Patna HC Quashes Time-Barred VAT Reassessment Order, Holds Revenue Acted Beyond Jurisdiction [Read Order]

The Patna High Court quashed the time-barred VAT reassessment order, holding that the revenue acted beyond its jurisdiction.

In this case, the petitioner, Mukesh Kumar Singh, has approached the high court against the impugned ex parte reassessment order and demand notice passed by the department.

The petitioner firm filed its self-assessment return for FY 2015-16 on December 15, 2016, within the 31.12.2016 deadline, in accordance with the Bihar VAT Act, 2005. Under Section 26(2), the department selected the case for audit, and on December 16, 2019, the audit was carried out. A notice was later issued on 26.12.2020, asking the petitioner to appear on 13.01.2021. As the petitioner did not appear, the authority passed an order on 01.12.2021.

The petitioner’s counsel submitted that the Notice dated 26.12.2020 was not served in the manner known to the law. The assessee’s counsel argued that the Respondent's actions are in violation of Sub-Section 3 of Section 26 and Sub-Section 3 of Section 24 of the Act, 2005. The order was issued on 31.03.2021 under Section 31 of the Act, 2005, which requires calculation within 36 months from the deadline for the 2015-16 financial year beginning on December 31, 2016.

The respondent’s counsel contended that the notice was served on the petitioner through registered post.

The High Court noted that the respondents have initiated & completed proceedings beyond the time limit stipulated under Sub-Section 3 of Section 26 of the Bihar VAT Act, 2005, read with 24(3) of the 2005 Act.

The High Court set aside the impugned order & demand notice dated 31.03.2021, along with the notice dated 10.02.2022. The concerned authority was directed to redress the consequential benefit under law within 03 months.

Justice P.B. Bajanthri allowed the writ petition.

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