Gauhati HC invalidates Reassessment Order u/s 40 of Assam VAT Act, Citing late filing of Returns and Lapse of Five Year Assessment Limitation [Read Order]
Gauhati High Court – Reassessment Order – Assam VAT Act – Assessment – Gauhati HC Invalidates Reassessment Order – Tax news – Taxscan
Gauhati High Court – Reassessment Order – Assam VAT Act – Assessment – Gauhati HC Invalidates Reassessment Order – Tax news – Taxscan
The Gauhati High Court has invalidated a reassessment order passed under Section 40 of the Assam Value Added Tax ( VAT ) Act, 2003 citing late filing of tax returns rendering the self assessment incomplete under Section 35 and the lapse of five year assessment limitation under Section 39.
The case, which involved Assam Gas Company Ltd. and the State of Assam, centered around the re-assessment order dated 17.03.2018, relating to the assessment year 2009-2010.
The crux of the matter lies in the alleged failure of Assam Gas Company Ltd. to deposit VAT on transmission charges amounting to Rs.1,03,05,23,595/-. The revenue authorities contended that this significant turnover had escaped assessment, prompting them to propose a reassessment under Section 40 of the Assam VAT Act.
However, the petitioner, Assam Gas Company Ltd., challenged the reassessment order on the grounds that it was procedurally flawed. The petitioner, represented by its Managing Director, Sri Aditya Kumar Sharma argued that the assessment was actually an audit assessment under Section 36 of the Assam VAT Act, which had become time-barred. The council for the petitioner, Dr. A Saraf maintained that the conditions precedent for reassessment under Section 40 were not fulfilled, as no assessment had been made under Sections 34, 35, 36, or 37.
The respondent revenue, The State of Assam and others, represented by the Standing Counsel for the Finance & Taxation Department countered these claims, asserting that the assessment was indeed completed under Section 40. They contended that the petitioner had been duly notified and provided an opportunity to respond. According to their argument, the submission of audited documents by the petitioner implied completion of self-assessment under Section 35 before the initiation of proceedings under Section 40. They dismissed any reference to ‘Section 36’ in the assessment order as a typographical error.
The Gauhati High Court found merit in the petitioner’s contention regarding the procedural irregularities surrounding the reassessment order.
The court observed that timely filing of tax returns is a fundamental requirement under the Assam VAT Act. However, in this case, returns for the fiscal year 2009-2010 were consistently filed after the prescribed deadlines, with revised returns also submitted belatedly. This failure to adhere to the filing deadlines rendered the self-assessment incomplete under Section 35 of the Act.
Further, the bench emphasised the importance of the five year assessment limitation period prescribed by Section 39 of the Assam VAT Act. Since assessments for the relevant tax year had become time-barred by March 31, 2015, without prior completion under Sections 34, 35, 36, or 37, the initiation of reassessment proceedings under Section 40 was deemed unlawful.
In result, the single bench of Justice Kaushik Goswami quashed the impugned reassessment order and notice of demand.
To Read the full text of the Order CLICK HERE
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