30 Apr 2121
Case : Greatship (India) Ltd. v. State of Maharashtra & Ors. Writ Petition No. 92630 of 2020
Court : Bombay High Court
Bench : Justice Ujjal Bhuyan & Justice Milind N. Jadhav
Decided on : 30 Apr 2121
Section 23 of Maharashtra Value Added Tax Act, 2002
The Central Sales Tax Act, 1956
Brief Facts & Procedural History
1. Petitioner is a company engaged in the business of providing services to people who are involved in the exploration and production of oil and natural gases. This service includes carrying men and providing drilling services by using the vessels and petitioners deal with public sector undertakings as well as private entities. Petitioner stated that they have discharged service tax under Finance Act 1994 at the rate prevailing during the financial year of 2015-16.
2. Respondent 3, Assistant Commissioner of State issued a notice of assessment and called upon the petitioner to produce relevant documents and to show cause as to why South men should not be done and section 23 of Maharashtra Value Added Tax Act, 2002. In reply of which petitioner submitted all the relevant documents but respondent 3 through another letter called upon the petitioners to submit documents on the failure of which assessment will be done ex parte, in reply of which partition are approached the respondent tree and informed that the documents were already submitted for the financial year 2015-16
3. After this no consequential steps were taken and the limitation period for making an assessment for that financial year was five years as per section 23 of Maharashtra Value Added Tax Act, 2002 which is on 31st March 2020 just two weeks before the expiry of limitation. Respondent 3 telephonically inform the petitioner about the personal hearing and asked to participate
4. Several attempts were made by the petitioner to participate in that hearing but many times it was told that no hearing took place and finally petitioner wrote a letter that all the relevant documents for the financial year 2015-16 had been already submitted.
5. Petitioners stated that respondents 3 has passed two orders determining tax liability along with interest and penalty without giving them an opportunity of being heard under Maharashtra Value Added Tax Act, 2002 and Central Sales Tax Act, 1956 And also stated that the impugned order was barred by the period of limitation.
6. To impugned orders of respondent three petitioners approached honourable High Court under writ jurisdiction.
Issues of the Case
1. Whether the order of assessment was passed or signed by respondent 3 on 20th March 2020 or any date prior to 31st March 2020, as asserted by respondent 3?
2. Whether an order of assessment is required to be communicated or just passing it and putting it in the file will suffice?
The Observations of the Court
1. The Honourable Bombay High Court referred to various sections of relevant statutes for determining the correct procedure for the assessment of returns. Court referred to section 23 of Maharashtra Value Added Tax Act, 2002 which provides for assessment and reliance was placed on sub-section 2 which provides that if the dealer fails to comply with the terms of any notice then-commissioner shall complete the assessment procedure however it also talks about the limitation for making such assessment which is 4 years from the end of the year containing the period to which the return relates. Also referred to section 26 of Maharashtra Value Added Tax, 2002 which states that the appeal is required to be filed within 60 days from the passing of the order against which appeal is to be filed. Court also referred to Internal Circular No. 13A of 2018 which has been issued by the Commissioner of Sales Tax laying down the guidelines for assessment. Clause 6.1 of Internal Circular No. 13-A talks about the procedure for assessment in cases of ex parte.
2. From all the above analysis of various sections and guidelines the Honourable Bombay High Court observed that there is a particular format for passing assessment orders manually. One of the important observations made by the Honourable Bombay High Court was that the assessment orders passed manually shall not be served electronically to the dealers for which the signature of the person to which order is to be served has to be obtained for the purpose of acknowledgement of service and that date will be considered as the date of manual services.
3. The Honourable Bombay High Court observed that the assessment order which was passed manually on 20th March 2020 under section 23 of Maharashtra Value Added Tax Act, 2002 for the year 2015-16 and section 23 of Maharashtra Value Added Tax Act, 2002 is very clear that, if the dealer does not appear on the date specified then the commissioner shall assess the dealer according to his judgment and also the limitation period for assessment was to expire on 31st March 2020, thus order has to be passed on or before 31st of March.
4. The Honourable Bombay High Court also noted that as per Rule 87, the assessment orders and demand notice can be served by different methods but in the case of personal service, the officer or the person serving an assessment order must get the signature of the person to whom the service was made in order to get it acknowledged. In the present case, there was no mention of any date when the assessment orders were manually served and also there is no endorsement on the body of assessment orders or any separate endorsement sheet.
5. Internal circulars clearly mentions that the assessment order must contain the date of the order when it was passed manually as well as the date on which the dealer was served with the assessment order which was missing in the present case. Further, it also that if the assessment order is passed manually then in that case, print out of this order should not be taken as it would not be considered to be a proper assessment order and it also prohibits the delivery of assessment order electronically to the dealer.
6. The Honourable Bombay High Court rejected the clarification made by respondent 3 regarding the service of assessment order on the grounds,
a. Since the assessment order was passed manually, respondent 3 was prohibited from service serving the copy through email.
b. Uploading of assessment order was mentioned on 14 July 2020 as mentioned in the email copies which leads to the clear inference that those assessment orders were passed on 14th July 2020.
7. The Honourable Bombay High Court came to the conclusion that all the above facts lead to one conclusion that the impugned order of assessment could not have been passed manually on 20th March 2020 or on any date prior to 31st March 2020. And for that court referred to the judgment of M Ramaishtaiah, Raja Harishchandra Raj Singh v. Deputy Land Acquisition Officer, AIR 1961 SC 1500, wherein Supreme Court clearly mentioned that if the award is pronounced without the notice of the date of pronouncement and the aggrieved party is not present, then, in that case, the award can be said to be made when it is communicated to the party later and also noted that the expression “the date of the award” would mean the date when the award is actually communicated to the party either actually or constructively. The same position of law was reiterated by Supreme Court in Assistant Transport Commissioner v. Nand Singh, (1979) 4 SCC 19.
8. Thus, the Honourable Bombay High Court came to the conclusion that the impugned orders of assessment could not have been passed on 20-03-2020 or before 31-03-2020 and was passed beyond the period of limitation and thus are not valid according to the law.
The Decision Held by the Court
The impugned orders of assessment allegedly passed on 20-03-2020 and notices of demand are set aside.