A Division Bench of the Bombay High Court held that assessment order under Maharashtra Value Added Tax Act having been passed after expiry of four years from the end of the year containing period to which return relates, is not a valid order and quashed the same.
The petitioner approached the Bombay High Court, against an order and notice of demand which were digitally signed by respondent no.3, i.e., Deputy Commissioner of State Tax, on 23rd June 2020 and issued on 24th June 2020 for financial year 2015-16.
It was petitioner’s case, inter alia, that the impugned order is barred by limitation. It was also the petitioner’s case that respondent no.3 has not followed the principles of natural justice by not giving a personal hearing despite petitioner seeking a personal hearing.
The petitioner also submitted that sub-section (2) of Section 23 of the Maharashtra Value Added Tax (MVAT) Act provides that no order of assessment under the said sub-section shall be made after the expiry of four years from the end of the year containing the period to which the return relates.
Counsel for the petitioner, Mr. Mundhra submitted that the return related to 1st April 2015 to 31st March 2016 and, therefore, the four year period would expire on 31st March 2020. Mr. Mundhra submitted that any order passed after 31st March 2020 shall be barred by limitation. In this case, according to the petitioner, the order was made only on 23rd June 2020 and hence, is barred by limitation.
It was also submitted that even intimation dated 16th October 2018 reflected non application of mind by respondent no.3 because petitioner was called upon to show cause as to why it should not be assessed under sub-section (3) of Section 23 of the MVAT Act whereas sub section (3) applies only to cases where a registered dealer has not filed the return in respect of any period by the prescribed date whereas in the notice itself, it is stated that petitioner has filed its return but the Officer wanted to ensure that the return furnished by petitioner was correct.
The petitioner also raised another ground that the assessment order could not have been passed without giving another intimation as required under sub-section (5A) of Section 23 of the MVAT Act which intimation should have been given not later than six months before the date of expiry of period of limitation for assessment and, therefore, the assessment order was bad in law.
The bench noted that, even though the order was passed within the period of limitation, the issue of non grant of personal hearing was to be given further consideration. In view of Covid period no personal hearing was given.
“But that makes us wonder why the Officer could not have given a virtual hearing”, the bench noted.
Additionally, the bench of Justices Jitendra Jain and K R Shriram observed that, “even the MVAT portal shows only this order of 23rd June 2020 and there is no order of 19th March 2020.”
In result, it was held by the Bombay High Court that the impugned assessment order having been passed after expiry of four years from the end of the year containing period to which return relates, is not a valid order and the same was quashed and set aside.
It was added that, “In view of these categorical findings of ours, we are not devoting time to deal with the submissions of the parties with regard to sub-section (5A) of Section 23 of the MVAT Act.”
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