Facts of the Case

M/s. SLS Engineers, a partnership dealing in valves and electrical goods, was assessed under the Telangana VAT Act, 2005 for the period April 2016 to June 2017, by an assessment order dated 09.05.2018. On the allegation of excess input tax credit having been allowed and a short levy of tax, revisional proceedings were initiated by a show-cause notice dated 04.01.2022, culminating in a revisional order dated 25.10.2022 passed under Section 32(2) of the VAT Act.

The petitioner's case was that limitation for revision runs four years from the date of assessment, and since the assessment was made on 09.05.2018, the revisional order dated 25.10.2022 was passed beyond that four-year period. The Department relied on an amendment made by the Telangana Value Added Tax (Second Amendment) Ordinance, 2017, which purportedly extended the limitation period from four to six years.

The Court held that this very amendment had already been declared unconstitutional by a coordinate/earlier decision of the same High Court in M/s. Sri Sri Engineering Works v. Deputy Commissioner (CT) (2022 SCC OnLine TS 1367). Since the Department's counsel fairly conceded that the impugned order was passed beyond four years (though within six years), and the six-year extension itself was unconstitutional, the revisional order could not be sustained and was set aside.

Issues Involved

  1. Whether the revisional order dated 25.10.2022, passed for the tax period April 2016 to June 2017, was barred by limitation.
  2. Whether the amendment purporting to extend the limitation period from four to six years, made by the Telangana VAT (Second Amendment) Ordinance, 2017, could be relied upon, given that it had already been struck down as unconstitutional.

Petitioner's Arguments

  • Limitation for revision runs from the date of the original assessment (09.05.2018), and the impugned revisional order dated 25.10.2022 was passed beyond the four-year limitation period prescribed under the unamended VAT Act.
  • The Department's reliance on the amendment extending the limitation period to six years was misplaced, as that very amendment had already been declared unconstitutional by the High Court in an earlier decision.

Respondent's Arguments

  • The Department's counsel fairly conceded that the impugned order was passed beyond four years, though within the six-year period purportedly available under the amendment.

Court Order / Findings

  • Since the amendment relied upon (extending limitation from four to six years) had already been declared unconstitutional in M/s. Sri Sri Engineering Works v. Deputy Commissioner (CT), the impugned revisional order — passed relying on that amendment — was unsustainable and liable to be set aside.
  • The Court accordingly allowed the writ petition and quashed the revisional order dated 25.10.2022.

Important Clarification

This ruling concerns the pre-GST Telangana VAT Act, 2005 regime and the constitutionality of a limitation-extending amendment/ordinance under that Act — it has no bearing on GST law or GST assessment timelines, notwithstanding that the underlying tax period straddles the transition to GST.

Sections Involved

  • Telangana Value Added Tax Act, 2005 — Section 32(2) (revisional power) and limitation for exercise of that power
  • Telangana Value Added Tax (Second Amendment) Ordinance, 2017 — provision extending limitation, held unconstitutional

Decision – In Favour of

Decided in favour of the petitioner — the writ petition was allowed and the revisional order dated 25.10.2022 was set aside as barred by limitation.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No.7917 of 2023
  • Coram: Hon'ble The Chief Justice Ujjal Bhuyan and Hon'ble Sri Justice N. Tukaramji
  • Date of Order: 16.06.2023

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