TaxTMI 
TaxTMI 
2021 (8) TMI 90
X X X X Extracts X X X X
X X X X Extracts X X X X
....period of limitation i.e. after lapse of more than six months to the date of completion of the Audit Visit Report (AVR) on 20th June, 2012. 4. The connected matters are for the periods from 2009-10 to 2011- 12 pertaining to demands both under the OVAT Act as well as under the Odisha Entry Tax Act (OET Act). 5. While directing notice to be issued in the present case along with other petitions by this Court, on 27th August, 2013 an interim order was passed directing the Petitioner to deposit a sum of Rs. 75 lakh with the Commercial Taxes Department towards outstanding dues under the OVAT Act. 6. Mr. Mohanty, learned Senior Counsel for the Petitioner informs the Court that the said direction was complied with. 7. In response to the notice issued in these petitions, a reply has been filed in the lead petition, W.P. (C) No.15956 of 2013. On this specific issue of limitation, it is submitted that the notice for audit visit was issued on 20th August, 2011. On 9th February 2012, the statement of representative of the Petitioner was recorded. It is stated that after completion of the AVR, it was sent to the assessing authority as required under Section 41 (4) of the OVAT Act. It is then....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment order dated 15th May, 2013 for all the above years? 14. In order to appreciate the above issue, the Court will first refer to Section 42 of the OVAT Act, which reads as under: "42. Audit assessment. - (1) Where the tax audit conducted under sub-section (3) of section 41 results in the detection of suppression of purchases or sales or both, erroneous claims of deductions including input tax credit, evasion of tax or contravention of any provision of this Act affecting the tax liability of the dealer, the assessing authority may, notwithstanding the fact that the dealer may have been assessed under section 39 or section 40, serve on such dealer a notice in the form and manner prescribed along with a copy of the Audit Visit Report, requiring him to appear in person or through his authorised representative on a date and place specified therein and produce or cause to be produced such books of account and documents relying on which he intends to rebut the findings and estimated loss of revenue in respect of any tax period or periods as determined on such audit and incorporated in the Audit Visit Report. (2) Where a notice is issued to a dealer under sub-section (1), he ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 42 (6) of the OVAT Act indicates the importance of completion of proceedings in a time bound manner. Section 42 (6) mandates the assessment should be completed within a period of six months "from the date of receipt of the Audit Visit Report." 17. In the present case, there is no dispute at all that the notice in Form VAT-306 was served on the Petitioner on 1st October, 2012. The six months period from that date ended on 31st March, 2013. The assessment was therefore required to be completed on or before 31st March, 2013. 18. The proviso to sub-section (6) of Section 42 of the OVAT Act permits the CST "on the merit of each such case" to allow "such further time not exceeding six months for completion of the assessment proceeding." If this is read with Section 42 (7) of the OVAT Act, it is clear that there is an outer limit for the extension of time granted by the CST. He cannot extend the time beyond six months and in any event the assessment order cannot be made, even with extension granted by the CST, after the period of one year from the date of the receipt of the AVR. In other words, in the present case, no extension could have been granted by the CST to complete the audit a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us S.A. TIN- 21961405922." 21. The above order itself indicates that what has been granted is an extension of time "post facto" to a case where the assessment order "has already been passed on 15th May, 2013." Curiously, the second paragraph states that the "proposal to extend the period of limitation prescribed under Section 42 (6) of the OVAT Act" was received "beyond a period of six months." In other words, it appears that the request made by the letter dated 25th March, 2013 was in fact received by the CST after 31st March, 2013. 22. Be that as it may, it is plain that on the date that the assessment order was passed i.e. on 15th May, 2013 the Assessing Authority could not have presumed that limitation was going to be extended by the CST by an order to be passed two months thereafter. Having applied to the CST for extension of time, it was impermissible in law for the Assessing Authority to proceed to pass the assessment order knowing fully well that such order, on the date that it was going to be passed, was barred by limitation. The mandatory language of Section 42 (6) of the OVAT Act, which states that an assessment "shall be completed within a period of six months from th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2013 clearly acknowledges that the CST was presented with a fait accompli since he allowed extension of time "for a further period of six months or date of assessment, whichever is earlier........" In other words, the CST felt constrained to somehow validate what is claimed to be an illegal order is ex post facto. 26. In State of Punjab v. M/s. Shreyans Industries Ltd. (2016) 4 SCC 769, the Supreme Court was interpreting Section 11 (10) of the Punjab General Sales Tax Act, 1948 (PGST Act), in terms of which the Commissioner could grant a three-year extension for completion of assessment after recording in writing the reasons for extending such period. The specific question considered was "whether the power to extend time is to be necessarily exercised before the normal expiry of the said period of three years run out?" 27. The above question was answered by holding that "power to extend the time is to be exercised before the normal period of assessment expires." The Supreme Court explained the rationale thus: "In the context of the Punjab Act, it can be said that extension of time for assessment has the effect of enlarging the period of limitation and, therefore, once the peri....