Three-Judge Bench of Supreme Court to Consider VAT Commissioner’s Power to Extend Time limit to complete Audit Assessment beyond Six Months [Read Order]

A two-judge bench of the Supreme Court, on Monday, referred a matter relating to extension of time of six months to the Assessing Authority to complete the audit assessment under the Orissa Value Added Tax Act, 2004, to a three-judge bench.

A bench of Justice Uday Umesh Lalit and Justice Pamidighantam Sri Narasimha was considering an appeal by the department raising three questions. Firstly,whether the power of the Commissioner to allow further time of six months to the Assessing Authority to complete the audit assessment must be exercised before the Assessing Authorities time to conclude the proceedings expire. The second question is whether an Assessing Authority could pass the assessment order after the period of six months in expectation of the Commissioner extending the time. The third and the last question is whether a Commissioner could grant post-facto extension, ratifying the assessment order passed beyond the period of six months.

Referring the matter to a three-judge bench, the Court held that “Considering this from the perspective of administrative law, the time limitations are restrains placed by the legislature to regulate exercise of administrative power. They are intended to enforce discipline in governance and could therefore be compelling guidelines or even mandatory prescriptions. The Court must therefore, examine the provisions in the context of balance between need for executive flexibility and the quest against arbitrariness. It is the duty of the Court to synthesize these competing claims keeping in mind the public interest of good governance.”

“This Court has traditionally drawn a distinction between statutes prescribing no time limit while performing public duties and statutes providing a time limit. Even with the statutes providing for the time limit, there is a distinction between statutes providing for consequence for not acting with the time limit and statutes not providing for any such consequences. Examination of these factors become necessary for appreciating the procedural ultra vires in the executive action. For the present, we need not say anything more,” the Court said.

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