2025 (5) TMI 381 - HC - GST

Time limitation of assessment order - the orders have been passed more than four years after the relevant assessment periods had concluded - HELD THAT - A similar issue had come up before a Division Bench of this Court in W.P. No.12529 of 2024 2025 (4) TMI 1284 - ANDHRA PRADESH HIGH COURT which was disposed of by the judgment dated 21.04.2025. In the said judgment this Court applying the principles laid down by the Hon ble supreme Court in S. Kasi vs. State through the Inspector of Police Samaynallur Police Station Madurai District 2020 (6) TMI 727 - SUPREME COURT and the principles laid down by a Division Bench of this Court in V-Guard Industries Limited vs. The Commercial Tax Officer Mangalagiri Circle and Ors. 2022 (1) TMI 1012 - ANDHRA PRADESH HIGH COURT had held that the benefit of extension of limitation granted by the Hon ble Supreme Court would not be available to the authorities exercising power under various statutes and the said extension of limitation would be available only to the members of the general public who had approached the relevant Fora after the period of limitation had expired. In the present case Rule 14A (5A) of the A.P. Central Sales Tax (A.P.) Rules stipulates that every dealer shall be deemed to have been assessed to tax based on the returns filed by him if no assessment is made within a period of four years from the date of filing of the return - This would mean that any assessment would have to be carried out within four years from the date on which the returns would have to be filed. In the present case the assessments carried out in relation to the assessment orders 2014-2015 and 2016-2017 are clearly beyond the period of four years from the last date on which the returns are to be filed for the month of March for these two assessment orders. As far as the assessment for the year 2015-2016 is concerned the return for the month of March 2016 would have been filed by 20th April 2016 and consequently the assessment for the month of March could have been carried out up to 20th April 2020. As the assessment order has been passed on 23.03.2020 it would have to be held that the assessment for the year 2015-2016 except for the month of March is beyond limitation. Conclusion - The statutory limitation period under Rule 14A (5A) is mandatory and binding and assessments beyond this period are invalid. The assessment for the years 2014-2015 and 2016-2017 have to be held to be beyond limitation and the assessment orders dated 12.07.2021 and 30.07.2021 stand set aside - Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in these writ petitions are:

Whether the assessment orders passed under the Central Sales Tax Act for the periods 2014-2015, 2015-2016, and 2016-2017 are barred by limitation, given that they were issued more than four years after the relevant assessment periods concluded;
Whether the extension of limitation period granted by the Hon'ble Supreme Court through suo motu writ petitions during the COVID-19 pandemic applies to the Assessing Officer's power to assess tax under the Central Sales Tax Act;
The interpretation and applicability of Rule 14A (5A) of the A.P. Central Sales Tax (A.P.) Rules, which stipulates the limitation period for assessment based on returns filed by dealers;
The consequences of assessments being held barred by limitation, including the validity of assessment orders and the possibility of remand for fresh assessment for certain periods.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the assessment orders are barred by limitation

Relevant legal framework and precedents: The limitation period for assessment under the Central Sales Tax Act is governed by Rule 14A (5A) of the A.P. Central Sales Tax Rules, which provides that if no assessment is made within four years from the date of filing the return, the dealer shall be deemed assessed based on the return filed. The returns are filed monthly by the 20th day of the succeeding month. Therefore, the limitation period for assessment is four years from the 20th of the succeeding month of the month under consideration.

Court's interpretation and reasoning: The Court held that the limitation period for assessments must be calculated from the date on which returns are due to be filed. For example, for the assessment year 2014-2015, the last return would have been filed by 20th April 2015 (for March 2015), and thus the limitation period expired four years later, i.e., 20th April 2019. Since the assessment order was passed on 12.07.2021, it is clearly beyond the four-year limitation period.

Key evidence and findings: The dates of the assessment orders and the statutory due dates for filing returns were critical in determining the limitation period. The assessment orders for 2014-2015 and 2016-2017 were passed well beyond four years from the last return filing date, and the assessment order for 2015-2016 was passed on 23.02.2020, which is beyond four years from the returns due date for months prior to March 2016.

Application of law to facts: The Court applied the limitation rule strictly, holding that assessments beyond four years from the return filing date are barred. For 2015-2016, the Court noted that the assessment order passed on 23.02.2020 was within limitation only for the month of March 2016 (return due 20.04.2016), but beyond limitation for the months prior to March 2016.

Treatment of competing arguments: The petitioner argued that the assessments were barred by limitation. The respondent contended that the limitation period was extended by orders of the Hon'ble Supreme Court during the COVID-19 pandemic. The Court examined this contention in light of binding precedents.

Conclusions: The assessments for 2014-2015 and 2016-2017 were held barred by limitation and set aside. The assessment for 2015-2016 was partially barred (April 2015 to February 2016) and partially within limitation (March 2016). The entire assessment for 2015-2016 was set aside with directions for fresh assessment for March 2016.

Issue 2: Applicability of the Supreme Court's extension of limitation during COVID-19

Relevant legal framework and precedents: The Supreme Court had issued orders suo motu extending limitation periods for filing appeals, suits, petitions, etc., from 15.03.2020 to 28.02.2022 in response to the COVID-19 pandemic. The question was whether this extension applies to the limitation period available to Assessing Officers for passing assessment orders under statutory tax laws.

Court's interpretation and reasoning: The Court relied on a Division Bench judgment of the same High Court and the Supreme Court decision in S. Kasi vs. State through the Inspector of Police, which held that the extension of limitation granted by the Supreme Court was applicable only to members of the general public initiating litigation and not to authorities exercising statutory powers under various enactments.

Key evidence and findings: The Court noted that the extension orders were intended to protect litigants from losing rights due to the pandemic and did not extend to the statutory time limits for authorities to complete assessments.

Application of law to facts: The Assessing Officer's power to assess tax is governed by statutory limitation periods, which are not extended by the Supreme Court's general extension orders. Therefore, the assessments in question could not rely on the extension granted during the pandemic.

Treatment of competing arguments: The respondent's argument that the limitation period was extended was rejected on the basis of binding precedent and statutory interpretation.

Conclusions: The extension of limitation granted by the Supreme Court during the COVID-19 pandemic does not apply to the Assessing Officer's power to make assessments under the Central Sales Tax Act.

Issue 3: Interpretation of Rule 14A (5A) of the A.P. Central Sales Tax Rules

Relevant legal framework: Rule 14A (5A) provides that if no assessment is made within four years from the date of filing of the return, the dealer shall be deemed assessed based on the returns filed.

Court's interpretation and reasoning: The Court interpreted this rule to mean that the Assessing Officer must complete assessment within four years from the return filing date, failing which the assessment cannot be reopened or made. This rule establishes a statutory limitation period for assessment.

Application of law to facts: The Court applied this rule to the facts, calculating the limitation period from the monthly return filing dates and concluding that the assessments were barred for the periods beyond four years.

Conclusions: The statutory limitation period under Rule 14A (5A) is mandatory and binding, and assessments beyond this period are invalid.

Issue 4: Consequences of assessments being barred by limitation

Court's reasoning and findings: The Court held that assessment orders passed beyond limitation are liable to be set aside. For the year 2015-2016, since only the month of March 2016 was within limitation, the entire assessment was set aside and the matter remanded for fresh assessment for that month alone.

Application of law to facts: The Court's order sets aside the assessment orders for 2014-2015 and 2016-2017 entirely and partially for 2015-2016, with directions for reassessment only for the permissible period.

Conclusions: The assessments barred by limitation are quashed, and the Assessing Officer is directed to conduct fresh assessment only for the period within limitation.

3. SIGNIFICANT HOLDINGS

"The benefit of extension of limitation granted by the Hon'ble Supreme Court would not be available to the authorities exercising power under various statutes and the said extension of limitation would be available only to the members of the general public who had approached the relevant Fora, after the period of limitation had expired."

"Rule 14A (5A) of the A.P. Central Sales Tax (A.P.) Rules stipulates that every dealer shall be deemed to have been assessed to tax, based on the returns filed by him, if no assessment is made within a period of four years from the date of filing of the return."

"The assessments for the years 2014-201

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