Express reassessment limitation under VAT law bars late proceedings and makes consequential demand notices void ab initio

The Jharkhand VAT Act prescribed an express five-year limit for reassessment under Section 40(4), and reassessment orders passed after expiry of that period were without jurisdiction. The Court applied strict construction of taxing statutes and held that the period could not be extended on the basis of audit objections or alleged understatement where the statute did not provide for such extension. It also noted that dealers were not required to retain records beyond five years under Rule 38(3), which supported the legislative intent behind the limit. The reassessment proceedings and consequential demand notices were therefore barred by limitation and void ab initio.

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Issues: Whether reassessment proceedings and consequential demand notices under the Jharkhand Value Added Tax Act, 2005 were barred by limitation and therefore void.

Analysis: The reassessment power under Section 40(1) of the Jharkhand Value Added Tax Act, 2005 was subject to an express five-year limit under Section 40(4). The relevant assessments related to financial years for which the reassessment orders were passed after the expiry of that statutory period. The Court applied the principle of strict construction of taxing statutes and held that the limitation period could not be extended by reference to audit objections or alleged understatement unless the statute itself so provided. It further noted that the dealer was not required to retain records beyond five years under Rule 38(3) of the Jharkhand Value Added Tax Rules, 2005, reinforcing the legislative intent behind the limitation. The challenge was treated as maintainable because limitation goes to jurisdiction.

Conclusion: The reassessment proceedings, reassessment orders, and consequential demand notices were barred by limitation, void ab initio, and liable to be quashed.

Ratio Decidendi: Where the taxing statute prescribes an express and unqualified limitation period for reassessment, proceedings initiated or concluded beyond that period are without jurisdiction and cannot be sustained on equitable or administrative grounds, including audit objections.

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