Telangana Profession Tax - Limitation 4 Years? Can AO demand Profession Tax after 4 Years?

Me and my friend (two partners) are running a small partnership firm without any employees for last 10 years. We did not enroll for PT act all these years as we didn't know it is applicable to us without having employees.

Yesterday State Profession Tax Officer created enrollment based on our GSTIN and sent a notice email asking to pay tax + penalty 50% + interest 2% per month since due since the financial year when turnover crossed 10 Lakhs (around FY 2014-15).

Commercial tax officer also asked for 15000 to be paid to someone's Phonepe if I want to settle the interest & penalty. I do not want to pay this bribe. Interest & penalty alone crosses 50K as per their excel sheet.

PT Act rules at https://www.tgct.gov.in/tgportal/AllActs/APPT/APPTAct.aspx mention AO may assess / demand with in 4 years. Is my understanding / interpretation correct? So can I just pay the actual tax for 4 years incl. current FY 22-23 and appeal to higher authority for a waiver of interest & penalty for this period?

Also Limitation Act may be applicable as this PT Act (THE TELANGANA TAX ON PROFESSIONS, TRADES, CALLINGS AND EMPLOYMENTS ACT, 1987. (ACT NO. 22 OF 1987)) is not included in the schedule of THE TELANGANA TAXATION OFFENCES (INAPPLICABILITY OFLIMITATION) ACT, 1982.(ACT NO. 17 OF 1982.)

Just curious as per act, AO assessments are out of judicial purview? So no option other than AC -> JC -> Commissioner -> Tribunal?

Please advise the statute of limitation in case of TS Profession Tax based on available laws.

Thanks everyone for your time.

Hi Ashok,

This is a good and practical question about Telangana Profession Tax (PT) limitation and demands after several years. Here’s a detailed breakdown to help you navigate this situation:

1. Statute of Limitation for Telangana Profession Tax

As per the Telangana Tax on Professions, Trades, Callings and Employments Act, 1987 (Act No. 22 of 1987), specifically Section 16(2), the Assessing Officer (AO) has 4 years from the end of the financial year in which tax became due, to make an assessment or demand.
This means the AO cannot normally demand or assess tax or penalties for periods older than 4 years unless some special circumstances apply (like concealment or fraud).
This 4-year limitation is common in most tax laws and provides taxpayers protection from indefinite liabilities.

2. Interest & Penalty

The demand raised includes tax + interest + penalty.
Interest is charged for delayed payment at the prescribed rate (2% per month here).
Penalty can be up to 50% or more, depending on the nature of default.
While the tax demand beyond 4 years may be barred by limitation, the interest and penalty for the legally assessable period (last 4 years) can still apply.
For the period beyond 4 years, interest and penalty cannot be levied if tax itself is not payable due to limitation.

3. Regarding the Bribe Demand

Paying money through PhonePe or any unofficial channel to settle interest/penalty is illegal and is essentially a bribe.
You should not pay bribes under any circumstances. This can be reported to vigilance authorities or higher government officials.

4. Your Options

Pay tax for the last 4 years + current FY (if due). This is the legally enforceable amount.
You can appeal or represent to higher authorities (AC → JC → Commissioner → Tribunal) for waiver/reduction of interest and penalty.
For years beyond 4 years, you can contest the demand based on limitation.
You can also file a written representation or complaint about the illegal demand for bribe.

5. Limitation Act applicability

The Limitation Act, 1963 generally applies to tax demands unless specifically excluded.
Since Telangana PT Act is not included in the schedule of the Telangana Taxation Offences (Inapplicability of Limitation) Act, 1982, the 4-year limitation stands and Limitation Act can be invoked.

6. Assessments being out of judicial purview?

While the Act may state certain provisions that limit judicial interference, the taxpayer has right to appeal to higher authorities and tribunals as mentioned.
Courts generally intervene if due process is not followed or orders are illegal/unjust.

Summary

Issue	Position
Limitation period for PT	4 years from end of FY tax due
Tax demand beyond 4 years	Not valid except in cases of concealment or fraud
Interest and penalty	Applicable for demand within limitation period
Bribe demand	Illegal, do not pay
Remedy	Pay tax for last 4 years, appeal for waiver of interest/penalty