R.K. Machine Tools vs The State of Punjab

Ashutosh Mohunta, J.—The Tribunal has referred this case by framing the following questions of law for its opinion:

(i) Whether the Revisional Authority''s first order disallowing the sales to registered dealers; revising the order of Assessing Authority dated 5.4.1971 i.e. After 131/2 , is valid in law on account of undue delay in passing the order, even if no period of limitation has been prescribed in Sales Tax Act on ground of laches and undue delay?

(ii) Whether the assessee-dealer is expected to maintain the record of his accounts and books for a period of 13 to 15 years to prove his case, when the sales at first instance were found to be genuine and were allowed by the department?

(iii) Whether more denial on the part of purchasing dealer that they have not made the purchases because they were liable to pay tax on those purchased goods, without examining their books of accounts and other evidence and without cross-examining, is just and proper?

(iv) Whether the Sales Tax Tribunal is justified to uphold the order of Assessing Authority in relation to disallowance of sale to six registered dealers, whereby the Assessing Authority has not complied with the original order of Tribunal to produce the purchasing dealers for cross-examination of the assessee?

(v) Whether this Sales Tax Registration of purchasing dealers alleged by the department having been cancelled was required to be notified in the gazette and whether in absence of the same, the cancellation order has come into force disentitling the selling dealers to claim deductions for sales made to them?

(vi) Whether the registration certificate of purchasing dealer, M/s Jasbir Singh Satnam Singh, Amritsar being cancelled by the Deputy Excise & Taxation Commissioner, Jalandhar is correct and according to law as that officer has no jurisdiction to cancel the registration and therefore, his order is nonest in the eyes of law.

In the present case, the petitioner who is a registered dealer under the Sales Tax Act is engaged in the manufacture of machine and worsted spinners and yarn. He did not file any return despite issuance of numerous notices in the year 1968-69. Ultimately, the assessing authority raised a demand amounting to Rs. 12,325/- vide order dated 5.4.1971. The aforementioned amount was paid by the assessee. Thereafter, the revisional authority reopened the assessment done vide order dated 5.4.1971, vide order dated 11.7.1984.

Mr. K.L. Goyal, learned Sr. Advocate submits that assessment order was passed on 5.4.1971, whereas the revisional authority has reopened the matter and and has decided the same vide order dated 11.7.1984, i.e. after an inordinate delay of 131/2 years. Counsel for the petitioner has placed reliance on State of Punjab and Ors. v. Bhatinda District Co. op Milk P. Union reported as (2007) 10 VST 180 (SC), wherein the Hon''ble Supreme Court has defined the reasonable period. It is held that reasonable period can be stretched from 3 to maximum of 5 years. Learned Counsel submits that as there was a delay of more than 13 years in the present case, hence, the assessment of the petitioner which had been done on 5.4.1971, could not have been reopened after such an inordinate delay. Counsel for the petitioner has placed reliance on GSTR No. 36 of 2006, M/s Skylark and Restaurant Pvt. Ltd. v. State of Punjab and Ors., decided on 19.1.2010, wherein a similar view has been taken with regard to limitation.

As far as question No. 1 is concerned, it is held that the revisional authority cannot reopen the matter after an inordinate delay. In the present case, as there has been inordinate delay of more than 13 years, hence, the matter could not have been reopened by the revisional authority.

In view of the above, we do not deem it necessary to go into the other questions referred to by the Tribunal. Resultantly, question No. 1 is answered in favour of the assessee and against the Revenue.

Reference is disposed of.