Discrepancies Between Dates Of Creation And Signing Assessment Order; Bombay High Court Quashes MVAT Order Passed Beyond 4 Years

The Bombay High Court, while noting the discrepancies between the dates of creation and signing of the assessment order, quashed the Maharashtra Value Added Tax Act (MVAT) Order, which was passed beyond the limitation period of 4 years.

The bench of Justice K.R. Shriram and Justice Jitendra Jain has observed that the return related to 1st April 2015 to 31st March 2016 and, therefore, a four-year period would expire on 31st March 2020, and the digital signature on the order served on the petitioner has been put on 23rd June 2020. In the order filed with the reply, the date typed is March 19, 2020.

The petitioner/assessee is a dealer engaged in the business of trading IT and electronic equipment and providing services. The petitioner was registered under the Maharashtra Value Added Tax Act, 2002.

The assessee has challenged an order and notice of demand that were digitally signed by the respondent, Deputy Commissioner of State Tax, on June 23, 2020, and issued on June 24, 2020, for the financial year 2015-16.

The petitioner contended that the order is barred by limitation. The department has not followed the principles of natural justice by not giving a personal hearing, despite the petitioner seeking a personal hearing. Section 23(2) of the MVAT Act provides that no order of assessment under the said subsection shall be made after the expiry of four years from the end of the year containing the period to which the return relates.

The assessee submitted that the return related to 1st April 2015 to 31st March 2016 and, therefore, a four-year period would expire on 31st March 2020. Any order passed after March 31, 2020, shall be barred by limitation. The order was made only on June 23, 2020, and hence is barred by limitation.

The department contended that Section 23(5A) of the MVAT Act is not applicable since the sub-section is applicable only where the assessing authority decides that the assessment proceedings are fit for closure on filing of the revised return. If the assessing officer comes to such a decision, he shall intimate to the dealer his observations about tax liability and interest payable. If the dealer agrees with all the observations and files a revised return within 30 days from the date of receipt of the intimation and also pays tax and interest applicable to the date within the period of 30 days, sub-section (5A) would be applicable.

The department relied upon an affidavit of one Sambhaji Kisan Yadav, which affirmed on November 14, 2022, that the order was passed on March 19, 2020, and only for the purpose of service of the order in electronic form, the digital sign was placed on a copy of the order on June 23, 2020. Hence, the order has been passed within limitations.

The issue raised was whether the assessment order under sub-section (2) was made within a period of four years from the end of the year containing the period to which the return relates.

The court noted that the order available in the SAP system also indicates that the order was signed digitally by respondent no. 3 only on June 23, 2020, and the SAP system does not show any order dated March 19, 2020.

The court held that the assessment order, having been passed after the expiry of four years from the end of the year containing the period to which the return relates, is not a valid order, and the same is quashed and set aside.

Counsel For Petitioner: Gopal Mundhra

Counsel For Respondent: Jyoti Chavan

Case Title: Karvy Innotech Limited Versus State of Maharashtra

Case No.: Writ Petition No.972 Of 2020

Click Here To Read The Order