State of Punjab vs Punjab State Electricity Board and Another

Ajay Kumar Mittal, J.—The State has filed the present appeal claiming the following substantial questions of law:

(a) Whether the order dated March 15, 2010 (annexure A1) passed by the VAT Tribunal, Punjab, is sustainable in law?

(b) Whether the period prescribed in sub-sections (1) and (3) of section 11 of the Punjab General Sales Tax Act, 1948 (since repealed) is mandatory in character or is merely directory in view of the provisions of sub-section (10) of this section?

(c) Whether the determination of tax amount, without any change in the turnover returned by a dealer, would come within the ambit of the term ''assessment''?

(d) Whether the VAT Tribunal, Punjab, was justified in setting aside the original assessment order dated February 18, 2008 (annexure A2) when it had already lost its entity because it was set aside in appeal by the first appellate authority vide its order dated January 22, 2009 (annexure A3)?

Briefly stated, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee is a registered dealer and is engaged in the generation and distribution of electricity and the supply of other allied material. The assessee filed the periodical returns for the year 2001-02. On scrutiny, the assessing authority found that the assessee had not paid sales tax on the meter rents charged by it and vide order dated February 18, 2008 raised an additional demand of Rs. 10,08,51,670. Feeling aggrieved, the assessee-dealer filed an appeal. The Excise and Taxation Commissioner (in short, "the Commissioner") vide order dated January 22, 2009 set aside the assessment order dated February 18, 2008 and remanded the matter to the assessing authority for re-examination. The assessee instead of approaching the assessing authority challenged the order of the appellate authority before the Value Added Tax Tribunal, Chandigarh (in short, "the Tribunal"). The Tribunal vide order dated March 15, 2010 set aside the order dated February 18, 2008 passed by the assessing authority holding that the assessment of the dealer was barred by limitation prescribed in section 11(3) of the Act.

The learned State counsel submitted that the Tribunal had erred in holding that the assessment order dated February 18, 2008 in respect of assessment year 2001-02 was barred by limitation whereas the Commissioner had extended the limitation on January 7, 2009 up to March 31, 2009 and in such circumstances, the assessment framed on February 18, 2008 for the year 2001-02 was within limitation. The matter, thus, required to be adjudicated on the merits.

The learned counsel for respondent No. 1, on the other hand, supported the order passed by the Tribunal. Learned counsel submitted that identical issue has been adjudicated by this court in Shreyans Industries Limited Vs. State of Punjab and Others, wherein it was held that the extension of limitation for framing assessment after framing of the assessment which was beyond limitation could not be extended.

After hearing learned counsel for the parties, we do not find any merit in the appeal. The issue that arises for consideration is whether the assessment order passed on February 18, 2008 in respect of the assessment year 2001-02 where the return had been filed on April 30, 2002 was within limitation and further that the Commissioner on January 7, 2009 could validly extend the limitation up to March 31, 2009.

Section 11(3) of the Punjab General Sales Tax Act provides for a period of limitation for framing of assessment whereby the assessing authority can pass an order of assessment within a period of three years from the last date prescribed for furnishing the last return in respect of any period. Thus, under the circumstances valid assessment could be framed up to April 30, 2005 as the last date for filing the return in the present case was April 30, 2002. The assessment having been framed on February 18, 2008 was, therefore, clearly beyond limitation as no order extending the limitation had been passed by any competent authority before the expiry of period of limitation. Any subsequent order extending the period of limitation passed by the Commissioner would not clothe the assessing officer with jurisdiction to frame assessment which could be held to be within limitation.

The issue stands settled by the decision of this court in Shreyans Industries Limited Vs. State of Punjab and Others, wherein, it has been held as under (pages 499 and 500 in 18 VST):

Reference to the above provisions shows that there is no express mention of any power to grant extension after the assessment has become time-barred. In absence of any contrary view, we respectfully follow the judgment of the Karnataka High Court in Bharat Heavy Electricals Ltd.''s case [2006] 143 STC 10 (Karn) which is holding the field for the last more than ten years on an analogous provision and hold that the power of extension of time for completing assessment has to be exercised before the assessment becomes time-barred. . .

In view of the above, there is no merit in this appeal.

It further requires notice that besides there being no merit in the appeal, the same is also barred by limitation as it has been filed after inordinate delay of 311 days. C.M. No. 12059-CII of 2011 has been filed for condonation of delay stating that due to certain formalities relating to filing of appeals it took time to file the appeal and, thus, delay had occurred in filing the present appeal. The said plea does not satisfy the test of "sufficient cause" envisaged u/s 5 of the Limitation Act, 1963. The apex court in Oriental Aroma Chemical Industries Ltd. Vs. Gujarat Industrial Development Corporation and Another, while laying down the broad principles for adjudicating the issue of condonation of delay, in paras 14 and 15 observed as under:

We have considered the respective submissions. The law of limitation is founded on public policy. The Legislature does not prescribe limitation with the object of destroying the rights of the parties but to ensure that they do not resort to dilatory tactics and seek remedy without delay. The idea is that every legal remedy must be kept alive for a period fixed by the Legislature. To put it differently, the law of limitation prescribes a period within which legal remedy can be availed of for redress of the legal injury. At the same time, the courts are bestowed with the power to condone the delay, if sufficient cause is shown for not availing of the remedy within the stipulated time.

The expression ''sufficient cause'' employed in section 5 of the Limitation Act, 1963 and similar other statutes is elastic enough to enable the courts to apply the law in a meaningful manner which subserves the ends of justice. Although, no hard and fast rule can be laid down in dealing with the applications for condonation of delay, this court has justifiably advocated adoption of a liberal approach in condoning the delay of short duration and a stricter approach where the delay is inordinate-- Collector, Land Acquisition, Anantnag and Another Vs. Mst. Katiji and Others, Comp Cas 370 (SC) : [1987] 2 SCC 107 : AIR 1987 SC 1353, N. Balakrishnan Vs. M. Krishnamurthy, and Vedabai @ Vaijayanatabai Baburao Pateil Vs. Shantaram Baburao Patil and Others,

Accordingly, the appeal is dismissed on the merits as well as being barred by limitation.