Recently, Haryana Value Added Tax, 2003 has been amended vide Ordinance issued by the Governor dated 31.7.15 published vide Notification No Leg. 9/2015 dated 3rd August 2015. The concerned amendment is effective with effect from 3rd August 2015. The major amendments increasing time limits for conducting assessment/ reassessment/ revision are laid down as below, for your kind perusal:
Section 16 contains provisions regarding assessment of unregistered dealer’s liability to tax. Earlier in the case of unregistered dealer, the assessing authorities could assess the tax only within a period of three years from the end of the period for which the tax is to be computed. Now, with the amendment that period of three years has been increased to six years.
Thus, with the effect of the amendment, the assessing authority can now assess tax of the unregistered builders, within a period of six years from the end of the period for which the tax is to be assessed. For example, the builders who are not registered in 2009-10 and no assessments has been made under Section 16 of the HVAT Act, till now, and the period of three years has also expired. However, with this amendment, the assessments could now be made for a past period of six years from the end of the period for which the tax is to be assessed. Thus the department has started ragging up the past of Haryana builders, with this amendment.
Section 17 provides for reassessment of tax. The amendment has increased the time limit within which assessing authority can reassess the tax. Earlier the Commissioner was allowed to reassess at any time before the expiry of five years following the close of that year or before the expiry of two years following the date when the assessment for that year becomes final, whichever is later. Now, with the amendment, the period of five years is replaced with eight years and two years is replaced with three years.
Section 34 provides the time limit within which the Commissioner can revise the order. Prior to amendment the Commissioner could have revised the order only within a period of three years from the date of the supply of copy of order, to the assessee. Now, after amendment, the Commissioner can revise the order within six years from the date of supply of copy of order to the assessee. Thus the time limit within which commissioner can order the revision of tax has been increased from three years to six years.
As per the official website of the Haryana CM, i.e. Haryanacmoffice.gov.in, the reasons for amendment in section 16, 17 and 34 are:
a. The amendment in section 16 will enable the assessing authority to fully and properly assess the tax liability of unregistered dealers whose liability of tax has arisen in view of the judgement of the Supreme Court by extending the limitation period to six years.
b. Extension of limitation period to three years in section 17 will enable the taxing authorities to reassess cases where some definite information has come into the possession of an assessing authority where the dealer has been under assessed or some turnover has escaped assessment.
c. The extended limitation period from three years to six years under section 34 will enable the revisional authority to revise those cases wherein some illegality or impropriety pre-judicial to the interest of the revenue of the state is noticed. It will also enable the revisional authority to revise the cases of those builders and developers whose assessment was not framed in accordance with the law declared by the Supreme Court in the case of L and T Limited.
Further, the Supreme Court in its judgment in the case of L&T Limited Vs. State of Karnataka delivered on 26.9.2013, laid down a clear position by holding that once the developer or the builder enters into an agreement to sell the property with the prospective buyers before completion of construction, the construction activity carried out after such agreement become a works contract and such developer/builder needs to be assessed as a works contractor.
Here it is pertinent to mention that with the extension of limitation period, the taxing authorities will now be able to reassess cases where some definite information has come into the possession of an assessing authority where the dealer has been under assessed or some turnover has escaped assessment. Thus such extended period of limitation is aimed at increasing the time span within which the Sales tax authorities can finalize the assessment/ re-assessment/ revision.
Nonetheless, it is important to note that, there are certain judicial pronouncements, wherein it has been held that subsequent amendment cannot be applied on the cases which are already barred by limitation.
S.S. Gadgil v. Lal & Co (1964) {MANU/SC/0122/1964}
Bharat Petroleum Corporation Ltd v. State of Punjab {MANU/PH/1173/2009}
Union of India v. Uttam Steel Ltd. {MANU/SC/0579/2015}
Thirumalai Chemicals Ltd. V. Union of India {MANU/SC/0427/2011}
Hence it can be concluded that any time barred claim cannot be subject to assessment/ re-assessment/ revision due to subsequent amendment which increases the limitation period. Thus, with the effect of this amendment read along with the judgements of case laws that subsequent amendment cannot be applied on the cases which are already barred by limitation, those developers/ builders in whose cases the period of limitation for assessment has not lapsed till 03.08.2015, only will now come under the purview for new limitations for assessment.
CS Priyanka Gupta
APRA & Associates- VAT Team
CAclubindia
