TMI Blog2023 (8) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... Interpretation of statute - Whether Section 42(3) is in itself the substantive provision provided under the JVAT Act for initiation of re-assessment proceeding or it merely enumerates additional circumstances/grounds under which re-assessment proceeding can be initiated under the substantive provision of re-assessment contained under Section 40 of the JVAT Act? - HELD THAT:- The Hon ble Supreme Court, in Mafatlal Industries [ 1996 (12) TMI 50 - SUPREME COURT] , has clearly laid down that the phrase levy and collection indicates that all the steps in making a man liable to pay a tax and exaction of tax from him must be in accordance with law. All steps must be taken according to statutory provisions and no one can be subjected to levy and collection of tax without authority of law. Completion of assessment of an Assessee confers valuable right upon the said assessee and the said assessment proceeding can be subjected to re-assessment strictly in accordance with the statutory provisions contained under the Act - under the scheme of the Act, there is provision for assessment, self-assessment, audit assessment, assessment of dealers not registered, and, specific provisions have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether Section 42(3) is an independent provision conferring power of re-assessment or is merely as additional ground conferred under the Act upon the assessing authority for carrying out re-assessment proceedings? - HELD THAT:- What has been dispensed with in Section 42(3) is the requirement of recording reasons to believe only. It is under the said circumstances, non-obstante clause was not inserted in Section 42(3) extending the period of limitation from the date of receipt of audit objection, and, thus, the period of limitation would be governed by Section 40(1) read with 40(4) of the JVAT Act - If the assessing authority is allowed to initiate repeated re-assessment proceeding against an Assessee merely on the dictate of Audit Party, there would be no finality of assessment and the Assessee would be having domical sword hanging over in it in perpetuity, which is not the scheme of the Act. Since it is already declared that Section 42(3) is to be read with Section 40(4) of JVAT Act and limitation period for carrying out re-assessment proceeding is five years, we are not deliberating further over the said issue. However, it would be appropriate to also refer to the Judgment r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f limitation bars the remedy but not the right. Thus, in view of the ratio of the Judgment of Hon ble Apex Court, in the case of S. Kasi read with the amendments carried out by the Parliament and the State Legislature extending the period of limitation by amending Acts, it is opined that the benefit of suo-motu extension orders of Hon ble Apex Court would not be available to original adjudication proceedings which is to be governed by applicable Statutes including its amendments. The suo-motu orders extending the period of limitation passed by Hon ble Apex Court is not applicable to original adjudication proceedings and re-assessment proceedings would be governed by provisions of JVAT Act read with the Amendment Act of 2020. Application disposed off. - HON BLE MR. JUSTICE RONGON MUKHOPADHYAY AND HON BLE MR. JUSTICE DEEPAK ROSHAN For the Petitioner : Mr. Sumeet Gadodia, Advocate Mrs. Shilpi Sandil Gadodia, Advocate Mr. Ranjeet Kushwaha, Adavocate For the Respondent-State: Mr. Rajiv Ranjan, Advocate General, Mr. Ashok Yadav, Sr. S.C.-1, JUDGMENT 1. Both these writ applications have been preferred by common Assessee-M/s. Rungta Mines Limited raising comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer i.e. Deputy Commissioner of Commercial Taxes, Chaibasa Circle, wherein turnover of the Petitioner was accepted and no dispute pertaining to loss suffered by the Petitioner was raised, and, admitted tax liability pursuant to said original assessment order dated 10.01.2017 was duly discharged by the Petitioner. 6. However, subsequently, an audit objection was raised vide Audit Objection No. 87/2019-20 by the office of the Accountant General, wherein by placing reliance upon Rule 25(4) of JVAT Rules 2006, it was suggested that since Petitioner-unit sold M.S. Billets/Ingots below its cost price by selling it at a loss of Rs. 12.78 crores, the same was liable to be taxed @ 5% , as Rule 25(4) of JVAT Rules provides, inter alia, that if a dealer sells goods less than its cost price, differential amount i.e. loss amount would be leviable to tax at applicable rate. 7. Subsequent to aforesaid objection, Notice bearing No. 456 dated 19.06.2020 in statutory Form JVAT 302 was issued to the Petitioner initiating proceeding for reassessment. Said Notice was issued in exercise of power under Section 40(1) read with 42(3) of the JVAT Act. Petitioner appeared and filed its repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy of appeal. In this regard, he has placed reliance upon a decision of the Hon ble Apex Court in the case of State of Punjab Ors. Vs. Bhatinda District Cooperative Milk Producers Union Ltd., reported in (2007) 11 SCC 363 (Para-23). Further, while placing reliance upon the order passed by Commercial Taxes Tribunal, Jharkhand it was contended that Tribunal while interpreting Section 40 read with Section 42(3) of the JVAT Act in respect of other Assessees have already held that Section 42(3) does not prescribe any period of limitation, Learned counsel contended before us that since the highest authority under JVAT Act i.e. Commercial Taxes Tribunal has already interpreted Section 40 read with Section 42 of JVAT Act and has held that there is no period of limitation prescribed for initiation of re-assessment proceeding pursuant to audit objection, an alternative remedy of appeal/revision available to the Petitioner would be an exercise in futility as officials of Commercial Taxes Department would be bound by the decision of the Tribunal. On the basis of the above, by placing reliance upon the decisions of Hon ble Supreme Court in the case of Onkarlal Nandlal Vs. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsive reliance upon the provisions of Section 42 of the JVAT Act, it was submitted that Section 42(1) and Section 42(2) contained non-obstante clause extending the period of limitation prescribed under the Act for proceeding to assess and/or re-assess the tax payable by the dealer under certain circumstances/grounds. It has been submitted that there is no such non-obstante clause under Section 42(3) of the JVAT Act. 12. It has been brought to our notice that Section 42(1) of the JVAT Act enables the Assessing Authority to proceed to re-assess the tax payable by a dealer if pursuant to the Judgment or order passed by any Court or Tribunal which has become final, the prescribed authority is of the opinion that earlier order passed by it in respect of any dealer is erroneous or prejudicial to the interest of revenue being not in accordance with the ratio of a judgment delivered by any Court or Tribunal in a subsequent proceeding. It was submitted that Section 42(1) provided for an additional ground for initiation of re-assessment proceeding over and above the grounds on which re-assessment proceedings could have been initiated under Section 40(1) of JVAT Act and specifically prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation for completion of re-assessment proceeding would be governed by Section 40(4) of the JVAT Act. Reliance in this regard was placed on two decisions of the Hon ble Supreme Court in the case of Sher Singh vs. State of Haryana reported in (2015) 3 SCC 724, [Para 13(2)]; and G.K. Choksi Company Vs. Commissioner of Income Tax, reported in (2008) 1 SCC 246 [Para 16]. Reliance was also placed on the principle of noscitur a sociis and it was contended that while interpreting Section 42 of the JVAT Act, said principle is required to be applied. Petitioner relied upon a decision of the Hon ble Supreme Court in the case of Maharashtra University vs. PrakashMandal, reported in (2010) 3 SCC 786 [paras 27 28] in support of the said proposition. 15. Per contra, learned Advocate General, Mr. Rajiv Ranjan, appearing for the State of Jharkhand, assisted by Mr. Ashok Kumar Yadav, Sr. S.C.-1, submitted that on a plain reading of Section 42(3), it would be evident that said Section is an independent Section enabling initiation of re-assessment proceeding pursuant to an objection or observation raised by Comptroller and Auditor General of India either in facts or in law. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be initiated in respect of a dealer whose assessment or re-assessment or scrutiny assessment has already been completed. Accordingly, it was contended that said Section even provides for re-assessment to be undertaken of an order of re-assessment already passed in respect of an Assessee and, thus, Section 40(4) cannot be applied interpolating the period of limitation prescribed under the said Section. While referring to Section 42(1) and 42(2), it was submitted that said Section also provides for initiation of re-assessment proceeding where, pursuant to an order passed by a Court or Tribunal, an earlier order passed in respect of a dealer is found to be erroneous or prejudicial to the interest of revenue or where an order is required to be passed for giving effect to an order in appeal or revision passed by any Court or Tribunal. It was submitted that it is true that under the said Section, non-obstante clause has been inserted extending the period of limitation for carrying out assessment or re-assessment proceeding on happening of the events prescribed under the said Section, but, merely because non-obstante clause has been provided in sub-section (1) or (2) of Section 42 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order would be deemed to have been passed within the statutory period. 19. Mr. Sumeet Gadodia, Advocate, while advancing the rejoinder arguments, vehemently opposed to the plea of extension/exclusion of the period of limitation from 15.03.2020 to 28.03.2022 in view of the order passed by the Hon ble Apex Court in Suo Motu Writ Petition No.3 of 2020. It was submitted that said plea was never raised by the Respondents either while passing the re-assessment order or while filing Counter Affidavit, but, for the first time, said plea has been raised during oral arguments. The orders passed by Hon ble Apex Court in Suo Motu Writ Petition No. 3 of 2020, being orders dated 23.03.2020, 08.03.2021, 27.04.2021, 23.09.2021 and the order dated 10th January, 2022 has been referred by the counsel for the Petitioner and it was submitted that extension granted by the Hon ble Supreme Court applies only to quasi-judicial and judicial matters relating to petitions/applications/suits/appeals/all other proceedings and would not apply to original adjudication proceeding. Reliance has also been placed upon a Circular dated 20th July, 2021 issued by Government of India, Ministry of Finance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon decision of the Hon ble Apex Court in the case of S. Kashi vs. State through the Inspector of Police Samaynallur Police Station, Madurai District, reported in 2020 SCC OnLine SC 529 to contend inter alia that in the said Judgment, Hon ble Supreme Court, while interpreting suo-motu orders of extension of limitation, has clearly held that said orders were issued keeping in view the plight of litigants across the country due to widespread of COVID 19 virus. 21. Lastly, reliance was placed upon a decision in the case of State of Punjab Ors. Vs. Bhatinda District Cooperative Milk Producers Union Ltd., reported in (2007) 11 SCC 363 (Para 15 and 24), and it was submitted that even if, for the sake of arguments, it is presumed that no period of limitation has been prescribed under Section 42(3), then also, power is to be exercised within a reasonable period of time which is to be ascertained from the scheme of the Act. It was submitted that under the scheme of the Act, particularly Section 35(8), period of limitation has been prescribed for three years for completion of assessment. Further, for completion of audit assessment and assessment of dealers who failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed any credit therein; the prescribed authority may, serve or cause to serve a notice on the dealer and after giving the dealer reasonable opportunity of being heard and making such inquiries as he considers necessary, proceed to assess to the best 5 of his judgment, the amount of tax due from the dealer in respect of such turnover, and the provisions of this Act shall so far as may be, apply accordingly. Provided, for Clause (a), where the prescribed authority has reasons to believe that the dealer has concealed, omitted or failed to disclose willfully, the particulars of such turnover or has furnished incorrect particulars of his such turnover and thereby return figures are below the real amount, the prescribed authority shall proceed to assess or reassess the amount of tax due from the dealer in respect of such turnover and the provisions of this Act, shall so far as may apply accordingly and for this purpose the dealer shall pay by way of penalty a sum equal to thrice the amount of additional tax assessed. (2) If the prescribed authority in the course of any proceeding or upon any information, which has come into his possession before assessment or otherwise, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Act, 1956 should have been assessed under the provision of a law other than that under which it was assessed, then in consequence of such order or to give effect to any finding or direction contained in such order such turnover and part thereof, may be assessed or reassessed, as the case may be, to a tax at any time within two years from the date of such order, notwithstanding any limitation period which would otherwise be applicable to, the assessment or reassessment made. (3) Whether an objection or observation relating to either in fact or in law, has been made by the Comptroller and Auditor-General of India, in respect to an assessment or re-assessment made or on scrutiny of any return filed u/s 33 of this Act; the prescribed authority shall proceed to re-assess the dealer with respect to whose assessment or re-assessment or scrutiny, as the case may be, the objection or the observation has been made. Provided that no such order shall be passed without serving upon the dealer concerned a notice requiring him to file, within one month of the date of the service of such notice, a reply to such objection or the observation as raised by the Comptroller and Auditor-G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving, inter alia, as under:- 13. It would have been futile in this case for the assessee to have gone to the court of revision which was bound by the ruling of the Allahabad High, Court reported in Swastika Tannery of Jaimau v Commissioner of Sales Tax U.P. Lucknow and it would have been equally futile to have gone to the High Court on a reference. The matter was more easily disposed of by giving special leave in this Court and we therefore felt that this was one of those extraordinary cases in which the ends of justice would be better served, by avoiding a circuity of action and by dealing with this matter in this Court directly. [Emphasis supplied]. 26. In view of the aforesaid ratio laid down by Hon ble Apex Court and in view of undisputed fact that in respect of other Assessees, Commercial Taxes Tribunal has already taken a view that Section 42(3) does not prescribe any period of limitation, in our opinion, it would have been a futile exercise on the part of the writ petitioner to first approach the Appellate and/or Revisional Authority on the jurisdictional issue of limitation. 27. In view of cumulative facts and circumstances, we hold that writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not complied with, the liability to pay a tax cannot be said to be according to law. In that case, a validly passed municipal law was sought to be enforced, but the objections of the taxpayer were not dealt with by the Municipal Council as a whole but by a sub-committee. The Court held that this was erroneous. The phrase levy and collection' indicates that all the steps in making a man liable to pay a tax and exaction of tax from him must be in accordance with law. There must be a valid statute which will be properly followed. All steps must be taken according to statutory provisions. Recovery of tax must also be according to law. No one can be subjected to levy or tax or deprived of his money by the State without authority of law. (Emphasis supplied). 30. The Hon ble Supreme Court, in the said Judgment, has clearly laid down that the phrase levy and collection indicates that all the steps in making a man liable to pay a tax and exaction of tax from him must be in accordance with law. All steps must be taken according to statutory provisions and no one can be subjected to levy and collection of tax without authority of law. 31. Completion of assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover of a dealer has-- (a) escaped assessment; or (b) been under-assessed; or (c) been assessed at lower rate; (d) been wrongly allowed deduction therefrom; or (e) been wrongly allowed credit therein. 35. Thus, under Section 40(1), the prescribed authority, upon information or otherwise received has to record his reasons to believe for initiating re-assessment proceeding if turnover of a dealer for any period has (a) escaped assessment; (b) been under-assessed; (c) been assessed at lower rate; (d) been wrongly allowed deduction therefrom; or (e) been wrongly allowed credit therein. 36. Thus, under Section 40(1), Assessing Authority can initiate re-assessment proceeding only after recording reasons to believe of the circumstances enumerated therein for carrying out re-assessment proceeding. 37. Section 40(1) read with Section 42 of JVAT Act would reveal that Section 42 prescribes additional grounds/circumstances in which re-assessment proceeding can be initiated by the prescribed authority. 38. Section 42(1) specifically provides that the prescribed authority may initiate re-assessment proceeding if in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf, the said order can be passed within two years from the date of the order irrespective of the fact that period of limitation for passing assessment or re-assessment order has expired. 41. It is evident that Section 42(1) and 42(2) of the Act contains non-obstante clause and the said clause appears to have been deliberately inserted by the Legislature wherein additional ground for opening of assessment has been laid down which is contingent upon happening of an event, as laid down in the aforesaid Section. However, interestingly, while inserting provisions of Section 42(3), the Legislature, in its wisdom, has not prescribed any non-obstante clause extending the period of limitation for carrying out re-assessment proceeding. A careful reading of Section 42(3) would reveal that Section 42(3) provides, inter alia, that where an objection or observation relating either in facts or in law is raised by the Comptroller and Auditor General of India, the prescribed authority shall proceed to re-assess the dealer. In order to appreciate the contours of Section 42(3), reference may be made to Section 40(1) which contained provisions for initiation of re-assessment proceeding by the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recording of reasons to believe by the Assessing Authority for initiation of re-assessment proceeding. 44. Learned Advocate General vehemently argued that Section 42(3) mandates the Assessing Authority to proceed with re-assessment pursuant to receipt of audit objection and the Assessing Authority is not required to be satisfied with the audit objection and it is compulsory upon the said authority to proceed for re-assessment. It is in that background, it has been submitted by learned Advocate General that the Legislature, deliberately, has not provided any period of limitation under Section 42(3) and said Section is an independent Section enabling the Assessing Authority for proceeding with the re-assessment proceedings pursuant to audit objection. 45. Learned Advocate General, by placing reliance upon Articles 148 and 149 of the Constitution of India, fervidly submitted that since the Comptroller and Auditor General of India is a constitutional authority and is entitled to audit the accounts of State Government, an objection/ observation made by the said authority has to be given due weightage and, it is for the said reason that by law it has been made mandatory by the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed with re-assessment and the Assessing Authority has to record his satisfaction on the audit objection. In the said Judgment, Hon ble Supreme Court noticed that the Assessing Authority was not agreeing with the audit observation, but, despite the same, proceeded to issue Notice on the ground of direction issued by Audit Party and not on its personal satisfaction and it was clearly held by Hon ble Apex Court that same was not permissible under law; and the very initiation of re-assessment proceeding was declared as without jurisdiction. Relevant extract of the Judgment is quoted herein-under:- 34. From a perusal of the last paragraph of the aforementioned report of the audit party, it is clear that the assessing officer was of the opinion that as the goods had not been transferred to the appellant Company but had been consumed, so it does not come under the purview of taxation. In other words, the assessing officer was not satisfied on the basis of information given by the audit party that any of the turnover of the appellant Company had escaped assessment so as to invoke Section 19 of the State Act. From the above, it also appears that the assessing officer had to issue noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. 28. This ejusdem generis principle is a facet of the principle of noscitur a `sociis. The Latin maxim noscitur a sociis contemplates that a statutory term is recognised by its associated words. The Latin word sociis means society . Therefore, when general words are juxtaposed with specific words, general words cannot be read in isolation. Their colour and their contents are to be derived from their context. 51. A holistic reading of Section 42 would reveal that said provision contains three different situations/circumstances under which re-assessment proceeding can be initiated. So far as Section 42(1) and 42(2) is concerned, the Legislature has deliberately inserted the non-obstante clause extending the period of limitation but the Legislature has not extended the period of limitation pursuant to audit objection under Section 42(3). This, in our opinion, has been deliberately omitted by the Legislature as it was conscious that re-assessment proceeding would have been otherwise initiated under Section 40(1) on information being received by the Audit Party , but the only further requirement was to record reasons to believe . What has been dispensed with in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (supra), re-assessment proceeding has to be initiated within a reasonable period of time and what would be reasonable period of time would depend upon the facts and circumstances of the case. Since we have already declared that Section 42(3) is to be read with Section 40(4) of JVAT Act and limitation period for carrying out re-assessment proceeding is five years, we are not deliberating further over the said issue. However, it would be appropriate to also refer to the Judgment rendered by Hon ble Supreme Court in the case of State of Punjab Ors. Vs. Bhatinda District Cooperative Milk Producers Union Ltd. (supra), wherein Hon ble Supreme Court, while examining the provisions contained under the Punjab General Sales Tax Act conferring power of suo-motu revision upon the Commissioner, held that although said Section prescribed no period of limitation but the same would not mean that suo-motu power can be exercised at any time. Hon ble Supreme Court, in the said Judgment, held that if no period of limitation is prescribed, statutory authority must exercise jurisdiction within reasonable time and the reasonable period would depend upon the nature of the statute, liabilities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of the order of the Hon ble Supreme Court to the limitations of time lines under GST Law. The matter has been examined on the basis of the legal opinion received in the matter. The following is observed as per the legal opinion:- (i) The extension granted by Hon ble Supreme Court order applies only to quasi-judicial and judicial matters relating to petitions/applications/suits/appeals/all other proceedings. All other proceedings should be understood in the nature of the earlier used expressions but can be quasi-judicial proceedings. Hon ble Supreme Court has stepped into to grant extensions only with reference to judicial and quasi-judicial proceedings in the nature of appeals/ suits/petitions etc. and has not extended it to every action or proceeding under the CGST Act. (ii) For the purpose of counting the period(s) of limitation for filing of appeals before any appellate authority under the GST Law, the limitation stands extended till further orders as ordered by the Hon ble Supreme Court in Suo Motu Writ Petition (Civil) 3 of 2020 vide order dated 27th April, 2021. Thus, as on date, the Orders of the Hon ble Supreme Court apply to appeals, reviews, revisions et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d till 31st August, 2020. Even amendments were carried out, and, under Section 42(1) and 42(2) of the Act and the period of limitation which was expiring on 31st March, 2020 was extended up to 31st August, 2020. This is an Act promulgated by the State Legislature relating to the JVAT Act itself and Respondent-State is estopped in law to contend contrary to its own Statute. Thus, by virtue of the said Amendment Act, 2020, the period of limitation was extended up to 31st August, 2020 for the Assessment Year 2014-15, but, admittedly, re-assessment order was passed on 08.03.2022 i.e., much beyond the extended period of limitation under the Amended Act. It is profitable, at this stage, to refer to the Judgment of Hon ble Apex Court in the case of S. Kasi (supra), wherein Hon ble Apex Court was considering the issue as to whether in view of the suo-motu orders passed by it, the period of submission of charge-sheet, as prescribed under Section 167(2) of Cr.P.C., would also stand extended disentitling the accused for grant of default bail. In the said Judgment, Hon ble Apex Court has noticed the reasons for passing of the order of extending the period of limitation and, vide Para-16, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et even within the stipulated period before the Magistrate (Incharge). 58. A careful reading of the Judgment of Hon ble Apex Court would leave no iota of doubt in our mind that the purpose of extending the period of limitation was for the benefit of litigants who have to take remedy in law as per the applicable statute for a right, as the law of limitation bars the remedy but not the right. Thus, in view of the ratio of the Judgment of Hon ble Apex Court, in the case of S. Kasi (supra) read with the amendments carried out by the Parliament and the State Legislature extending the period of limitation by amending Acts, we are of the opinion that the benefit of suo-motu extension orders of Hon ble Apex Court would not be available to original adjudication proceedings which is to be governed by applicable Statutes including its amendments. 59. In view of the cumulative facts and circumstances mentioned hereinabove, we answer the issues framed by us in the following manners:- 60. Issue No. (i) :- The writ petitions having raised jurisdictional question of limitation are maintainable and, even otherwise, it would have been an exercise of futility for the Writ Petitioner to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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