The Bombay High Court quashed the notice issued further since the commissioner failed to complete the assessment within a period of ten years of issuing Form H.
Siemens Limited, the petitioner is a ‘Company’ incorporated under the Companies Act, 2013 and has been registered as a ‘dealer’ in the State of Maharashtra under the provisions of Section 2(16A) of the Maharashtra Municipal Corporations Act, 1949. The Dealer was liable to pay a cess on bringing goods within the limits of Navi Mumbai Municipal Corporation –(the Municipal Corporation) under Section 152A of the Act of 1949.
The Dealer filed returns for the period commencing from 01.04.2008 to 31.03.2009 and thereafter for each financial year till 31.03.2013 under the Maharashtra Municipal Corporation (Cess on Entry of Goods) Rules, 1996. The assessment of cess is carried out under Rule 25 of the Rules of 1996.
The Dealer was issued a notice in FormH as provided by Rule 25(3) of the Rules of 1996 since the Commissioner was not satisfied with the returns filed by the Dealer. By such notice in FormH, the Dealer was required to produce all evidence on which the Dealer sought to rely in support of the returns as filed.
According to Dealers by not completing the process of assessment for a long period of almost eight to ten years, the Municipal Corporation was not entitled to proceed further in the matter. The Dealer seeks a declaration that the action of issuing such notice belatedly was contrary to the provisions of the Act of 1949 read with the Rules of 1996.
It was submitted that though the Municipal Corporation initiated the process of assessment within the time prescribed by Rule 25 of the Rules of 1996, the failure to complete the assessment process within reasonable time rendered the continuation of the process of assessment to be bad in law.
Rule 25 of the Rules of 1996 indicates that a dealer can be assessed the amount of cess due based on the satisfaction of the Commissioner if the returns are furnished. If the Commissioner is satisfied with the returns as furnished, he is required to immediately assess the cess due for the relevant period.
On the other hand, if the Commissioner is not satisfied with the returns furnished by the dealer for the relevant period he can require the dealer to remain present before him or to attend and produce or cause to be produced all evidence on which the dealer seeks to rely in support of its returns.
It was viewed that the Municipal Corporation did grant sufficient opportunity to the Dealer to produce all the evidence on which it desired to rely upon. It also called upon the Dealer to submit further documents but the Dealer failed to do so.
The Court observed that there was no justification indicated by the Municipal Corporation for the failure on the part of the Commissioner to assess the amount of cess due from the Dealer to the best of the Commissioner’s judgment at least from 21.08.2013 till the reminder in Form-H was issued on 24.09.2019. It is well settled that where no period of limitation is prescribed for completing an act, the same is required to be done/ completed within a reasonable period.
A two-judge member Comprising of Justice A S Chandurkar and Justice M W Chandwani observed that the Municipal Commissioner must complete the assessment under Rule 25(3) of the Rules of 1996 either on the date specified in the notice issued in Form-H or as soon as may be thereafter based on evidence produced by a registered dealer.
Further held that “failure to complete the process of assessment under Rule 25(3) and (4) of the Rules of 1996 for a period of more than ten years from the date of issuance of the initial notice in Form-H would render the process of assessment liable to be quashed on the ground of unreasonableness and failure to complete the assessment for no justifiable reason.”
The Court held that since the Commissioner failed to complete the assessment for the relevant years within a period of ten years of issuing the initial notice in Form-H, the notice dated 24.09.2019 is quashed.
It was viewed that the period of ten years from the issuance of notice in Form-H on 30.10.2014 for the year 01.04.2012 to 31.03.2013 is yet to expire, then the Commissioner is free to proceed to complete the assessment expeditiously and by the law.
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