Chakka Sundara Raja vs. The State Of Ap

Held

The Court held that the impugned assessment order was passed beyond the period stipulated under Section 21(4) of the AP Value Added Tax Act, 2005, and was therefore barred by limitation and non-est. The Court found that the assessment order was entirely based on a best judgment assessment, relying on the returns filed by the petitioner. There was no mention in the order of suppression of facts, much less willful suppression of facts leading to willful evasion of tax, which is a prerequisite for invoking Section 21(5) of the Act. Consequently, the provisions of Section 21(5) were not applicable, and the limitation period remained four years as per Section 21(4). The Court allowed both writ petitions, setting aside the assessment order dated 24.08.2021, the penalty notice dated 16.09.2021, and all consequential proceedings, including the attachment of the petitioner's bank account and immoveable property.

Facts

The petitioner, Chakkas Enterprises, filed two writ petitions challenging tax demands and subsequent property/bank account attachments. The tax period in question is from 02.06.2014 to 13.06.2017. The Commercial Tax Officer, Addanki Circle, issued an assessment order dated 24.08.2021 and a penalty notice dated 16.09.2021. The petitioner claims to have not received these orders until their bank accounts and immoveable property were attached. Initially challenging only the attachments, the petitioner later amended the prayer to challenge the assessment order itself. The petitioner's primary contention is that the assessment order is time-barred under Section 21(4) of the AP Value Added Tax Act, 2005, as it was passed after the limitation period ending 30.06.2021. The respondent argued that notices were sent to the petitioner's last known business address and served, and that Section 21(5) of the Act, with a six-year limitation period, should apply due to alleged deliberate avoidance and non-cooperation.

Key Issues

1. Whether the assessment order dated 24.08.2021, passed for the tax period ending 30.06.2017, is barred by limitation under Section 21(4) of the AP Value Added Tax Act, 2005, or if Section 21(5) of the Act is applicable. Petitioner's arguments: The tax period ended on 30.06.2017, making the limitation period for issuing an assessment order four years, i.e., until 30.06.2021, as per Section 21(4). The assessment order dated 24.08.2021 was passed beyond this period and is therefore non-est. Respondent's arguments: The petitioner deliberately avoided service of notices and refused to cooperate. Notices were sent to the last known business address and served on 28.07.2021. In such circumstances, Section 21(5) of the Act, which provides a six-year limitation period ending on 30.06.2023, is applicable. The assessment was made on a best judgment basis due to the petitioner's non-cooperation and failure to provide books of accounts, implying willful suppression of facts.