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TMI Blog2023 (5) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of Section 2(16A) of the Maharashtra Municipal Corporations Act, 1949 (for short, 'the Act of 1949'). The Dealer was liable to pay cess on bringing goods within the limits of Navi Mumbai Municipal Corporation - hereinafter referred to as the Municipal Corporation under Section 152A of the Act of 1949. Accordingly, the Dealer filed returns for the period commencing from 01.04.2008 to 31.03.2009 and thereafter for each financial year till 31.03.2013 under the Maharashtra Municipal Corporation (Cess on Entry of Goods) Rules, 1996 (for short, 'the Rules of 1996'). The assessment of cess is carried out under Rule 25 of the Rules of 1996. For each of the aforesaid years, the Dealer was issued notice in Form-H as provided by Rule 25(3) of the Rules of 1996 since the Commissioner was not satisfied with the returns filed by the Dealer. By such notice in Form-H, the Dealer was required to produce all evidence on which the Dealer sought to rely in support of the returns as filed. The relevant dates when Form-H came to be issued by the Municipal Corporation are as under:- Relevant Period Date of issuing notice in Form-H 01.04.2008 to 31.03.2009 02.12.2009 01.04.2009 to 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dealer a reasonable opportunity of being heard. Relying upon the aforesaid provisions it is submitted that though the period for completing the assessment may not be specifically provided in Rule 25 of the Rules of 1996, it could not mean that for an indefinite and unreasonable period such process of assessment could continue. After issuance of notice in Form-H the Dealer had produced some material in support of its returns. However, the Commissioner thereafter did not take any further step to complete the assessment for a period of more than almost ten years from the initial notice in Form-H that was issued on 02.12.2009. It was urged that in absence of any prescribed period of limitation the Commissioner was required to act within reasonable period and in the facts of the present case the reminder issued by the Municipal Corporation in Form-H on 24.09.2019 was highly belated. Even this notice in Form-H referred to Rule 33 of the Maharashtra Municipal Corporation (Local Body Tax) Rules which was not at all applicable. In that regard, the learned counsel for the Dealer placed reliance on the decisions in Reliance Transport and Travel Pvt. Ltd. Versus Union of India & Others [2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absent or had sought time for producing further documentary material. Since the Dealer failed to submit all requisite documents despite grant of sufficient time, the reminder in Form-H came to be issued on 24.09.2019. The Municipal Corporation had acted in reasonable time and it could not be said that the assessment was liable to be set aside on the ground that it continued for a long period. It was further submitted that the unit of the Dealer was located in the Small Scale Industrial Area and the litigation with regard to the demand of cess under Rule 35(1) of the Rules of 1996 was pending in Writ Petition No. 8506 of 2016 with Connected Writ Petitions [M/s Super Label Manufacturing Co. Versus The State of Maharashtra & Others]. The aforesaid writ petitions came to be decided on 29.07.2016 and the Special Leave Petition challenging that decision was pending before the Hon'ble Supreme Court. By an order dated 06.02.2017 it had been directed that no coercive steps be taken against the members of the Small Scale Entrepreneurs Association for recovery of any interest or penalty under Rule 41 of the Rules of 1996. This was one of the reasons for the assessment to be pending. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rashtra Act XLII of 2017 Chapter XI-A and Sections 152A to 152O of the Act of 1949 have been deleted with effect from 01.07.2017. Rule 25 of the Rules of 1996 relate to assessment of cess and the relevant provisions read as under:- "25. Assessment of cess. (1) The amount of cess due from a registered dealer liable to pay cess shall be assessed separately for each period made applicable to his class of cess payers by the Commissioner under sub-rule (2) of rule 24. (2) If the Commissioner is satisfied that the returns furnished by a registered dealer in respect of any period are correct and complete, he shall assess the amount of cess due from the dealer on the basis of such returns. (3) Where a registered dealer has filed all the returns in respect of any period on or before the date prescribed for filing the last return pertaining to that period and if the Commissioner is not satisfied that the returns furnished by the registered dealer in respect of that period are correct and complete, and he thinks it necessary to require the presence of the dealer or the production of further evidence he shall serve on such dealer a notice requiring him on a date and at a place specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. On the date specified in the notice or "as soon as may be thereafter" the Commissioner is required to assess the amount of cess after considering all the evidence that may be produced. However under Rule 25(4) of the Rules of 1996 for failure on the part of the dealer to comply with the terms of any notice issued under Rule 25(3) of the Rules of 1996, the Commissioner is required to assess "to the best of his judgment" the amount of cess due from the dealer. Since the Dealer in the present case had furnished its returns, sub-Rules (5) and (7) of Rule 25 of the Rules of 1996 would not be relevant in the present factual context. Under Rule 25(10) of the Rules of 1996 the notice required to be issued under Rule 25(3) of the Rules of 1996 has to be in Form-H and the date fixed for compliance therewith is not required to be earlier than fifteen days from the date of service thereof. Under Rule 25(11) of the Rules of 1996 the Commissioner is required to issue notice in Form-H to a dealer to show cause why it should not be so assessed. The date for compliance with notice cannot be earlier than fifteen days from the date of service thereof. 6. Aforesaid scheme of the relevant provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which indicates that the assessment has to be completed within a short period and without delaying the assessment for a long period. This can also be gathered from Rule 26(4) of the Rules of 1996 which permits the Commissioner to assess to the 'best of his judgment' the amount of cess due if the dealer fails to comply with the terms of any notice issued under Rule 25(3) of the Rules of 1996. The consequence of failure on the part of a dealer to comply with the notice in Form-H thus enables the Commissioner to assess the amount of cess due to the best of his judgment. It is therefore clear that the Commissioner is not required to continue to wait for the response of the dealer to a notice issued under Rule 25(3) of the Rules of 1996 in Form-H. He has to either on the date specified in the notice or as soon as may be thereafter complete the assessment and if the dealer fails to comply with such notice, the assessment has to be done to the best of the Commissioner's judgment. Once it is shown that sufficient opportunity was given to a dealer to produce evidence on which he relies, the assessment is required to be completed either on the basis of the evidence produced by the dealer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely only upon those documents. The last such reminder is dated 21.08.2013. 9. The aforesaid thus indicates that the Municipal Corporation did grant sufficient opportunity to the Dealer to produce all the evidence on which it desired to rely upon. It also called upon the Dealer to submit further documents but the Dealer failed to do so. In view of this the Commissioner was free to proceed with assessing the amount of cess due from the Dealer on the basis of the annual report for the year 2010 and documents as filed alongwith it. If the Commissioner was not satisfied with those documents and a direction was given to the Dealer to produce further documents, on failure of the Dealer to do so, the Commissioner ought to have assessed the amount of cess due from the Dealer based on his best judgment. There is no justification indicated by the Municipal Corporation for the failure on the part of the Commissioner to assess the amount of cess due from the Dealer to the best of the Commissioner's judgment at least from 21.08.2013 till the reminder in Form-H was issued on 24.09.2019. It is not the grievance of the Dealer that it was not granted any opportunity to submit documents in support o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter. Having produced the documents which according to the Dealer were sufficient and on which it intended to rely in support of its returns, there does not appear to be any legal justification on the part of the Municipal Corporation in waiting for a period of more than six years and thereafter continuing to seek further documents without assessing the Dealer to the best of the judgment of the Commissioner under Rule 25(4) of the Rules of 1996. 11. In the aforesaid backdrop, it would be necessary to consider as to whether failure to adjudicate of the notice issued in Form-H by the Municipal Corporation vitiates the proceedings on the ground of unreasonable delay. The learned counsel for the parties have relied upon various decisions in support of their respective submissions. While according to the Municipal Corporation there being no period of limitation prescribed for completing the assessment and the said process of completion having been undertaken within reasonable period, there was no reason to interfere with such process of assessment. On the other hand, it is the case of the Dealer that by unnecessarily keeping the assessment proceedings pending for long period which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Rule 25(5) of the Rules of 1996 are perused, the same relates to failure on the part of a registered dealer in furnishing return on or prior to the date prescribed for the last return pertaining to that period. In such situation, the Commissioner is required to act at any time within three years from the end of the year in which such period occurs, give the dealer a reasonable opportunity of being heard and thereafter proceed to assess to the best of his judgment the amount of cess if any due from the dealer. In other words, if a return is not furnished for a particular period then at any time within three years from the end of that relevant period, the Commissioner can initiate the process of assessment to the best of his judgment. Similar such time frame has been prescribed in Rule 25(7) of the Rules of 1996 of three years when the Commissioner has reason to believe that a dealer is liable to pay cess for any period but has failed to apply for registration or has failed to so apply within the time prescribed. Even in this situation, the Commissioner can act within three years from the end of the year in which such period occurs. The aforesaid provision thus indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Municipal Corporation for not completing the assessment to the best of the judgment of the Commissioner for all this period except failure on the part of the Dealer to submit further documents. 14. The issue with regard to belated adjudication of a show cause notice/demand notice has been considered in various decisions of this Court. For the present purpose, we find that reference to the decision in Premier Limited, Mumbai & Another Versus Union of India & Others [2017 (5) Mh.L.J. 433] would be relevant since this decision has been subsequently followed by various Division Benches in the decisions referred by the learned counsel. The following observations in paragraphs 9 to 11 are relevant and the same read as under:- "9. ........ We must outline the difference between the power that the authorities possess and which has to be exercised coupled with a duty. Just as there is power to issue any Show Cause Notice, equally there is a duty to adjudicate it promptly. If one is interested in protecting the revenue and to subserve the larger public interest, then, expediency demands that once a Show Cause Notice is issued and duly served, reasonable opportunity has to be af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fend has to be granted in the event an adverse order having civil consequences has to be passed. Therefore, the quasi-judicial authorities should realise that they need not be friendly or liberal with the assessee and to such an extent as would give an opportunity to the assessee to complain that the Show Cause Notice having been issued decades back, it cannot be adjudicated." 15. We may note that in a recent decision in ATA Freight Line (I) Pvt. Ltd. Versus Union of India & Others [2022(3) BCR 20] after considering various earlier decisions on the question of belated adjudication of a show cause notice, the Division Bench held that non-adjudication of the show cause notice for a period of about ten years resulted in causing prejudice to the said petitioners. The Court proceeded to quash the said show cause notices. 16. The communication dated 07.01.2020 issued by the Assessing Authority of the Municipal Corporation reveals that it was of the view that the period of three years mentioned in Rule 25 of the Rules of 1996 was for initiation of the assessment proceedings and not for passing the assessment order. Even accepting this position that the period of three years is for initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 either on the date specified in the notice issued in Form-H or as soon as may be thereafter on the basis of evidence produced by a registered dealer. On failure of a registered dealer to comply with the terms of notice issued under Rule 25(3) of the Rules of 1996, the Commissioner has to assess to the best of his judgment the amount of cess due under Rule 25(4) of the Rules of 1996. Since assessment has to be undertaken at any time within three years from the end of the year in which the relevant period occurs as per Rule 25(5) of the Rules of 1996 if a dealer does not furnish any returns or on failure to apply for registration under Rule 25(7) of the Rules of 1996, it becomes clear that though there is no outer period fixed for completing such assessment, the same has to be completed within reasonable period. In the facts of the present case, the assessment has not been completed for a period of almost ten years from issuance of the initial notice in Form-H. The completion of assessment proceedings having been unnecessarily delayed by the Municipal Commissioner and there being no basis to hold that the Corporation is required to wait endlessly for the dealer to produce further d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H would render the process of assessment liable to be quashed on the ground of unreasonableness and failure to complete the assessment for no justifiable reason. On that basis the assessment for the period from 01.04.2008 to 31.03.2009, 01.04.2009 to 31.03.2010, 01.04.2010 to 31.03.2011, 01.04.2011 to 31.03.2012 has not been completed within the aforesaid period of ten years which we have found to be reasonable period for completion of assessment. The Commissioner was not precluded from completing the assessment either in terms of Rule 25(3) of the Rules of 1996 by treating the documents produced by the Dealer as the only documents on which the Dealer relied in support of his returns or under Rule 25(4) of the Rules of 1996 when the Dealer failed to submit any further documents pursuant to the notice in Form-H being issued to him. The period of ten years has been reckoned from the date of issuing the initial notice in Form-H and these notices have not been adjudicated even till the hearing of the writ petitions even in the absence of any order interdicting such adjudication. 20. As a result of the aforesaid discussion, Writ Petition Nos. 3124 of 2020, 9635 of 2021, 9637 of 2021, 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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