2024 (10) TMI 556 - HC - VAT / Sales Tax

VAT reassessment order quashed as time-barred under Section 40(4) five-year limitation period

M/s Linde India Limited Versus State of Jharkhand, Deputy Commissioner of Commercial Taxes, Jamshedpur, Assistant Commissioner of Commercial Taxes, Jamshedpur State Tax Officer, Jamshedpur.

The HC quashed a VAT reassessment order dated 07.09.2021 for Assessment Year 2015-16, finding it barred by limitation. Under Section 40(4) of JVAT Act, ... Maintainability of petition - availability of alternative remedy - Time Limitation - Challenge to Re-assessment Order and the consequential demand notice - claim for exemption from payment of Value Added Tax on “facility charges” disallowed - HELD THAT:- It is necessary to peruse Section 40 (4) of the JVAT Act, which specifies that no order of assessment and reassessment shall be made under section 40 (1) after the expiry of five years from the end of the year in respect of which the tax is assessable - In the present case, the Assessment Year is 2015-16 and five years from the end of the relevant year would be 31.03.2021. However, the order in the present case has been passed belatedly on 07.09.2021 and hence is clearly without jurisdiction and barred by limitation. The Respondents have specifically admitted that the present reassessment proceedings have been initiated pursuant to an audit objection, under Section 42 (3) of the JVAT Act. In this regard it is pertinent to mention here that section 42 (3) of the JVAT Act only specifies one of the categories pursuant to which reassessment can be initiated and is therefore also subject to the rigours of limitation as provided under Section 40 (4) of the JVAT Act. Such period of limitation of five years cannot be given a complete go-by the Respondents as the stipulation has been inserted by legislature to give finality to proceedings to a certain assessment year. Completion of assessment of an assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act. This issue has already been decided by this Hon’ble Court in M/s. Rungta Mines Ltd. [2023 (8) TMI 786 - JHARKHAND HIGH COURT]. It is therefore, beyond cavil that the Order dated 07.09.2021 having been passed beyond the period of limitation, is void and bad in law. Further, reassessment order being a nullity is without jurisdiction and hence its invalidity can be set up at any time. Since the present Order has been passed beyond the period of limitation, it has rendered the entire proceedings as a nullity. Since the Order is a nullity, its invalidity can be set up at any point of time and alternative remedy is not a bar when the order is wholly without jurisdiction. Re-assessment Order dated 07.09.2021 (Annexure-5) and the consequential demand notice dated 07.09.2021 (Annexure-6) demanding Rs. 2,37,69,924/- in respect of the Assessment Year 2015-16, are hereby, quashed and set aside - Application allowed. Issues Involved:1. Limitation and Jurisdiction of the Reassessment Order.2. Validity of the Reassessment Order being a Nullity.3. Applicability of Alternative Remedy.4. Procedural Lapses and Principles of Natural Justice.Detailed Analysis:1. Limitation and Jurisdiction of the Reassessment Order:The primary issue addressed in this judgment is whether the reassessment order dated 07.09.2021 was barred by limitation as per Section 40(4) read with Section 42(3) of the Jharkhand Value Added Tax Act (JVAT Act). The court noted that Section 40(4) specifies that no order of assessment or reassessment shall be made after the expiry of five years from the end of the year in respect of which the tax is assessable. For the Assessment Year 2015-16, this period ended on 31.03.2021. Since the reassessment order was passed on 07.09.2021, it was deemed to be beyond the prescribed limitation period and thus without jurisdiction. The court referenced its own judgment in M/s. Rungta Mines Ltd. v. State of Jharkhand, which emphasized that Section 42(3) does not extend the limitation period beyond what is provided in Section 40(4).2. Validity of the Reassessment Order being a Nullity:The court examined the argument that the reassessment order was a nullity and without jurisdiction due to being issued beyond the limitation period. Citing the Supreme Court's decision in Commissioner of Income Tax, Chennai v. Alagendran Finance Ltd., the court held that an order passed without jurisdiction is void and its invalidity can be raised at any time. Thus, the fact that the petitioner became aware of the order only in September 2023 does not render it valid. The court reiterated that the order, being a nullity, could be challenged irrespective of the delay in its discovery.3. Applicability of Alternative Remedy:The court addressed the respondent's argument regarding the availability of an alternative remedy, asserting that the existence of such a remedy does not bar the High Court from exercising its writ jurisdiction in cases where the order is wholly without jurisdiction. The Supreme Court's ruling in U.P. Power Transmission Corpn. Ltd. v. CG Power & Industrial Solutions Ltd. was cited, which allows for writ petitions in situations involving jurisdictional issues, even when alternative remedies exist. The court concluded that since the reassessment order was without jurisdiction, the writ petition was maintainable.4. Procedural Lapses and Principles of Natural Justice:The court also considered procedural lapses, particularly the failure of the respondents to serve a copy of the Audit Objection along with the show cause notices. This omission was found to violate principles of natural justice, as it prevented the petitioner from providing an effective response. The court referenced the Supreme Court's decision in CCE versus Brindavan Beverages (P) Ltd., which held that vague show cause notices lacking specific details violate natural justice principles. The court emphasized that the respondents were obligated to provide all necessary documents to the petitioner to ensure a fair hearing.Conclusion:Based on the aforementioned issues and analyses, the court quashed and set aside the Re-assessment Order dated 07.09.2021 and the consequential demand notice for Rs. 2,37,69,924/- for the Assessment Year 2015-16. The writ application was allowed, and any pending interlocutory applications were closed.