TaxTMI 
TaxTMI 
2023 (8) TMI 786
X X X X Extracts X X X X
X X X X Extracts X X X X
....allenging re-assessment order dated 08.03.2022 passed by the Assessing Authority-Deputy Commissioner of Commercial Taxes, Chaibasa Circle, wherein pursuant to an audit objection raised by the office of the Accountant General, Jharkhand, re-assessment order was passed in exercise of the power under Section 42(3) of the Jharkhand Valued Added Tax Act, 2005 (for short 'JVAT Act'). 3. In writ Petition being W.P.(T) No. 3528 of 2022, Assessment Year involved is 2015-16 and in the said writ application also, pursuant to a similar audit objection raised by the office of the Accountant General, Jharkhand, re-assessment order dated 08.03.2022 has been passed by the Assessing Authority i.e., Deputy Commissioner of Commercial Taxes, Chaibasa Circle, Chaibasa which has been assailed by the writ petitioner. 4. The primary contention of the Petitioner is that re-assessment orders have been passed beyond the statutory period of limitation prescribed under the JVAT Act and Section 42(3) of the JVAT Act is only a provision which provides the circumstances under which re-assessment proceedings can be initiated, and it has been further contended that only enabling provision for carrying out re-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urther contended that Rule 25(4) of JVAT Rules, 2006 would not apply in the case of Petitioner as the Petitioner is a manufacturing dealer and the said Rule applies only to a trading dealer. Petitioner further contended that, even otherwise, if Petitioner sold the goods at a price as reflected in its invoices, the State Government is incompetent to levy tax on the cost price of the goods of the Petitioner as it can only levy tax on actual sale consideration received by Petitioner, even though Petitioner suffered loss at the time of sale of goods. However, Assessing Authority, vide its order dated 08.03.2022, passed re-assessment order levying tax on the amount of Rs. 12.78 crores @ 5%. Said order was passed under Section 42(3) of the JVAT Act read with Section 35(7) of the Act. So far as W.P.(T) No. 3528 of 2022 is concerned, in the said case, original assessment order was passed for the Assessment Year 2015-16 on 31.03.2019 and the notice pursuant to audit objection was issued on 19.05.2020 and re-assessment order was passed on 08.03.2022. 8. Mr. Sumeet Gadodia, learned counsel for the Petitioner, apart from arguing the jurisdictional issue of limitation, also requested us t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstitution of India and submitted that the constitutional embargo enshrined under Article 265 of the Constitution of India is both on levy and collection of tax without authority of law and the State is not permitted to extract any tax without following procedure laid down by law. It was submitted that JVAT Act contains a complete mechanism and lays down detailed procedure under which re-assessment proceeding can be initiated against an Assessee including the period of limitation. It was submitted that not only levy of tax but its collection should be in accordance with law and Section 42(3) of the JVAT Act is to be read with Section 40 of the said Act which is the only enabling provision for initiation of re-assessment proceeding and, thus, the period of limitation of five years from the end of tax period, as prescribed under Section 40(4) of the JVAT Act, would be applicable even in respect of re-assessment proceeding which has been initiated pursuant to audit objection. Reference in this regard has been made to the decision of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd. & Ors. Vs. Union of India and ors. reported in (1997) 5 SCC 536 (Para-160). 11. Learn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nte clause' extending the period of limitation by two years for passing of assessment/ re-assessment order which was required to be passed by the prescribed authority for giving effect to an order passed by a Court or Tribunal in appeal/revision in respect of the Assessee itself. 13. It was further submitted that similarly Section 42(3), which was inserted by Act 22 of 2011, lays down additional ground for initiation of reassessment proceeding where an objection or observation relating to either in fact or in law has been made by the Comptroller and Auditor General of India in respect of assessment/re-assessment order of an Assessee. Referring Section 42(3) of the Act it was vehemently contended that although additional ground for initiation of reassessment proceeding against a dealer was inserted vide Section 42(3), but said Section did not contain any non-obstante clause extending the period of limitation for reassessment as prescribed under Section 40(4) of the JVAT Act. On the strength of the above, it has been submitted that where the Legislature, while providing for additional ground for initiation of reassessment proceeding, thought it appropriate to extend the period of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... information or otherwise' has to form 'reason to believe' for proceeding for re-assessment of a dealer, whereas, under Section 42(3), requirement of recording 'reason to believe' has been dispensed with and it is mandatory for the Assessing Authority to proceed to re-assess a dealer. It was submitted that in view of such mandatory provision inserted by the Legislature, deliberately, no period of limitation has been prescribed under Section 42(3) which is an independent enabling provision of re-assessment inserted under the Act. It was submitted that the Comptroller and Auditor General of India is a Constitutional authority recognized under Articles 148 and 149 of the Constitution of India and under Article 149, the Comptroller and Auditor General of India is required to perform such duties and exercise such power in relation to the account of the Union and of the State or any other Authority, or Body as may be prescribed, by any law made by the Parliament. It was further submitted that the Comptroller and Auditor General of India (Duties, Power and Conditions of Services) Act, 1971 gives wide power upon the said authority to audit the account of State Government and while audit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not supply any casus omissus to the said provision. By placing reliance upon the decision of the Hon'ble Supreme Court in the case of State of Jharkhand vs. Shivam Coke, reported in (2011) 8 SCC 656, it was contended that where the Statute does not provide period of limitation, provisions of Limitation Act cannot be read into it and proceedings are required to be conducted in a reasonable period of time which would depend upon the facts and circumstances of each case. 17. Learned Advocate General also raised the issue of maintainability of the writ applications by stating, inter alia, that Petitioner has alternative remedy of preferring an appeal against the orders of re-assessment under Section 79 of the JVAT Act before the Appellate Authority and, in view of existence of alternative remedy of appeal, writ petitions should not be entertained by this Court. Reliance was placed upon a decision of the Hon'ble Apex Court in the case of Assistant Commissioner of State Tax & Ors. Vs. Commercial Steel Limited, reported in (2021) SCC OnLine SC 884 (Para-11) in support of the said contention. 18. Lastly, it was submitted that even if, for the sake of arguments, it is presumed that S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... orders of the Hon'ble Apex Court are not applicable to original adjudication proceedings. Reference in this regard was also made to Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to contend, inter alia, that the Parliament, in view of COVID 19 pandemic, provided relaxation by carrying out amendment in Central Taxing Statutes including Goods and Services Tax Act, Income Tax Act, etc. extending the period of limitation for completion of assessment/re-assessment proceedings, etc. It was submitted that there was no occasion for the Parliament to pass the Relaxation and Amendment Act, 2020, which was notified on 29th September, 2020, if the order of Hon'ble Apex Court itself has an effect of extending the period of limitation pertaining to adjudication proceedings also. Reliance was also placed upon similar amendment carried out by the State of Jharkhand vide Jharkhand Value Added Tax (Amendment) Act, 2020 notified on 19th November, 2020. By virtue of the said amendment, State of Jharkhand amended the provisions of Section 40(4) and Section 42(1) and 42(2) of the JVAT Act, wherein specifically, for the Assessment Year 2014-15, the period of limita....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve years from the original tax period and, thus, under the scheme of the Act also, even if it is presumed that Section 42(3) did not prescribe any period of limitation, the limitation should be read to be five years from the end of the original tax period. 22. Having heard learned counsel for the rival parties and after going through the documents available on record following issues arise for determination in the instant case, namely:- (i) Whether Writ Petition is maintainable in view of availability of alternative remedy? (ii) Whether Section 42(3) of the JVAT Act merely enumerates additional circumstances/grounds on which an Assessee can be subjected to re-assessment, and, re-assessment proceeding is to be guided by substantive provision of re-assessment contained under Section 40 of the JVAT Act?' (iii) Whether if Section 42(3) is held as not prescribing any period of limitation for carrying out re-assessment proceedings, said re-assessment proceeding is required to be carried out within the reasonable time and what should be the reasonable time under the scheme of the JVAT Act? (iv) Whether suo-motu extension orders extending the period o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rnished incorrect statement of his turnover or incorrect particulars of his sales or purchases in the return furnished under sub-section (1) of Section 29; or otherwise, The prescribed authorities shall, after giving such a dealer an opportunity of being heard, by an order in writing direct that he shall, in addition to any tax payable which is or may be assessed under Section 35 or 36 or 38, pay by way of penalty a sum equal to thrice the amount of tax on the concealed turnover or on concealed or incorrect particulars of suppression or concealment or for furnishing incorrect particulars; on the amount of tax payable under the Act or on the suppressed turnover or on concealed turnover or for furnishing incorrect particulars. The interest shall be payable before the completion of the assessment and for determining the amount of interest payable, the prescribed authority shall quantify the amount of tax payable provisionally under this Act. (3) Any penalty imposed or interest levied under this section shall be without, prejudice to any action which is or may be taken under Section 84 of this Act. (4) No order of assessment and reassessment shall be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntal right; violation of principles of natural justice; and excess of jurisdiction or a challenge to vires of a statute or delegated legislation. In the present case, writ petitioner has raised the issue of limitation which is a jurisdictional question and, thus, writ petition is maintainable. The Hon'ble Apex Court in the case of State of Punjab & Ors. (supra), has held as under:- "24. Question of limitation being a jurisdictional question, the writ petition was maintainable." 24. Apart from the jurisdictional question being raised in the writ petition, further argument was advance on behalf of the Petitioner that alternative remedy of appeal and/or revision would be an exercise in futility as the highest statutory authority i.e., Commercial Taxes Tribunal, in respect of other Assessees, has already held that Section 42(3) of JVAT Act does not prescribe any period of limitation and, thus, it was contended that filing of appeal would be an empty formality. It was brought to our notice that order passed by Commercial Taxes Tribunal on the aforesaid issue has been challenged in other writ petition filed by the assesse, which is pending consideration before this Hon'ble Court. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the instant writ application is "Whether Section 42(3) is in itself the substantive provision provided under the JVAT Act for initiation of re-assessment proceeding or it merely enumerates additional circumstances/grounds under which re-assessment proceeding can be initiated under the substantive provision of re-assessment contained under Section 40 of the JVAT Act." 29. Article 265 of the Constitution of India provides, inter alia, that there shall be no levy and collection of tax without any authority of law. Like any taxing statute, the scheme of JVAT Act also contains provisions pertaining to charge of tax; secondly, provisions relating to computation of tax resulting into demand of tax; and, thirdly, provisions for recovery of tax so computed. The Hon'ble Apex Court, in the case of Mafatlal Industries (supra), vide Para 160, has held as under:- "160. The constitutional embargo is on both the levy and collection of tax without authority of law. It has been repeatedly asserted by the Courts that every taxing law has three parts. First is charge, the second is computation which results in a demand of tax and the third is recovery of the tax so computed. The Constitu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned various provisions of JVAT Act, 2005 and like any other taxing statute, JVAT Act also contains provisions for computation and demand of tax. Section 33 of the Act provides for 'Scrutiny of Returns', which enables the Assessing Authority to verify the correctness of calculation etc. in respect of the return filed by the Assessee. Section 35 contains therein provisions for 'Assessment and Self-assessment'; and Section 35(8) of the said provisions provides, inter alia, that no assessment would be made after expiry of three years from the end of tax period for which tax is assessable. Section 37 deals with 'Audit Assessment' and Section 38 deals with 'Assessment of Dealer who fails to get himself Registered'. Section 39 provides, inter alia, that 'No Assessment after five years' shall be made under Sections 37 and 38 of the Act. Section 40 of JVAT Act, which we have quoted hereinabove, deals with the provision of 'Turnover escaping assessment' and, admittedly, Section 40(4) provides, inter alia, that no assessment or re-assessment shall be made after expiry of five years of the tax period for which tax is assessable. Section 41 of the Act provides for 'Exclusion of period for Asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nue. This enabling provision, which has been inserted under Section 42(1), contains a non-obstante clause which extends the period of limitation up to three years from the date of Judgment and order of any Court or Tribunal. Analysis of the said provision would clearly reveal the intention of the Legislature wherein the Legislature enabled the prescribed authority to correct an erroneous or prejudicial assessment order passed by it in the light of any Judgment or order of any Court or Tribunal rendered subsequently. Since this specific enabling provision was inserted as an additional ground for initiation of re-assessment proceeding, the Legislature, deliberately in its wisdom, inserted a non-obstante clause in Section 42(1) of the Act extending the period of limitation of five years prescribed under Section 40(4) for re-assessment by a further period of three years from the date of Judgment or order. 39. Thus, even if in a case where the period of limitation has already expired for initiation of re-assessment proceeding under Section 40(4) of the Act and thereafter Judgment is delivered by any Court or Tribunal, which pronounces any law; and if the prescribed authority is of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e interpreting similar provisions under Section 19 of the Bihar Finance Act, 1981, has held as under:- "31. The contention whether finding the information from the very facts that were already available on record amounts to information for the purpose of Section 19 of the State Act, it would be sufficient to refer to a judgment of this Court in Anandji Haridas & Co. (P) Ltd. v. S.P. Kasture wherein it was held that a fact which was already there in records does not by its mere availability that a fact which was already there in records does not by its mere availability become an item of "information" till the time it has been brought to the notice of assessing authority. Hence, the audit objections were well within the parameters of being construed as "information" for the purpose of Section 19 of the State Act. 32. The expression "information" means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or after bearing on the assessment. We are of the clear view that on the basis of information received and if the assessing officer is satisfied that reasonable ground exists to believe, then in that case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mined the provision of the Comptroller and Auditor General of India (Duties, Powers and Conditions of Services) Act, 1971. We are not in agreement with the proposition of law advanced by learned Advocate General, as the Comptroller and Auditor General of India, under the Act of 1971, essentially performs administrative or executive functions and it cannot be attributed with power of judicial supervision over the quasi-judicial authority. Hon'ble Supreme Court, in the case of Indian Eastern Newspaper Society, New Dehi Vs. Commissioner, reported in (1979) 4 SCC 248, has held as under:- "11. Whether it is the internal audit party of the Income Tax Department or an audit party of the Comptroller and Auditor- General, they perform essentially administrative or executive functions and cannot be attributed the powers of judicial supervision over the quasi-judicial acts of income tax authorities. Nor does section 16 of the Comptroller and Auditor-General's (Duties, Powers and Conditions of Service) Act, 1971 envisage such a power for the attainment of the objectives incorporated therein." (Emphasis supplied). "12. But although an audit party does not possess ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder dated 27.02.2006 passed by the Deputy Commissioner, Commercial Taxes, Urban Circle, Jamshedpur is without jurisdiction and the High Court was not right in dismissing the petition filed by the appellant Company." (Emphasis supplied). 48. It is trite law that a quasi-judicial authority cannot abdicate its jurisdiction on the dictate of an external authority and proceed to pass order on such external dictate. In the present case, it has been argued by learned Advocate General that Section 42(3) mandates the assessing authority to initiate re-assessment proceeding on the dictate of the Audit Party which, on the face of discussions held above, would amount to abdication of jurisdiction of the assessing authority being a quasi-judicial body to external dictates, which would be contrary to the ratio laid down by the Judgment of Hon'ble Apex Court in the case of Indian Eastern Newspaper Society, New Dehi (supra) and in the case of Larsen and Toubro (supra). 49. It is in the aforesaid backdrop; we are required to examine as to whether Section 42(3) is an independent provision conferring power of re-assessment or is merely as additional ground conferred under the Act upon the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eceipt of audit objection, and, thus, the period of limitation would be governed by Section 40(1) read with 40(4) of the JVAT Act. 52. If two different terminologies are used in same Section, it intends to convey different meaning and, thus, in absence of 'non-obstante clause' contained under Section 42(3) of JVAT Act, the period of limitation for completion of re-assessment proceeding would be governed by Section 40(4) of the JVAT Act. 53. We are further not consciously deliberating on the issue of Section 42(3), which mandates the assessing authority to initiate re-assessment proceeding pursuant to receipt of audit objection being contrary to the very basic structure of exercise of power of quasi-judicial authority, as vires of Section 42(3) is not under challenge before us. 54. At this stage, we may further record the arguments advanced by learned Advocate General by referring to Section 42(3) of the Act wherein it was argued that Section 42(3) enables initiation of re-assessment proceeding not only of completed assessment proceeding, but also of completed re-assessment proceeding. It has been argued that Section 42(3) even enables the assessing authority to initiate fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ears and, in any event, the same should not exceed the period of five years. Said finding was given by Hon'ble Apex Court by considering various provisions of the Punjab Act which contains provision of limitation varying from three years to five years from the end of the tax period. Likewise, under the scheme of JVAT Act also, provisions of limitation for carrying out assessment, audit assessment, scrutiny assessment, re-assessment proceedings, etc. have been prescribed to be three years to five years. It is for the said reason also, in our opinion, while incorporating provision of Section 42(3), the Legislature, in its wisdom, had not sought to extend the period of limitation by inserting non-obstante clause. 56. Issue No. (iv) :- The next question to be adjudicated is "Whether in view of suo-motu extension of limitation orders passed by Hon'ble Apex Court, the period of limitation for initiating re-assessment proceedings also stood extended or not?". Learned Advocate General has referred to various suo-moto orders passed by Hon'ble Apex Court, including orders dated 23.03.2020, 08.03.2021, 27.04.2021, 23.09.2021 and the order dated 10.01.2022. Learned Advocate General emphasiz....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uasi-judicial exercise of power and discretion. Even under this category, Hon'ble Supreme Court applies only to a lis which needs to be pursued within a time frame fixed by the respective statutes. (iv) Wherever proceedings are pending, judicial or quasi-judicial which requires to be heard and disposed off, cannot come to a standstill by virtue of these extension orders. Those cases need to be adjudicated or disposed off either physically or through the virtual mode based on the prevailing policies and practices besides instructions if any. (v) The following actions such as scrutiny of returns, issuance of summons, search, enquiry or investigations and even consequential arrest in accordance with GST law would not be covered by the judgment of the Hon'ble Supreme Court. (vi) As regards issuance of show cause notice, granting time for replies and passing orders, the present Orders of the Hon'ble Supreme Court may not cover them even though they are quasi-judicial proceedings as the same has only been made applicable to matters relating to petitions/applications/suits, etc." 57. A bare perusal of the said Circular would reveal that CBIC, in exercise ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eedings are indicated in the order itself. Two reasons, which are decipherable from the order of this Court dated 23.03.2020 for passing the order are:- (i) The situation arising out of the challenge faced by the country on account of Covid-19 virus and resultant difficulties that are being faced by the litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed. (ii) To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court." After recording the aforesaid, Hon'ble Apex Court, vide Para 17 of its Judgment, has held as under:- "17. The limitation for filing petitions/applications/suits/appeals/ all other proceedings was extended to obviate lawyers/litigants to come physically to file such proceedings in respective Courts/Tribunals. The order was passed to protect the litigants/lawyers whose petitions/applications/suits/appeals/all other proceedings would become time barred they being not able to physically come to file such proceedings....