TaxTMI 
TaxTMI 
2026 (10) TMI 299
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.... 35 was issued to the petitioner company, which is a condition precedent for scrutiny of records under Section 39 of the Act. It is the further contention that the said powers under 39 of the Act for scrutiny of returns cannot be exercised at any time, since the Act of 2003 provides the period for 5 years from the end of the tax period, as the period of limitation for completing the assessment. It is alleged that in the present case the scrutiny has been completed and notice issued under Section 39 of the Act, much after the expiry of the period of limitation for the completion of assessment. The action of the respondents as per the petitioner company is therefore arbitrary, illegal, without jurisdiction, barred by limitation, and as such the same are liable to be set aside and quashed. 2. Dr. A Saraf, learned Senior counsel assisted by Mr. S.J. Saikia, learned counsel for the petitioner has submitted that a plain reading of Section 39 of the Act shows that the scrutiny of returns under this provision can only be done when a notice has been issued to a dealer by the Commissioner of Taxes under Section 35 of the Meghalaya Value Added Tax Act, 2003. The learned Senior counsel has ....
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....ns under Section 35(2) and other dealers who may be required to file returns under Section 35(3), upon which the scrutiny power under Section 39 is expressly conditioned and therefore, for registered dealer who do not fall Section 35(3), the scrutiny provision cannot be invoked. 4. It has also been contended that the impugned notices for curing defects in the tax returns were issued without granting any reasonable opportunity to the petitioner by way of show cause notice and the scrutiny was completed and notices were issued on the same date, which left no scope for the petitioner to present its case or explain the alleged defects. This action it is submitted is a clear violation of the principles of natural justice, as well as the provision of Section 39 of the MVAT Act. On another limb of submission, it has been argued that in the action of the respondents there is an absence of proper delegation of powers, inasmuch as, even if the respondent No. 3, could exercise powers under Section 39, such powers should be properly delegated by the respondent No. 2, in accordance with Section 26 of the MVAT Act read with Chapter-II of the MVAT Rules, 2005, whereby Rule 3 mandates that the ....
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....Cooperative Milk Producers Union Ltd. (2007) 11 SCC 363 iv) Cape Brandy Syndicate v. Commissioner of Inland Revenue, (1921) 1 K.B. 64 v) Murarilal Mahabir Prasad & Ors. vs. Shri B.R Vad & Ors. (1975) 2 SCC 736 vi) C.I.T. Madras vs. Ajax Products Ltd., AIR 1965 SC 1358 vii) Srimati Tarulata Shyam & Ors. vs. Commissioner of Income-Tax, West Bengal (1977) 3 SCC 305 viii) Polestar Electronic (Pvt) Ltd., vs. Additional Commissioner, Sales Tax & Anr. (1978) 1 SCC 636 ix) H.H. Lakshmi Bai & Anr. vs. Commissioner of Wealth Tax & Ors. (1994) 2 SCC 534 x) Federation of A.P. Chambers of Commerce & Industry & Ors. vs. State of A.P. & Ors. (2000) 6 SCC 550 xi) Ajmera Housing Corporation & Anr. vs. Commissioner of Income Tax (2010) 8 SCC 739 xii) K. Subamanian vs. Siemens India Ltd., 1988 173 ITR 136 xiii) Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai, (1998) 8 SCC 1 xiv) Assistant Commissioner of State Tax vs. Commercial Steel Limited (2021) SCC Online SC 884 xv) Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-cum-Assessing Authority & Ors. (2023) 109 GSTR 402 (SC) ....
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....namely; (i) Kusha Duruka v. State of Odisha (2024) 4 SCC 432 (ii) K. Jayaram v. BDA (2022) 12 SCC 815 (iii) Prestige Lights Ltd. v. SBI (2007) 8 SCC 449 and (iv) S. Tripathi Rao v. M. Lingamaiah (2024) SCC OnLine SC 1764, have also been pressed into service on this point. 10. The learned AG has then contended that the entire case of the petitioner is based on the argument that no notice under Section 35 has been issued to the petitioner and therefore, the notices and orders under Section 39 of the MVAT Act are illegal. As per the pleadings he submits, it can be taken that the case of the petitioner is that no notice under Section 35 can be issued to registered dealers and therefore, Section 39 must be read in such a manner to be applicable only to unregistered dealers, meaning thereby essentially any proceedings initiated against registered dealers is illegal. This argument according to the learned AG is flawed and contrary to the provision of MVAT Act, inasmuch as, Section 39 provides for "Security of Return" and under Section 35(2) every registered dealer is mandated to furnish returns, and as such Section 39 cannot be read to exclude reg....
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....icle-226, and the writ petition is also liable to dismissed as being not maintainable. 12. From the materials and submissions as tendered, in the opinion of this Court the following issues have arisen for determination:- i) Firstly, whether scrutiny under Section 39 of the MVAT Act, 2003 can be validly initiated without issuance of notice under Section 35 by the respondent No. 2 and whether such notice can be issued to a registered dealer given that Section 35(3) specifically refers to dealers "other than a registered dealer" ii) Secondly, whether the period of limitation of 5 years prescribed under Section 57 of the MVAT Act, 2003 for completion of assessments under Section 55 & 56 can be read into Section 39 proceedings for scrutiny of returns and consequently, whether initiation of scrutiny proceedings in March, 2023, for the period 2007 to 2017 is barred by limitation. iii) Thirdly, whether the respondent No. 3 (Superintendent of Taxes) had jurisdiction and authority to initiate proceedings under Section 39 of the Act as provided under Section 26 and Chapter-II of the MVAT Rules, regarding delegation of powers. iv) Whether there has been v....
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....of tax to be due that what was shown in the original return, it shall be accompanied by a receipt showing payment of the extra amount in the manner provided in sub-section (4). 39. Scrutiny of return - (1) Each and every return in relation to any tax period furnished by a registered dealer to whom notice has been issued by the Commissioner under section 35 shall be subject to scrutiny by the Assessing Authority to verify the correctness of calculation, application of correct rate of tax and interest and input tax credit claimed therein; and full payment of and interest payable by the dealer during such period. (2) If any mistake is detected as result of such scrutiny made as per the provisions of sub-section (1) the Assessing Authority shall serve a notice in the prescribed form on the dealer to make payment of the extra amount of tax along with the interest as per the provisions of this Act, if it is payable by a date specified in the said notice. (3) If the Commissioner:- (a) Discovers any error or omission in any return furnished by a dealer: or (b) Has reasons to believe upon information or otherwise that a dealer has furnis....
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....d in the manner provided by the statute, as held in Kunwar Pal Singh vs. State of U.P. (2007) 5 SCC 85 (Para 16), directly applies that provision of a statute when statute prescribes a particular manner for doing a particular act, that must be done in that manner alone, and an authority cannot assume jurisdiction in a manner not authorised or allowed by a statute. In a similar case which has great persuasive value, a Division Bench of the Tripura High Court in the case of Shri Pankaj Bihari Saha vs. State of Tripura & Ors (supra), while considering the provisions of the Tripura Value Added Tax, 2004, which contains provisions which are pari materia to the provisions of MVAT Act namely; Sections 24 (periodical returns and payment of tax) and Section 27 (scrutiny of returns). In similar circumstances, while also considering the limitation prescribed, held that unless and until notices are issued in terms of Section 24(2) of TVAT Act, the authorities cannot invoke powers under Section 27 of the TVAT Act. Paragraph 20 thereof, which is relevant is reproduced hereinbelow:- "20. The special powers can be exercised only in relation to a dealer to whom notice has been issued by th....
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....er Section 35(3), and thereafter became registered, which does not apply to the case of the petitioner, who was always registered and had filed returns under Section 35(2), without any notice. 18. On the other issues i.e. the delegation of powers, Section 26 of the Act read with Rule 3 of the MVAT Rules, 2005 has mandated that the Commissioner "shall" delegate powers by a notification in the Official Gazette. The respondents in this connection, have in the course of the proceedings not placed on record any such notification published in the Official Gazette delegating Section 39 powers to the respondent No. 3 (Superintendent of Taxes). The reliance placed on internal order and circulars therefore, will not satisfy this statutory requirement. Though a lot has been sought to be made out by the respondents to rely on a notice dated 27.04.2017, to be a Section 35 notice, the same is disregarded as the said notice was for production of Books of Accounts for assessment purposes and not a notice to furnish returns, even if treated as such, it will be invalid as Section 35(3) does not authorise issuance of notice to registered dealers 19. In view of the clear findings with regard to ....