R.G. Scrap Traders vs State of Gujarat

Sonia Gokani, J.—This application is preferred for review of the judgment delivered by this court in Tax Appeal No. 667 of 2013 on September 12, 2013 R.G. Scrap Traders Vs. State of Gujarat, in the following background. Five substantial questions of law were proposed in the said tax appeal preferred by the applicant-original appellant, M/s. R.G. Scrap Traders challenging the common judgment and award passed by the Tribunal dated May 10, 2013 whereby the appeal of the applicant had been dismissed on merits. Aggrieved by the said dismissal, the appeal came to be preferred proposing five substantive questions of law where, after hearing both the sides extensively, both the appeals were dismissed and consequently the application for vacating the stay as well was dismissed. It is averred in the present application that the court has inadvertently omitted to consider the issues concerning extension of time for passing the assessment order beyond the statutory time-limit and, therefore, review is necessary.

The affidavit-in-reply is filed by the Commercial Tax Officer contending, inter alia, that the contentions raised in the present application were not raised at the time of arguing the tax appeal. Moreover, the dictation of the order was in the open court in presence of both the sides and at no point of time, it was pointed out that any error is committed. It is further urged that if at all the order requires to be recalled, it shall be done for the purpose of adjudicating question No. 4 in the tax appeal. In detail, in the said affidavit, the respondent has dealt with the merit of the matter.

It is further urged that the original order granting extension has been passed on March 31, 2006 and not on any other date and there was an oral consent on the part of the applicant noted by the Tribunal and which has been also properly dealt with by this court in the decision sought to be reviewed.

Further affidavit has been filed by the Commercial Tax Officer contending, inter alia, that the order of extension of time was passed on March 31, 2006 as reflected earlier and it was dispatched on the very day and not on April 15, 2006 as contended. Moreover, according to the respondents, the order dated March 22, 1994 passed by the Commissioner of Sales Tax delegating the power to the Assistant Commissioner of Sales Tax is also forming part of the record.

Both the sides have been extensively heard. On careful examination of the material on the record as also considering the submissions on the facts as well as on the law point, for the reasons to follow hereinafter, this application for review merit no entertainment.

At the outset, the question No. 4 raised as a substantial question of law in tax appeal requires reproduction:

"4. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the assessment orders were not barred by jurisdiction having been issued by authority not authorised thereto and were not barred by limitation having been passed beyond the statutory time-limit prescribed thereunder ?"

Before the Gujarat Value Added Tax Tribunal, on the question of limitation and jurisdiction, the applicant had contended in the written submissions that the extension order passed by the Deputy Commissioner of the Sales Tax is not tenable in law. The power of extension is exercised under section 42 of the Gujarat Sales Tax Act (hereinafter referred to as "the said Act") by the Deputy Commissioner of Sales Tax under the delegated powers given to him by the Commissioner of Sales Tax. However, it was further contended that the Gujarat Tax Laws (Amendment) Act No. 4 redesignation is made under section 27 of the Act and the word "Joint Commissioner" is provided therein instead of "Deputy Commissioner" and therefore May 26, 2004, the date on which this amendment came into effect, the power of extension is given to the Joint Commissioner to extend the time for assessment and, therefore, any order passed by the Deputy Commissioner of Sales Tax is bad in law.

The Tribunal on having considered rival submissions, dealt with legal issue raised by the appellant concerning the issue of limitation. Entire paragraph 17 of the Tribunal''s order deals with not only the extension of time, but, also the authority which passed such order.

This court while dealing with the proposed questions of law noted the submissions made by the learned advocate for the appellant at paragraph 4.4 of the said judgment where issue of the assessment having been made beyond the period of limitation was raised. It was further contended that the appellant''s consent for extension of period of limitation could not have been made the base inasmuch as mere consent cannot extend the period of limitation in any manner.

This court also, while dealing with the said issue of limitation has upheld the version of the Tribunal by holding that the appellant had given consent for extension of time and the Joint Commissioner of Sales Tax extended such time-limit up to March 31, 2007 and the assessment was passed within the extended time limit and accordingly answered the question No. 4 in favour of the Revenue.

According to the applicant, prior to April 1, 1994, under section 42(1) of the Act, the period of limitation prescribed for carrying the assessment was three years, but, the proviso to section 42 of the Act authorized the State Government by a general or special order to extend the period either generally or specially. However, from April 1, 1994 to August 1, 1998, the said proviso did not exist and the power to extend the period of limitation being removed under section 42(1) of the Act, the explicit authority of extension of time was missing. It was further submitted that under the order of delegation dated March 22, 1994, the powers under section 42(1) of the Act were given to the Assistant Commissioner of Sales Tax and similarly the powers under rule 37(A) of the Act were delegated to Assistant Commissioner of Sales Tax. It is also the say of the applicant that in absence of the existence of the proviso, exercise of delegation of such powers by an order dated March 22, 1994 would no longer survive and, therefore, the Deputy Commissioner would have no jurisdiction to pass the order of extension when no powers existed for delegation and even otherwise such powers were delegated under the Gujarat Act (14 of 2004) to the Joint Commissioner.

In answer to the said contentions, the respondent has urged that notification dated March 22, 1994 was issued delegating the power to the Assistant Commissioner of Sales Tax as required under section 42 of the Act. The provision for extension of time under section 42 of the Act was withdrawn, however, the same was later on reintroduced in the year 1998, i.e., with effect from August 1, 1998. When no notification delegating powers under section 42 of the Act was passed after reintroduction of proviso to section 42 of the Act, the earlier notification dated March 22, 1994 continued to be in operation in respect of delegation of powers under section 42 of the Act. The powers were delegated to the Assistant Commissioner of Sales Tax by a subsequent notification dated May 26, 2004, the designation of Assistant Commissioner was substituted by Deputy Commissioner and, therefore, the powers earlier enjoyed by the Assistant Commissioner were subsequently enjoyed by Deputy Commissioner and it was the Deputy Commissioner who passed the order of extension dated March 31, 2006.

Dealing firstly the issue of passing of an order beyond the period of three years, the assessment year concerned is 2001-02, since sub-section (2) of section 42 of the Act would apply to the facts of the case, the last date of making assessment was March 31, 2006. The proviso to sub-section (2) of section 42 of the Act empowers the State Government or the Commissioner to extend either generally or specially the period specified in sub-section (1) of section 42 of the Act. Thus, in the event of any valid extension, the assessment can be made subsequent to the date of expiry of the period for making the assessment. The application was made by the applicant-appellant on March 31, 2006 and the consent was given for extension of the time-limit. The appellant gave the consent letter to the Joint Commissioner of Sales Tax on March 31, 2006 and time-limit was extended up to March 31, 2007. Such order of assessment was passed on March 31, 2007. Hence, the order can be said to be well within the time-limit prescribed. Accordingly, any challenge in connection with the passing of the order on April 15, 2006 would fail. As rightly pointed out by the respondent, the order of extension actually was passed on March 31, 2006 but the same was received by the assessing officer on April 15, 2006 as the mention of the date of April 15, 2006 is found in the inward entry made by assessing officer. The order of extension of passing the assessment order passed on March 31, 2006 was dispatched by an outward No. 3903 of 2005 by the office of the Deputy Commissioner on the very same day and the record in respect of the same has also been brought on record and, therefore, that challenge comes to an end and no intervention is desirable on that count.

With regard to the notification dated March 22, 1994 passed by the Commissioner of Sales Tax delegating the powers to Assistant Commissioner of Sales Tax, it states that in exercise of powers conferred by sub-section 6 of section 27 of the Gujarat Sales Tax Act, 1969, the Commissioner of Sales Tax is pleased to delegate to all the Assistant Commissioner of Sales Tax the powers and duties of Commissioner under rule 37(A) of the Gujarat Sales Tax Rules, 1970. Such powers and duties of the Commissioner of Sales Tax under the order shall be exercised subject to such conditions and restrictions as the Commissioner may impose from time to time.

It is not the case of there being absence of power for extending time period for the purpose of assessment. The essential challenge is of the concerned authority having extended the same not having the power in wake of absence of proviso to sub-section (2) of section 42 of the Act for a limited period from April 1, 1994 to August 1, 1998. On March 22, 1994, the order of delegation gave the powers under sub-section (1) to section 42 of the Act to the Assistant Commissioner of Sales Tax. It is explained by the respondent that no notification delegating the power under section 42 of the Act was passed after the reintroduction of the proviso to section 42 of the Act with effect from August 1, 1998 and the earlier notification dated March 22, 1994 continued to be in operation in respect of delegation of power. Such powers were delegated to the Assistant Commissioner of Sales Tax by a subsequent notification dated May 26, 2004 where designation of Assistant Commissioner was substituted by Deputy Commissioner and those powers which were enjoyed by Assistant Commissioner were given to the Deputy Commissioner.

Undisputedly, the order of extension in the instant case had been passed by the Deputy Commissioner. Therefore also, in the opinion of this court, challenge does not survive. It is to be observed at this juncture that in wake of the substantive power authorizing the State Government or the Commissioner to extend the period of limitation for carrying out the assessment as prescribed under the proviso to section 42(2) of the Act coupled with the specific consent having been expressed in writing and communicated to the concerned authority by the petitioner, the subsequent challenge seeking to review the order needs to fail. The sequence of issuance of notification also has been well explained by the respondent and the order having been passed on March 31, 2006 extending the period up to March 31, 2007 is clear from the record and thus the substantial question of law raised by the appellant challenging the order of the Tribunal merited no acceptance. Consequently, this application for review fails in its entirety and is disposed of accordingly.