Limitation Period to challenge Assessment Order commences from Date of Service of Demand Notice, not from Date of Assessment Order: Jharkhand HC

The Jharkhand High Court ruled that the Limitation period to challenge assessment order commences from date of service of demand notice, not from the date of assessment order.

The petitioner was a dealer registered under the provisions of Jharkhand Value Added Tax Act, 2005 (JVAT Act, 2005) and Central Sales Tax, Act, 2006 (CST Act, 1956) and the petitioner filed application for surrender of the registration certificates before the Commercial Tax department w.e.f. March, 2015 for which acknowledgements regarding submission of such applications. The petitioner was regularly filing its returns to the respondent-Commercial Tax department and its regular assessment proceedings were completed.

However, for the assessment years, 2009-10 and 2010-11, the petitioner was neither communicated the copy of the assessment orders, nor copy of the demand notices till July 2018 for both under Central Sales Tax (CST) as well as Jharkhand Value Added Tax Act, 2006 (JVAT).

The petitioner was served with four demand notices for the assessment years, 2009-10 and 2010-11 , both CST and JVAT through e-mail on August 3, 2018 wherein the date of payment has been notified as August 13, 2018, i.e., after expiry of more than four years from the alleged date of demand notices.

Advocate Sumeet Gadodia, on behalf of the petitioner argued that the action of the respondents clearly demonstrates that the assessment proceedings including impugned the assessment orders and demand notices are antedated which has been done by manipulating the records and consequently, the assessments having been done beyond the statutory period, though antedated, are void ab initio.

Mr. Gadodia has also referred to Section 43(4) of the JVAT Act, 2005 read with Rule 27 of the JVAT Rules, 2006 to indicate that under normal circumstances, 30 days’ time is provided for payment of tax demand.

Mr. Gadodia argued that the action of the respondents has caused serious prejudice to the petitioner. For this he has referred to Rule 38 (3) of JVAT, Rules to submit that a dealer is required to maintain the records for the period of five years in respect of each assessment year and accordingly the petitioner has not retained the records for the assessment years, 2009-10 and 2010-11 and under such circumstances the petitioner has been left remediless against the impugned assessment orders. It has been submitted that the petitioner is not in possession of any records or documents to contest the alleged demands raised by the impugned assessment orders as more than five years have elapsed from the end of the assessment years, 2009-10 and 2010-11.

On the other hand the State has brought on record, not only the attendance filed by the concerned Advocate on the date of assessment order, but also the entire order sheet of the assessment proceedings which records the appearance of the counsel even on the respective date of assessment orders and conclusion of hearing. The respective order-sheets indicate filing of attendance and records quantification of tax/ penalty and directs for issuance of demand notices after verification of the payments already made. The order sheets also record that the assessment orders have been passed in separate sheets. The assessment orders also record the appearance of the counsel of the petitioner along with books of account of the petitioner and other documents which reflects passing of assessment orders after consideration of the books of accounts and other documents of the petitioner.

The division judge bench of Justice Aparesh Kumar Singh and Justice Anubha Rawat Choudhary noted that the demands arise due to non-production of certain statutory forms or rejection of certain claim of sales returns on account of non-production of corresponding credit notes. During the course of assessment proceedings also no prayer was made seeking adjournment for production of any further documents or records. It is also not the case of the petitioner that any statutory form/ documents were received by the petitioner after the conclusion of the assessment proceedings.

“No prejudice has been caused to the petitioner even it is assumed that the petitioner does not possess the relevant books of accounts and other documents after expiry of five years from the end of the tax periods involved in these cases. The period of limitation to challenge the assessment order commences from the date of service of demand notice and not from the date of the assessment order,” the bench while rejecting the arguments of the petitioner, ruled.

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