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State of Punjab & Ors. v. M/S Shreyans Indus Ltd. Etc.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 2506-2511 of 2016)Decided 4 Mar 2016
Civil Appeal Nos. 2506-2511 of 2016
Chief Justice T.S. Thakur · Justice A.K. Sikri · Justice R. Banumathi

Background

The assessee had filed quarterly sales-tax returns for Assessment Years 2000-01 to 2003-04, and under Section 11(3) of the Punjab General Sales Tax Act, 1948, assessments had to be completed within three years of the end of each year. No assessment was made within those deadlines. The Assessing Officer later issued notices under Section 11(10), purporting to extend the assessment period, but did so only after the original three-year window had already expired. The Punjab and Haryana High Court held these late extensions invalid, and the State appealed to the Supreme Court along with several similarly-situated connected appeals.

Decision Breakdown

The Supreme Court held that the power to extend the time for completing an assessment under Section 11(10) must be exercised before the normal three-year assessment period expires, not after it has already lapsed. Once the limitation period expires, a valuable right vests in the assessee that cannot be taken away by a subsequent, belated extension order. The Court rejected the State's reliance on Section 148 CPC, Section 139(2) of the Income Tax Act, and a prior decision on Section 133(2) of a different statute, finding none of those analogies applicable to this specific statutory language. It upheld the High Court's view and dismissed all the appeals, leaving parties to bear their own costs.

Lesson Learnt

A tax authority cannot revive or extend its own power to assess after the statutory deadline has already passed: any extension of a limitation period must be granted while that period is still running, not retroactively after it has expired.

Official source (sci.gov.in)View Judgment (PDF)

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