Andhra Pradesh High Court - Amravati
M/S. Lakshmi Lavanya Cottons vs Commercial Tax Officer on 19 July, 2021
Author: Joymalya Bagchi
Bench: Joymalya Bagchi, K Suresh Reddy
THE HON'BLE SRI JUSTICE JOYMALYA BAGCHI
AND
THE HON'BLE SRI JUSTICE K.SURESH REDDY
Writ Petition No.3757 of 2021
(Proceedings taken up through video conferencing)
ORDER:(Per Hon'ble Sri Justice Joymalya Bagchi) Petitioner has assailed the endorsement, dated 15.12.2020 of the 1st respondent rejecting the declarations in Form 'C' which were obtained by it in the year 2020 and consequentially refusing to reopen the Assessment Order dated 04.12.2015 in respect of the Assessment Year 2013-14.
2. Learned counsel for the Department submit that the authorities had no power to reopen the proceedings after lapse of four years, in view of Section 21(4) of the Andhra Pradesh Value Added Tax Act, 2005 ('the AP VAT Act', for brevity).
3. We have considered the materials on record.
4. The declaration in Form 'C' or Form 'F' or the certificate in Form 'E-1' or Form 'E-II' under the AP VAT Act is to be filed within the time frame as envisaged in Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 ('the Rules', for brevity), which reads as follows:
"12 (7): The declaration in Form 'C' or Form 'F' or the certificate in Form 'E-1' or Form 'E-II' shall be furnished to the prescribed authority within three months after the end of the period to which the declaration or the certificate relates:
Provided that if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, that authority may allow such declaration or certificate to be furnished within such further time as that authority may permit."
2 JB, J & KSR, J W.P.No.3757 of 2021
5. A perusal of the said Rule shows that the assessee is required to furnish the declaration in Form 'C' or 'F' or 'E-1' or 'E-II' within three months after the end of the period for which declaration or the certificate relates, i.e., the Assessment Year. Proviso to the Rule, however, empowers the prescribed authority to permit such declarations/certificates beyond the aforesaid time provided 'sufficient cause' to the satisfaction of the authority is shown.
6. In the present case, the assessee was required to file the forms by June, 2014 but has failed to do so. In the meantime, Assessment Order was passed in 2015 which also was not appealed by the assessee. Only in the year 2020, the assessee had approached the Commissioner to accept the declaration in Form 'C' and reopen the assessment. The Commissioner, however, turned down the prayer with the endorsement that he had no power to reopen the assessment after a lapse of four years.
7. As per Section 9 of the Central Sales Tax Act, 1956 ('Act of 1956', for brevity), provisions relating to assessment, re-assessment or reopening under general sales tax law of the appropriate State, i.e., A.P. Value Added Tax Act in the present case, shall apply to the proceedings under the Act of 1956. Section 21 of the AP VAT Act relates to Assessment. Sub-sections (4) and (5) of Section 21 of the AP VAT Act provide the time frame within which such assessment is to be made. They read as under:
Sub-section (4):
"The authority prescribed may, based on any information available or on any other basis, conduct a detailed scrutiny of the accounts of any VAT dealer or TOT dealer and where any assessment as a result of such scrutiny becomes necessary, such assessment shall be made within a period of four years from the end of the period for which the assessment is to be made."
3 JB, J & KSR, J W.P.No.3757 of 2021 Sub-section (5):
"Where any wilful evasion of tax has been committed by a dealer, an assessment shall be made to the best of his judgment by the authority prescribed within a period of six years of date of filing of the return or the first return relating to such offence."
8. From the aforesaid statutory scheme, it appears that the prescribed authority may make assessment within four years from the end of the period for which the assessment is made. Sub-section (5) relates to an enlarged period of six years in the event of wilful evasion of tax. The time frame under the aforesaid provision, however, would not include such period as prescribed in Sub-section (7) of Section 21 when assessment is stayed by the Appellate Tribunal or the High Court or the Supreme Court, as the case may be, or where similar question of law touching the assessment is pending before the aforesaid Tribunal/Court. The orders of assessment are appealable under Section 31 of the AP VAT Act within thirty days but not later than 60 days from the date on which such order is passed. Appellate Order may be further appealed before the Appellate Tribunal under Section 33 of the AP VAT Act not later than 60 days. In the event the order of assessment is set aside by the Appellate Tribunal or any other Court, assessment may be reopened beyond four years in terms of Sub-section (8) of Section 21 of the AP VAT Act, which reads as follows:
"(8) Where an assessment made has been set aside by any Court or as the case may be the Appellate Tribunal, the period between the date of such assessment and the date on which it has been set aside shall be excluded in computing the period of four years or six years as the case may be, for making fresh assessment."
Apart from the appellate authorities, Commissioner or any other prescribed authority under Section 32 of the AP VAT Act may reopen assessment proceedings in the event the Assessment Order is prejudicial to the interests of 4 JB, J & KSR, J W.P.No.3757 of 2021 the revenue but within four years from the date on which the order was served on the dealer subject to enlargement of time as provided in Sub-sections (7) and (8) thereof, which are pari materia to Sub-sections (7) & (8) of Section 21, which are discussed herein before.
9. An analysis of the aforesaid scheme, therefore, leads us to the following conclusions:-
(a) Prescribed authority under Section 21 of the AP VAT Act may pass an order within four years from the period for which the assessment is being made or in case of wilful default within six years thereafter subject to enlargement of time as per sub-sections (7) & (8);
(b) The Commissioner may exercise suo motu power to reopen the assessment; however, such power is to be exercised in the interests of the revenue and that too within four years from the date on which the order is served on the assessee subject to enlargement of time as per sub-sections (7) & (8);
None of these provisions empower the Assessing Authority or the Commissioner, in exercise of powers of revision, to reopen an assessment beyond the period stipulated in law, as aforesaid.
10. It is argued such power is to be read in the law as prescribed authority has the power to condone delay in submitting the declaration forms beyond the stipulated time frame as envisaged under Sub-rule (7) of Rule 12 of the Rules. Petitioner relies on the decision in Godrej Agrovet Limited v. Commercial Tax Officer, Eluru, West Godavari District1 in support of its submissions.
11. The condition precedent for condonation of such delay is 'sufficient cause'. However, 'sufficient cause' even if shown, may permit the authority to condone the delay but does not authorize the Assessing Authority or the Commissioner to reopen the proceeding.
1 [2007] 7 VST 730 (AP) 5 JB, J & KSR, J W.P.No.3757 of 2021
12. Petitioner would argue that the aforesaid Rule would give incidental powers to the Assessing Authority to reopen the assessment. We are unable to agree to such contention. Statutory authorities can exercise powers which are vested in them by law and do not possess inherent powers. Rule 12 (7) of the Rules empowers the prescribed authority to condone delay and accept declarations submitted by the assessee. However, the Rule does not deal with power to reopen assessment proceeding after expiry of the statutory time limit as envisaged under Sub-sections (4) & (5) of Section 21 of the AP VAT Act. There cannot be any dispute over the proposition that a subordinate legislation cannot alter express statutory provisions. Thus, by no stretch of imagination, Rule 12 (7) can be read to empower the Assessing Authority to reopen the assessment after expiry of the time frame as envisaged under Sub-sections (4) and (5) of Section 21 of the AP VAT Act. In such a situation, the remedy available to an assessee for reopening of the assessment is to prefer an appeal before the appellate forum under Section 31 of the AP VAT Act or a Second Appeal under Section 33 thereof against the appellate order. Even in appropriate cases, this Court, in exercise of writ jurisdiction may also direct the authorities to reopen the proceeding for the purpose of consideration of declarations in Form 'C' as has been held in Godrej Agrovet Limited (1 supra). However, for the purpose of invoking extraordinary writ jurisdiction of this Court, it is incumbent upon the petitioner/assessee to satisfy that the petitioner, in spite of due diligence to obtain declarations in Form 'C' was unable to submit the same within the stipulated period.
13. The expression 'sufficient cause' in Rule 12(7) of the Rules must justify the entire period of delay, i.e., commencing three months beyond the assessment year and not from the date of assessment in view of the 6 JB, J & KSR, J W.P.No.3757 of 2021 amendment to the law in 2005 as held by this Court in M/s. Shanti Alloys Private Limited v. the Commercial Tax Officer, Hindupur2.
14. In the present case, there is hardly any explanation offered with regard to the circumstances which stood in the way of the petitioner/assessee to submit declarations in Form 'C' within the stipulated time. A vague averment has been made that the business had closed down. However, no material particulars are placed on record with regard to the date of such closure. It is argued that the declarations in Form 'C' are genuine and there was delay as the forms had to be obtained from the business entities beyond the State. However, no contemporaneous documents are placed on record to support the claim that efforts had been made on the part of the petitioner to obtain declarations in Form 'C' from such business entities. No doubt, the expression 'sufficient cause' may require liberal interpretation, but a vague and evasive explanation, which does not inspire confidence, cannot give a valid justification to reopen the assessment proceedings after an inordinate lapse of time. To do so, in our considered opinion, would lead to abuse of the said provision by indolent assessees who intentionally choose not to obtain and submit declarations in Form 'C' within the stipulated time and only upon coercive proceedings being undertaken to recover the tax, rush to Court and seek reopening of the proceedings under the garb of enlargement of time under Rule 12(7) of the Rules to file such forms without valid justification. Amendment to the said Rule truncating the period for submission of such forms indicates the legislative intention to ensure that the assessment proceedings are not unnecessarily dragged due to dilatory tactics adopted by the assessee in submitting declaration forms to claim exemption or concessional rate of tax, as the case may be, after the assessment order is passed. While deserving cases of unintentional delay ought to be condoned, law cannot be permitted to 2 W.P.No.11565 of 2021 dated 06.07.2021 (APHC) 7 JB, J & KSR, J W.P.No.3757 of 2021 be misused at the hands of an indolent litigant by mechanically condoning delay without valid justification.
15. In the factual matrix, as no 'sufficient cause' has been made out by the petitioner to explain the delay in filing declarations in Form 'C', we are of the opinion no case for directing to reopen the assessment is made out.
16. Accordingly, the Writ Petition is dismissed.
There shall be no order as to costs.
Pending miscellaneous petitions, if any, shall stand closed.
__________________ JOYMALYA BAGCHI, J ________________ K.SURESH REDDY, J Date: 19.07.2021 RAR