1998 (8) TMI 547 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of reassessment orders for S.Y. 2029, 2030, and 2032 beyond the prescribed period.
2. Validity of assessment orders for S.Y. 2033 and 2034 beyond the prescribed period.
3. Legality of stay orders granted under section 42(1) of the Gujarat Sales Tax Act, 1969.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Orders for S.Y. 2029, 2030, and 2032 Beyond the Prescribed Period:
The petitioner challenged the reassessment orders made on April 30, 1985, arguing they were beyond the three-year period from the date of service of notice as required by section 44 of the Gujarat Sales Tax Act, 1969. Notices for reassessment were served on October 10, 1978, and the reassessment should have been completed by October 9, 1981. The court noted that no stay order was made before the expiry of the limitation period, and any stay order made after the period of limitation could not extend the period. Thus, the reassessment orders for S.Y. 2029, 2030, and 2032 were declared without jurisdiction and void.

2. Validity of Assessment Orders for S.Y. 2033 and 2034 Beyond the Prescribed Period:
The petitioner argued that the assessment orders were made beyond the two-year period prescribed by section 42 of the Gujarat Sales Tax Act. However, the court clarified that the actual period was three years from the end of the year in which the last return was filed. For S.Y. 2033, the period ended on the last day of S.Y. 2037, and for S.Y. 2034, it ended on the last day of S.Y. 2038. The assessment proceedings were stayed within the limitation period, and thus, the assessment orders for these years were not time-barred.

3. Legality of Stay Orders Granted Under Section 42(1) of the Gujarat Sales Tax Act, 1969:
The petitioner contended that the stay orders granted under section 42(1) were without valid reasons and violated the Supreme Court's decision in Fag Precision Bearings v. Sales Tax Officer. The court observed that the stay orders merely stated that more time was needed to complete the assessment, which is not a valid reason as per the Supreme Court's ruling. The stay orders did not provide extraordinary circumstances or supervening reasons, rendering them invalid. Consequently, the period covered by these stay orders could not be excluded for computing the limitation period.

Conclusion:
The court quashed and set aside all the impugned orders passed by the second respondent staying the assessment and reassessment proceedings, the impugned assessment and reassessment orders made on April 30, 1985, and the demand notices issued on September 12, 1985. The rule was made absolute with no order as to costs.