Extension of time limit for assessment by a public notice on the website is not valid

Punjab VAT Tribunal in Olam Agro India Limited vs State of Punjab (2013) 21 STM 128 has held that extension of time limit u/s 29 of Punjab VAT Act, 2005 from 3 years to 6 years, for making assessment of a person, by giving a public notice on the website of the department, is not valid extension.

Background: As per Section 29(4) of Punjab VAT Act, 2005 an assessment of a person u/s 29(2) and 29(3) can be made within a period of three years after the date when the annual statement was filed or due to be filed. whichever is later.

However as per the proviso to section 29(4), if the circumstances so warrant, the commissioner may, by an order in writing, allow assessment of a taxable person or registered person after three years, but not later than six years from the date, when annual statement was filed or due to be filed by such person, whichever is later.

Punjab & Haryana High court in A B Sugar Mills Limited vs State of Punjab CWP No. 8555 of 2005 decided on 01-09-2009 [2010] 15 STM 90 had held that principles of natural justice must be followed before making an order for the extension of the period for the assessment, i.e opportunity of being heard must be given to the affected person.

Excise and Taxation Department, Punjab has recently adopted a tendency to display the list of persons in whose case extension u/s 29(4) is to be made and issue a public notice inviting objections against such proposed extension from such persons, on its website. No personal notice is issued to any affected person before passing the extension order.

Verdict of the Tribunal: 

Admittedly, only Rule 86 of the Punjab Value Added Tax Rules, 2005 provide the mode of service of notice and there is no other provision either in the Punjab Value Added Tax Act, 2005 or the Rules framed there under. As per the extension order dated 15.11.2010 passed by the Ld. ETC as available in the extension fiIe, the public notice was issued on 22.10.2010 for extending the time Iimit by two years for framing of assessment u/s 29(4) of the Act, 2005 for the assessment year 2006-07. The list of assessment cases in which the time limit was to be extended was put on the website of the Department for inviting the objections from the dealers/taxable persons to be effected by such extension order. It is not within the contemplation of Rule 86 ibid to invite objections from tlre dealer/taxable persons by putting the list of such persons on the website of the Excise and Taxation Department. Such mode of service being not there in Rule 86 ibid, it is very dfficult to say that the service of notice in the stated manner is in tune with the provisions of this Rule. The notice having not been got served in a manner as provided by law, it is not possible to say that the persons to be affected by extension order were afforded an opportunity of being heard.(Para 8).

Adverting to instant Case, there is nothing on the record to show that the persons to be affected by the alleged extension order 15.11.2010 were associated in the limit extension proceedings before the extension was granted or that the extension order was individually communicate to the persons who were to be affected by It. Needless to say, the language of Section 11(10) of the Punjab General Sales Tax Act, 1948 is almost in pari-materia with that of Section 29(4) of the Punjab Value Added Tax Act, 2005 as in the former, the words "for reasons to be recorded" occur, whereas in the latter, the expression "where circumstances so warrant' do find mention. The judgment delivered on 1.9.2009 in A.B. Sugar Ltd. still holds the ground. So, it has to be followed in letter and spirit. The Department cannot be relieved of its legal obligation to serve the notice upon the dealers in a manner as provided under Rule 86 ibid, merely because their number 1286. The Department in abhorrence to the provisions of Rule 86 ibid, cannot devise its own ways and means of service of notice. To add further to it, in the proviso appended to Sub-Section (4) to Section 29 of the Act, 2005 the legislature has employed the expression "Allow assessment of a taxable person or a registered person after three years" which means that the grant extension in the time limit has to be considered in respect of a taxable person or a registered person. It is not any person or any class of persons as figures in the language of sub-section 29(3) of the Act, 2005.(para 9)

In the case at hand, the assessment year being 2006-07, the last return was due to be filed by 20.11.2007. The limitation prescribed for framing assessment u/s 29(4) of the Act, 2005 being three years, the assessment could have been framed by 20.11.2010 unless the time limit was extended in a manner as enunciated in A.B.sugar Ltd. (Supra). The extension order dated 15.11.2010 being not in adherence to the spirit- of A.B. Sugars Ltd. (Supra) cannot be deemed to be valid and legal. Sequelly, such extension cannot be taken note of. If it is so, there can be no escape from the finding that the assessment orders dated 30.11.2411 being barred limitation is without jurisdiction and cannot be legally enforced. The record is quite barren to show, if there was any legal impediment in passing the assessment order,,within the limitation period as prescribed under law. The assessment proceedings had not been stayed by any court or competent authority. The assessment being barred by limitation, the ld. Counsel for the appellant assessee submits that the rest of the grounds taken up in the Memorandum of appeal be left open for being decided at a subsequent stage arose, if any. Accordingly the other grounds are not being dealt with presently.(para 10)

Conclusion: The order of extension to be made under proviso to section 29(4) has to be made after following the rule of natural justice and if such rules are not followed, the extension order is void. Extension order cannot be passed after just giving a public notice on the website, rather notice in the manner as prescribed under Rule 86 of Punjab VAT Rules, 2005, has to be served.


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