Power to extend period to be exercised before expiry of original limitation period


Quick Summary
The Orissa High Court ruled that an assessment order passed after the original limitation period is invalid, even if an extension was granted afterwards. The power to extend the time for passing an assessment order must be exercised by the Commissioner of Sales Tax before the original six-month period expires. In this case, the assessment order was passed before the extension was granted, making it unsustainable in law.

Court :
Orrisa High Court

Brief :
In M/s Cobra Instalaciones Y Servicios v. Commissioner of Sales Tax, Cuttak [W.P. (C) No. 15956/2013 decided on July 29, 2021] M/s Cobra Instalaciones Y Servicios ('the Petitioner') challenged an assessment order dated May 15, 2013 ('Assessment Order') passed under Section 42 of the Odisha Value Added Tax Act, 2004 ('OVAT Act') for being passed beyond the period of limitation i.e. after lapse of more than 6 months from the date of completion of the Audit Visit Report ('AVR') on June 20, 2012.

Citation :
W.P. (C) No. 15956/2013 decided on July 29, 2021

In M/s Cobra Instalaciones Y Servicios v. Commissioner of Sales Tax, Cuttak [W.P. (C) No. 15956/2013 decided on July 29, 2021] M/s Cobra Instalaciones Y Servicios ('the Petitioner') challenged an assessment order dated May 15, 2013 ('Assessment Order') passed under Section 42 of the Odisha Value Added Tax Act, 2004 ('OVAT Act') for being passed beyond the period of limitation i.e. after lapse of more than 6 months from the date of completion of the Audit Visit Report ('AVR') on June 20, 2012.

The Assessing Authority ('AA') realised that limitation period was going to end thus, requested the Commissioner of Sales Tax ('CST') to invoke the power conferred on him in terms of proviso to Section 42(6) of the OVAT Act. Thereafter the CST passed an order extending the time for passing the assessment order on July 20, 2013 by a period of 6 months.

The Hon’ble Orrisa High Court noted that on the date that the Assessment Order was passed i.e., May 15, 2013, there was no order passed by the CST extending time for making the assessment. Further, the Assessment Order dated does not even mention the fact that the AA had made a request to the CST for extension of time for completion of the assessment proceedings.

Thus, the extension has been granted post facto to a case where Assessment Order has already been passed on May 15, 2013. Therefore, Assessment Order is unsustainable in law. Further, the order passed by the CST in terms of the proviso to Section 42(6) of the OVAT Act cannot validate such an illegal assessment order, which, on the date it was passed, was clearly time-barred.

FAQ :

The main issue was whether an assessment order passed after the original limitation period could be validated by a subsequent extension granted by the Commissioner of Sales Tax.

The case was decided under Section 42 of the Odisha Value Added Tax Act, 2004 (OVAT Act), specifically the proviso to Section 42(6).

The power to extend the limitation period must be exercised by the Commissioner of Sales Tax before the original limitation period expires.

No, the assessment order was deemed unsustainable in law because it was passed after the original limitation period and the extension was granted retrospectively.

No, the court held that an order extending time cannot validate an assessment order that was already time-barred when it was passed.

 

Bimal Jain
Published in VAT
Views : 173

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