Monthly VAT limitation must run from each return due date; time-barred assessment also defeats the dependent penalty.

Monthly VAT returns had to be filed by the 20th day of the succeeding month, so the extended six-year limitation for wilful evasion had to be computed separately from each monthly due date. On that basis, the assessment made on 31.03.2021 was time-barred for the earlier months in the disputed period and was unsustainable to that extent. Because the penalty order was entirely founded on the assessment, it also could not survive once the assessment failed for the barred period. The matter was remanded for fresh assessment of the period that remained within limitation after hearing the assessee.

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Issues: Whether the assessment for the VAT period was barred by limitation under the extended limitation provision for willful evasion of tax, and whether the penalty order could survive once the assessment order was set aside.

Analysis: The liability to file returns was monthly, and the rules required such returns to be filed by the 20th day of the succeeding month. On that basis, the six-year period under the extended limitation provision had to be computed month-wise from the respective due dates of the returns. The assessment made on 31.03.2021 was therefore beyond limitation for the earlier months in the disputed period. The penalty order was founded entirely on the assessment order, so once the assessment was found unsustainable for the barred period, the penalty could not stand independently. Since the assessment also required fresh computation for the period still within limitation, the matter had to be remanded for reassessment after hearing the assessee.

Conclusion: The assessment was barred by limitation for the period April 2014 to February 2015, the penalty order did not survive, and the matter was remanded for fresh assessment for the period within limitation.

Ratio Decidendi: Where returns are filed monthly within time, the extended limitation for willful evasion under the VAT law must be applied with reference to each monthly return due date, and any assessment beyond that period is unsustainable to that extent; a penalty dependent on such assessment also falls.

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