IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH VAT Appeal No. 9 of 2008 DATE OF DECISION: JULY 02, 2008 Guru Nanak Dev Rice Mills, Dasuya, District Hoshiarpur .....APPELLANT Versus The State of Punjab and others ....RESPONDENTS CORAM: HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present: Mr. K.L.Goyal, Advocate with Mr.Sandeep Goyal, Advocate, for the appellant. Mr.Piyush Kant Jain, Additional Advocate General, Punjab, for the respondents. .. SATISH KUMAR MITTAL, J. The assessee, who was a dealer registered under Punjab General Sales Tax Act, 1948 (hereinafter referred to as `the Act') and engaged in the business of rice shelling, has filed this VAT appeal against the order dated 15.02.2008 passed by the VAT Tribunal, Punjab, whereby the revision filed by the assessee under sub-section (3) of Section 21 of the Act against the order dated 9.8.2006 passed by the Assistant Excise and Taxation Commissioner-cum-Revisional Authority, Hoshiarpur, revising the assessment of the appellant in exercise of suo-moto revisional power under Section 21(1) of the Act, has been dismissed. VAT Appeal No. 9 of 2008 -2- 2. The brief facts of the case are that for Assessment Year 1996- 97, the assessment of the assessee was framed by the Assessing Officer on 27.3.2000 and the assessee was allowed the refund of Rs.90,702/- on account of excess purchase tax deposited by him. This refund was granted to the assessee while coming to the conclusion that the assessee was not liable to pay purchase tax on the purchase of paddy out of which rice manufactured by the assessee was sent out of India. 3. After the expiry of more than six years, the Revisional Authority in exercise of the suo-moto power contained in sub-section (1) of Section 21 of the Act, issued notice to the assessee on 4.3.2006 for revising the order of assessment dated 27.3.2000 on the ground that in view of the decision of this Court in M/s Veerumal Monga & Sons vs. State of Haryana and others, reported as (2000) 16 PHT 304 (P&H), decided on 13.7.2000, the purchase tax was leviable on the paddy purchased by the assessee, and the Assessing Officer while committing grave illegality had illegally ordered for refund of Rs.90,702/-. The assessee objected to the re-opening of the assessment on the ground of limitation as well as on the ground that the said judgment pertains to the State of Haryana and the same is not applicable in the State of Punjab as the provisions of the Act are different. 4. The Revisional Authority vide its order dated 9.8.2006 passed the order while observing that in view of the decision dated 13.7.2000 rendered by this Court in M/s Veerumal Monga's case (supra), the assessee was liable to pay the purchase tax on the paddy out of which rice manufactured by the assessee was sent out of India, and raised the demand of Rs.90,702/-. The said order was subsequently rectified vide order dated VAT Appeal No. 9 of 2008 -3- 20.3.2007, whereby the amount of Rs.90,702/- was reduced to Rs.71,185/-. 5. Feeling aggrieved against the aforesaid order, the assessee filed a revision before the VAT Tribunal, which has been dismissed by the impugned order. 6. Before the VAT Tribunal, the assessee challenged the aforesaid impugned order on the ground that the Revisional Authority could not have exercised suo-moto power under Section 21(1) of the Act for re-opening of the assessment after expiry of the period of six years, particularly when the reason recorded in the notice was known to the Department even in the year 2000 as the decision in M/s Veerumal Monga's case (supra) was rendered on 13.7.2000. Thus, there was no justification with the Revisional Authority in exercising the revisional jurisdiction under Section 21(1) of the Act in April, 2006 after expiry of more than six years of the original assessment. 7. In this appeal, the assessee has raised the following substantial question of law for consideration of this Court:- Whether the learned AETC was within its power to assume jurisdiction of revision, after the expiry of five years from the date of assessment period or from the passing of the original order of Assessing Authority? 8. We have heard the learned counsel for the parties on the aforesaid substantial question of law, which, in our opinion, is arising from the order of the VAT Tribunal. 9. Learned counsel for the appellant argued that under the Act for exercising the suo-moto power under Section 21(1) of the Act, no period of limitation has been prescribed. However, learned counsel submits that the Revisional Authority can exercise the said power within a VAT Appeal No. 9 of 2008 -4- reasonable period if sufficient reasons exist to exercise the said power on that date. While referring to the decision of this Court in Bhatinda District Co-operative Milk Producers Union Ltd. vs. State of Punjab and others, (2007) 8 VST 418, learned counsel submitted that this Court in the said case has laid down the following principles in which the Revisional Authority can exercise the suo-moto power under Section 21(1) of the Act:- “(i) the period prescribed for completing assessment does not control exercise of revisional jurisdiction. (ii) even when no limitation has been prescribed, the power of revision has to be exercised within a reasonable period. What is reasonable period has to be decided in facts of each case for which no hard and fast rule could be laid down.” 10. Learned counsel submitted that applying the above principles to the present case, the Revisional Authority was not justified to revise the assessment order dated 27.3.2000 after the expiry of more than six years, particularly when the ground on which the revision was made was available in the year 2000 itself. Learned counsel for the appellant further referred to the decision of the Supreme Court in State of Punjab and others vs. Bhatinda District Co-operative Milk P.Union Ltd., (2007) 10 VST 180 (SC), wherein the aforesaid judgment of this Court was upheld while observing that the revisional jurisdiction should ordinarily be exercised within a period of three years and in any event the same should not exceed the period of five years. 11. On the other hand, learned counsel for the respondent-State submitted that the Revisional Authority was fully justified in revising the Assessment Order dated 27.3.2000 even after expiry of the period of five years because in terms of the decision of this Court in M/s Veerumal VAT Appeal No. 9 of 2008 -5- Monga's case (supra) and the judgment of the Supreme Court in M/s Monga Rice Mill Etc. vs. State of Haryana and another, (2004) 23 PHT 418 (SC), the assessee was liable to pay the purchase tax on the paddy. He submitted that as per the Division Bench decision of this Court in Bhatinda District Co-operative Milk Producers Union Ltd.'s case (supra), what is reasonable period has to be decided on the facts of each case. Since in the present case the assessee was liable to pay the purchase tax on the paddy, the Revisional Authority was fully justified in revising the order of assessment even after expiry of more than six years. 12. Undisputedly, in the present case the Assessing Officer framed the assessment for the year 1996-97 vide order dated 27.3.2000 and determined a refund of Rs.90,702/- on account of excess payment of purchase tax. After expiry of six years, the Revisional Authority issued notice to the assessee to revise the said Assessment Order in exercise of the suo-moto power under Section 21(1) of the Act only on the ground that as per the decision dated 13.7.2000 given by this Court in M/s Veerumal Monga's case (supra) , the purchase tax was leviable on the paddy out of which rice manufactured by the assessee was sent out of India, though the said judgment was known to the Department in the year 2000 itself. Section 21 of the Act gives the revisional jurisdiction to the Commissioner, `who may of his own motion call for the record of any proceedings which are pending before, or have been disposed of by any authority subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such proceedings or order made therein and may pass such order in relation thereto as he may think fit.' The said power of the Commissioner by notification issued by the State Government under VAT Appeal No. 9 of 2008 -6- sub-section (2) of Section 21 of the Act has been conferred on Assistant Excise and Taxation Commissioner. Under Section 21 of the Act, no period of limitation has been prescribed for exercising the said power. It is well settled that if no period of limitation has been prescribed under the statute for exercising a power, the statutory authority must exercise its jurisdiction within a reasonable period as held by the Supreme Court in State of Punjab and others vs. Bhatinda District Co-operative Milk P.Union Ltd. (supra). (What shall be a reasonable period would depend upon the nature of the statute, the rights and liabilities thereunder and other relevant factors). While considering the scheme of the Act, the Supreme Court in the aforesaid judgment has laid down that though under the Act no period of limitation has been prescribed for exercising the revisional power under Section 21(1) of the Act, but the said power must be exercised within a reasonable period, which, according to the Supreme Court, is three years. In the said judgment, keeping in view the scheme of the Act, it has also been observed that in any event the said period should not exceed the period of five years. In that case, the Supreme Court has upheld the decision of this Court in Bhatinda District Co-operative Milk Producers Union Ltd.'s case (supra) where the exercise of suo-moto revisional jurisdiction for setting aside the Assessment Order after the expiry of more than five years, was held to be unreasonable. 13. Undisputedly, in the present case, the Revising Authority revised the order of assessment dated 27.3.2000 after the expiry of more than six years only on the ground that as per the decision in M/s Veerumal Monga's case (supra), the dealer (assessee) was liable to pay the purchase tax on the paddy and the Assessing Officer had wrongly ordered the VAT Appeal No. 9 of 2008 -7- refund of the excess purchase tax while coming to the conclusion that the dealer was not liable to pay the purchase tax on the paddy out of which rice manufactured by the assessee was sent out of India. In our opinion, in the facts and circumstances of the case, the Revising Authority was not justified in exercising the revisional power after the expiry of more than six years, particularly when the Revising Authority was aware of the said judgment in the year 2000 itself. The Revising Authority neither in its notice nor in its order nor the counsel for the State before this Court assigned any reason as to why such notice was being issued after a period of six years. There was no reason or justification with the Department to explain this delay of six years when the Department was very much aware of the judgment in M/s Veerumal Monga's case (supra). Therefore, in our opinion, in this case the Revisional Authority has not exercised the revisional jurisdiction under Section 21(1) of the Act within a reasonable period. Thus, the orders passed by the Revising Authority as well as the VAT Tribunal are liable to be quashed. Accordingly, the appeal is allowed and the impugned orders dated 9.8.2006 passed by the Revising Authority as well as the VAT Tribunal dated 15.2.2008 are hereby quashed with no order as to costs and the order dated 27.3.2000 passed by the Assessing Officer is restored. (SATISH KUMAR MITTAL) JUDGE July 02, 2008 (RAKESH KUMAR GARG) vkg JUDGE Refer to Reporter