value Added Tax Act, 2005 - HELD THAT:- The Hon’ble Supreme Court in the case of STATE OF PUNJAB AND OTHERS VERSUS M/S SHREYANS INDUS LTD. ETC [2016 (3) TMI 331 - SUPREME COURT] held 'the aforesaid expression would mean that the time can be extended even after original time prescribed in the said provision has expired.' It is by now a well settled proposition of law that when the plain reading of the provision of law is unambiguous and is very clear in its intent and object, the need for giving a different interpretation which is otherwise not reflected on its plain reading, cannot be permitted or that may not be sustainable. The argument advanced by the learned Special Government Pleader in the given factual backdrop would not be sustainable. Therefore, all the Writ Petitions would be liable to be allowed, as either the show-cause notices or the assessment orders in all the writ petitions have been issued beyond the period envisaged under Section 21 of the Act. Petition allowed. Issues Involved:1. Period of limitation for issuing show cause notices and assessment orders u/s 21(3) and 21(4) of the Telangana Value Added Tax Act, 2005 (TSVAT Act).2. Validity of the assessment orders and show cause notices issued beyond the prescribed period.3. Applicability of Section 21(7) of the TSVAT Act for extending the period of limitation.Summary:Issue 1: Period of LimitationThe primary issue examined was whether the show cause notices or assessment orders in the writ petitions were sustainable given the period of limitation prescribed u/s 21(3) and 21(4) of the TSVAT Act. Section 21(3) states that the authority must assess within four years of the due date of the return or the date of filing, whichever is later. Section 21(4) mandates that any assessment resulting from detailed scrutiny must be made within four years from the end of the period for which the assessment is made.Issue 2: Validity of Orders Issued Beyond Prescribed PeriodThe court noted that most of the show cause notices and assessment orders were issued beyond the four-year limitation period stipulated by the TSVAT Act. The petitioners argued that any assessment initiated beyond this period is void ab initio and without jurisdiction. The court agreed with this contention, emphasizing that once the period of limitation lapses, the right to assess extinguishes, making any subsequent assessments invalid.Issue 3: Applicability of Section 21(7)The respondents contended that u/s 21(7) of the TSVAT Act, the period during which appeals or proceedings were pending before higher judicial forums should be excluded from the limitation period. They argued that since the issue of Entry Tax was sub judice before the Supreme Court in related cases, the limitation period should be extended. However, the court found this argument unsustainable. It noted that the judgment in the related Supreme Court cases was delivered on 11.11.2016, and the impugned notices and orders were issued much later, beyond the four-year period from the date of the judgment. The court also highlighted that the respondents did not uniformly apply this argument, as some notices were issued before the Supreme Court's decision.Conclusion:The court held that the show cause notices and assessment orders issued beyond the period prescribed u/s 21 of the TSVAT Act were invalid. The writ petitions were allowed, and the impugned notices and orders were set aside. Specific writ petitions (No. 26152 of 2023, No. 26297 of 2023, and No. 7562 of 2021) were discussed in detail, with the court finding that the assessments were either beyond the limitation period or violated principles of natural justice. All writ petitions were allowed, and the impugned actions were set aside. No costs were awarded.