In Writ Petition No. 3124/2020- BOM HC- Bombay High Court quashes notice issued to Siemens Limited as assessment not completed within ten years of issuing the initial notice in Form-H
Justice A.S. Chandurkar & Justice M.W. Chandwani [03-05-2023]

Read Order: Siemens Limited v. The State of Maharashtra and Ors

Chahat Varma

New Delhi, May 20, 2023: The Bombay High Court has quashed a notice dated 24.09.2019 that was issued to Siemens Limited (petitioner), as the Commissioner had failed to complete the assessment within ten years of issuing the initial notice in Form-H.

Briefly stated issue involved was that the petitioner, was a registered dealer in Maharashtra and was liable to pay cess on bringing goods within the limits of Navi Mumbai Municipal Corporation. The Commissioner was not satisfied with the returns filed by the petitioner, leading to the issuance of notices in Form-H for each relevant year under Rule 25(3) of the Maharashtra Municipal Corporation (Cess on Entry of Goods) Rules, 1996 (Rules of 1996). According to the Local Body Tax Officer, the petitioner failed to produce relevant documents in support of the returns filed. After the last notice issued on 30.10.2014, a Form-H reminder was issued on 24.09.2019 for all the relevant years. The petitioner argued that the Municipal Corporation was not entitled to proceed further in the matter as they had not completed the assessment process for almost eight to ten years. The petitioner challenged the belated issuance of the Form-H reminder, seeking a declaration that it was contrary to the provisions of the Maharashtra Municipal Corporations Act, 1949, and the Rules of 1996.

The two-judge bench of Justice A.S. Chandurkar and Justice M.W. Chandwani said that it was clear from Rule 25(3) of the Rules of 1996 that the Commissioner should complete the assessment expeditiously. Once a dealer was given sufficient opportunity to produce the evidence on which they rely, the assessment should be completed based on the evidence provided by the dealer. If the dealer fails to produce such evidence, the assessment should be made to the best judgment of the Commissioner.

The bench noticed that there was no justification indicated by the Municipal Corporation for the failure on the part of the Commissioner to assess the amount of cess due from the petitioner to the best of the Commissioners judgment at least from 21.08.2013 till the reminder in Form-H was issued on 24.09.2019.

Observing that the Municipal Corporation was not obligated to wait endlessly till the terms of notice issued under rule 25(3) of the Rules of 1996 are complied with, the bench held that the Commissioner was empowered to take action under Rule 25(4) of the Rules if the dealer fails to submit further documents. The bench found that the failure of the petitioner to submit relevant documents cannot be a justification for the Commissioner to delay the completion of the assessment.

The bench placed reliance on Bharat Steel Tubes Limited and Another v. State of Haryana and Another [LQ/SC/1988/276] and held that the assessment proceedings are required to be completed within a reasonable time keeping in view the spirit of Rule 25 of the Rules of 1996 when read as a whole.

“We thus hold that failure to complete the process of assessment under Rule 25(3) and (4) of the Rules of 1996 for a period of more than ten years from the date of issuance of the initial notice in Form-H would render the process of assessment liable to be quashed on the ground of unreasonableness and failure to complete the assessment for no justifiable reason,” held the bench.