Case Law Details
Chakkas Enterprises Vs Chief Commissioner of State Taxes and Others (Andhra Pradesh High Court)
Andhra Pradesh High Court has set aside the VAT assessment order against Chakkas Enterprises, ruling that the assessment was issued beyond the prescribed limitation period. The case involved tax demands for the period between June 2, 2014, and June 13, 2017, along with a penalty notice dated September 16, 2021. The petitioner, a registered dealer under the A.P. VAT Act, 2005, challenged the attachment of their bank accounts and immovable property, contending that the assessment order was issued after the four-year limitation period under Section 21(4) of the Act. The tax authorities argued that the petitioner deliberately evaded service of notices and that the assessment was based on a best judgment assessment due to non-cooperation. They also cited Section 21(5), which extends the limitation period to six years in cases involving willful tax evasion.
The High Court found that the assessment order did not establish willful suppression of facts, which is a prerequisite for invoking Section 21(5). Since no evidence of deliberate tax evasion was cited in the order, the court ruled that the four-year limitation under Section 21(4) applied. Consequently, the assessment order and penalty notice were deemed invalid and beyond limitation. The court also quashed all related actions, including the attachment of the petitioner’s bank accounts and immovable property. With this ruling, all proceedings initiated under the disputed assessment were nullified.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
Heard Sri P. Venkata Sai Rajesh, learned counsel appearing for the petitioner and learned Government Pleader for Commercial Tax appearing for respondents 1 to 3.
2. These two writ petitions have been filed by the same petitioner in relation to tax demand arising for the tax period 02.06.2014 to 13.06.2017 and the consequent order dated 16.09.2021 in relation to attachment of property and bank accounts of the petitioner.
3. The petitioner is registered as a dealer under the A.P. Value Added Tax Act, 2005 (for short ‘the Act’) and has been filing his returns in relation to the tax period mentioned above. The Commercial Tax Officer, Addanki Circle, had passed an assessment order, dated 24.08.2021, and a subsequent notice of penalty dated 16.09.2021. The petitioner contends that he did not receive these orders or notices until the bank accounts of the petitioner were attached and subsequently immoveable property of the petitioner was also attached for recovery of the amounts, which arose out of the order of assessment, dated 24.08.2021.
4. The petitioner had initially challenged only the orders of attachment of the bank account and the immoveable property. However, after receipt of the order of assessment, the petitioner has amended the prayer in W.P.No.30501 of 2023 raising a challenge to the assessment order also.
5. The case of the petitioner is that the tax period in question ends on 30.06.2017 and consequently the limitation for issuing an assessment order under Section 21 (4) of the Act is restricted to four years from the end of the period, which would be 30.06.2021. However, the order has been passed on 24.08.2021 and is consequently beyond limitation and nonest.
6. The Assessing Officer has filed a counter affidavit stating that the petitioner had deliberately avoided service of notices and deliberately refused to cooperate with the Assessing Officer. She would also contend that the notice of the order was sent to the last known business address of the petitioner by registered post and the same had been served on 28.07.2021 itself. The Assessing Officer would also contend that subsequent penalty notice, dated 16.09.2021, was also sent to the business address of the petitioner, under registered post, and the same was served on 04.10.2021. The Assessing Officer, after contending that the writ is not maintainable as there is an effective alternative remedy of appeal, would also contend that the provisions of Section 21(5) would be applicable wherein the period of limitation would be six years, ending on 30.06.2023.
7. The learned Government Pleader for Commercial Tax would contend that the impugned assessment order came to be passed, on a best judgment assessment basis, in view of the refusal of the petitioner to attend to the assessment proceedings and in view of the fact that no books of accounts or other material have been placed before the Assessing Officer. Learned G.P. would contend that in such circumstances, it would have to be held that there is willful suppression of facts, due to which provisions of Section 21(5) of the Act would be applicable.
8. A perusal of the impugned order would show that the entire order goes on the basis of best judgment assessment, relying upon the returns filed by the petitioner. There is nowhere any mention of suppression of facts, much less, willful suppression of facts, resulting in willful evasion of tax, which is the sine qua non, for invoking Section 21(5) of the Act. In such circumstances, the provisions of Section 21(5) of the Act would not be applicable and the period of limitation would be four years, as set out under Section 21(4) of the Act.
9. As the impugned assessment order has been passed beyond the period stipulated under Section 21(4) of the Act, it must be held that the impugned order is beyond limitation and non-est.
10. Accordingly, both the writ petitions are allowed setting aside the impugned assessment order of the Commercial Tax Officer, Addanki Circle, dated 24.08.2021 and penalty notice dated 16.09.2021. Consequently, all the consequential proceedings of attachment of bank account as well as the immoveable property of the petitioner are also set aside. There shall be no order as to costs.
As a sequel, pending miscellaneous applications, if any, shall stand closed.
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