Exide Industries Limited vs State of Jharkhand And Ors

Heard learned counsel for the petitioner Company and the learned counsel for the State.

The petitioner Company is aggrieved by the impugned reassessment of the tax liability, made under Section 40(1) of the J.V.A.T. Act, by order dated 29.06.2015, passed by the respondent No.3, CTO, Urban Circle Jamshedpur, as contained in Annexure-7 of the writ application. The said order was also sustained by the Appellate Authority by the order dated 03.03.2016, as contained in Annexure-8 to the writ application, and the revision filed against the same by the petitioner was also dismissed by Judgment dated 18th May, 2017, passed by the Commercial Taxes Tribunal, Ranchi, (hereinafter referred to as "Tribunal"), in Revision Petition No. JR 73 of 2016, as contained in Annexure-9 to the writ application. All these orders / Judgement are challenged by the petitioner in this writ application.

Admittedly, the matter relates to the A.Y. 2009-2010, for which the assessment of the tax liability of the petitioner was made by the Assessing Authority by order dated 07.03.2013, as contained in Annexure-1 to the writ application. The only point that has been canvassed by the learned counsel for the petitioner is that the reassessment made by the CTO was beyond the un-extendable period of limitation of five years, as prescribed under Section 40(4) of the J.V.A.T. Act, which reads as follows:-

"40.(4) No order of assessment and reassessment shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable."

In support of his contention that the limitation prescribed under the Act cannot be extended, learned counsel for the petitioner has placed reliance upon the decision of the Hon'ble Apex Court in State of Punjab and Others Vs. Shreyans Industries Limited and Others, reported in (2016) 4 SCC 769, wherein the law has been laid down as follows:-

"23. ---------. 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 period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Therefore, there would be no question of extending the time for assessment when the assessment has already become time-barred. A valuable right has also accrued in favour of the assessee when the period of limitation expires. If the Commissioner is permitted to grant the extension even after the expiry of original period of limitation prescribed under the Act, it will give him right to exercise such a power at any time even much after the last date of assessment. -----------.

When the last date of assessment in respect of these assessment years expired, it vested a valuable right in the assessee which cannot be lightly taken away. ----------."

(Emphasis supplied).

Placing reliance on the aforesaid decision, learned counsel submitted that since the period of limitation could not be extended, the Assessing Officer had no authority to make the reassessment of the tax liability of the petitioner, beyond the period of limitation, and accordingly, the impugned reassessment order dated 29.06.2015, as contained in Annexure-7 to the writ application, as also the order / Judgment passed by the Appellate Authority as well as the Tribunal, as contained in Annexures-8 and 9 to the writ application, cannot be sustained in the eyes of law.

Learned counsel for the State, on the other hand, has opposed the prayer and has pointed out from the counter affidavit filed on behalf of the State that the reassessment was actually done pursuant to an audit objection under Section 42(3) of the J.V.A.T. Act, and no limitation is prescribed for reassessment under Section 42(3) of the J.V.A.T. Act. This submission of learned counsel for the State cannot be entertained, in view of the fact that very opening line of reassessment order dated 29.06.2015, states that the reassessment order has been passed under Section 40(1) of the J.V.A.T., Act. In that view of the matter, the stand of the State as taken in the counter affidavit cannot be sustained.

The impugned order of reassessment dated 29.06.2015, clearly shows that the order has been passed under Section 40(1) of the J.V.A.T. Act and Section 40(4) of the J.V.A.T., Act clearly prescribes that no order of assessment and reassessment shall be made under sub-section (1) after the expiry of five years from the end of the year in respect of which or part of which the tax is assessable. In the present case, admittedly, the reassessment has been done after the expiry of the period of five years from the end of the Assessment Year. There is nothing in the Act empowering the extension of the period of limitation, and the facts of this case is fully covered by the law laid down by the Hon'ble Apex Court in Shreyans Industries Limited's case (supra).

In that view of the matter, on that limited scope, and without entering into the merits of the case, the impugned order of reassessment dated 29.06.2015, as contained in Annexure-7 to the writ application cannot be sustained in the eyes of law. For the same reasons, the appellate order as well as the Judgment dated 18.5.2017, passed by the Tribunal in Revision Petition No. JR 73 of 2016, as contained in Annexures-8 and 9 to the writ application respectively, also cannot be sustained in the eyes of law. Consequently, all these three orders / Judgement, are hereby, set aside.

This writ application is, accordingly, allowed. Pending I.A. also stands disposed of.