Judgment : 1. The petitioner, in the writ petitions, a native of Maharashtra, is running a gold re-cycling unit within the State of Kerala, in Kochi. The subject matter of the above writ petition is the seizure of 6280 grams of gold from the business premises of the petitioner, by the Shadow Unit of the Kochi City Police and the proceedings initiated by the Income Tax Department as also the Commercial Taxes Department of the State, for assessment, deeming such possession to be for the purpose of sale within the State, thus attracting levy under the Income Tax Act, 1961 as also the Kerala Value Added Tax Act, 2003. 2. On facts; suffice it to say that, on 15.01.2010, the shadow unit of the Kochi City Police conducted a raid in the business premises of the petitioner, on alleged information, of gold being possessed illegally by the petitioner. According to the petitioner, the raid commenced at 4.00 p.m. on 15.01.2010. But the mahazar prepared, evidenced by Ext.P5 is dated 16.1.2010. This Court is not concerned with the procedure adopted or the validity of the same. At this point of time, the issue to be focussed upon is, the release of the gold, which admittedly, the Income Tax Department has found to be not owned by the petitioner. Ext.P5 mahazar is to be looked into, only to ascertain the exact quantity of the gold seized from the petitioner and the nature of the same. 3. Admittedly, 6280 grams of gold was seized of which 3000 grams were pure gold bars, along with an amount of Rs.2,05,500/- from the business premises. The cash so seized was subsequently adjusted towards the income tax dues, determined on re-opening of assessments for various years; pursuant to the seizure effected. Immediately after the seizure, the gold was handed over to the Income Tax Department, who issued Ext.P14 and P16 notices to the petitioner. The petitioner filed Ext.P17, in reply to such notices, taking the contention, at the first instance, that the petitioner was not a dealer or trader in gold or gold ornaments. 4. The petitioner asserted that, the petitioner was engaged only in the purification of gold and gold ornaments, on contract with the dealers in gold ornaments, within and outside Kochi. The petitioner filed Ext.P17, in reply to such notices, taking the contention, at the first instance, that the petitioner was not a dealer or trader in gold or gold ornaments. 4. The petitioner asserted that, the petitioner was engaged only in the purification of gold and gold ornaments, on contract with the dealers in gold ornaments, within and outside Kochi. The petitioner also specifically accounted the quantity, seized from the petitioner's premises, by Ext.P7 to P13 vouchers issued by various registered dealers in gold and gold ornaments, within the State of Kerala. Exts.P7 to P13 are vouchers evidencing issuance of gold and gold jewelery to the petitioner, for conversion purposes. In fact, the pure gold bars coming to 3000 grams were issued by one dealer, by name Alapat Gold, who had purchased the same on various dates from the Bank of Nova Scotia. Ext.P13 and P13(a) are receipts issued in lieu of the purchase of bullion made by the Alapat Gold Den (P) Ltd. The gold bars are identified by the numbers, given in such official receipts, which according to the petitioner is clearly printed in the bars. 5. The dealers who issued Ext.P7 to P13 vouchers supported the case of the petitioner and admitted, before the authorities that the gold seized from the premises of the petitioner, belongs to them. The petitioner was entrusted with the same for distillation and conversion even according to such dealers. Petitioner hence approached the Income Tax Department, with an application under section 132B of the Act, for an expeditious conclusion of the proceedings. 6. The petitioner was anxious for the release of the gold, which, admittedly, belonged to other dealers and was entrusted to him for distillation purposes. While so, the Commercial Taxes Department also issued Ext.P20 notice, alleging suppression of sales and threatening penalty for attempt to evade tax at double the tax, so sought to be evaded. The tax evasion was computed on the basis of the exact quantity of the gold seized by the Police and handed over to the Income Tax department. The petitioner approached this Court with a specific prayer for release of the gold seized, as also the return of cash seized with interest and for declaring the entire proceedings to be vitiated for reason of the search and seizure having no sanction of law. 7. The petitioner approached this Court with a specific prayer for release of the gold seized, as also the return of cash seized with interest and for declaring the entire proceedings to be vitiated for reason of the search and seizure having no sanction of law. 7. On admission, this Court in W.P(C) No.11000/2010 granted an interim order wherein the petitioner was permitted to get release of the gold, on furnishing a bank guarantee. The petitioner being in financial distress, was unable to furnish the Bank guarantee and hence the gold was retained by the Income Tax Department. Subsequently, the Income Tax Department by Ext.P27 series concluded the assessment for various years. 8. For the assessment year 2010-2011, Ext.P27(f) is relevant, insofar as, the seizure, which is the subject matter of the writ petition, was effected in the previous year being 2009-2010. The assessment completed for the assessment year 2010-2011, specifically dealt with the said issue as extracted hereunder :- 7.1. The claim of the assessee was verified. The six jewelers have confirmed that the gold seized belong to them. The confirmation filed by the jewelers as well their issue register/stock register showing the issue of gold to the assessee in the quantities claimed by the assessee, has been placed on file. So in the matter of gold seized, the claim of the assessee is accepted. Accordingly consequent action as provided in Section 153 C will be separately initiated. 9. Hence the proceedings initiated under the Income Tax Act, by the authority under the Act, found the contention of the petitioner to be justified and that the gold belonged to third parties who were dealers in gold jewellery. No proceedings to assess the income, on the basis of the sale of gold seized, was resorted to by the Income Tax Department, though the assessments of the petitioner was re-opened to make additions on the income received from the business. The Income Tax Department, thus retained no further interest in the gold seized. 10. In such circumstance, the petitioner was before this Court again claiming release of the gold to the petitioner, un-conditionally. This Court, directed the Commissioner of Income Tax to consider the said request and the same was considered under Ext.P35. The Income Tax Department, thus retained no further interest in the gold seized. 10. In such circumstance, the petitioner was before this Court again claiming release of the gold to the petitioner, un-conditionally. This Court, directed the Commissioner of Income Tax to consider the said request and the same was considered under Ext.P35. Ext.P35 noticed the penalty proceedings initiated against the petitioner, by the Commercial Taxes Department of the State and only on that ground, found that the gold bars and gold ornaments cannot be released. The Income Tax Department thus retained the gold; only for the purpose of conclusion of the proceedings by the Commercial Taxes Department. 11. Before Court, at the time of hearing, the learned Standing Counsel, Government of India (Taxes), would, on instruction from the Income Tax Department, submit that they have no subsisting claim on the gold now retained with them. The only subsisting claim hence, if at all, is of the Sales Tax Department. 12. The above matter was heard earlier on 13.06.21014 and the matter was adjourned to 17.06.2014 for further hearing. At that point of time, the petitioner was issued with an order under Section 67(1) of the Kerala Value Added Tax Act, 2003 (for short "KVAT Act") wherein the penalty proceedings initiated as per Ext.P2 was concluded, imposing penalty at double the tax attempted to be evaded, which order was produced as Ext.P36 in O.P No.11000/2010. In the context of that, being an order passed subsequently, the petitioner rightly filed a further writ petition numbered as W.P(C) 16554/2014, challenging the imposition of penalty, by the order produced as Ext.P18, in the subsequent writ petition. 13. The pleadings are completed in the earlier writ petition and the only ground on which the subsequent order is assailed, is of limitation as provided under Section 67 of the KVAT Act. The matters were posted together and adjourned at the request of the State and taken up for hearing, today, on consent of both the parties. 14. As has been noticed earlier, the Income Tax Department having no subsisting claim, what would arise for consideration is the sustainability of the final order, passed by the Commercial Taxes Department. The penalty proceedings was commenced on 19.01.2010, by Ext.P22, immediately after the seizure was effected. The Commercial Taxes Department and its officers rested contend after issuance of such notice. As has been noticed earlier, the Income Tax Department having no subsisting claim, what would arise for consideration is the sustainability of the final order, passed by the Commercial Taxes Department. The penalty proceedings was commenced on 19.01.2010, by Ext.P22, immediately after the seizure was effected. The Commercial Taxes Department and its officers rested contend after issuance of such notice. The Department then, by Ext.P15, dated 10.03.2014 again, issued a notice in continuance of the earlier proceeding, and without even giving an opportunity for hearing to the petitioner, concluded the same, by Ext.P18 dated 05.05.2014. 15. The learned Government Pleader, would alertly point out that the subsequent notice, offered an opportunity for hearing, which the learned counsel appearing for the petitioner would counter on the submission that he had in fact, sought further time by Ext.P15, which was not allowed. In any event, the fact remains that the penalty order was hastily concluded after the notice issued on March, 2014; in May 2014. In any event, this Court is not concerned with any question of violation of principles of natural justice nor even with the action of the authority in having concluded the proceedings when the writ petition was being heard. The emphasis is only on the question of limitation, which has to be considered on the specific words employed in Section 67. 16. The proviso to Section 67(1) reads as follows : Provided that the authority empowered under this section shall dispose of the case within three years from the date of detection of offence mentioned under this section except where the extension of time is granted by the Deputy Commissioner. The three year period was brought in by substitution as per the Kerala Finance Act, 2005; prior to the seizure of gold, which is the subject matter of the writ petition. There is no contention by the State that at any point of time, extension was granted by the Deputy Commissioner. Ext.P18 definitely is beyond the period of limitation, as provided in the proviso. It is also to be noticed that if the State's contention was that the petitioner was involved in sale of gold ornaments, normally the Department would have taken up proceedings for the offence of non-registration of the petitioner as a dealer and for assessment for the years in which the petitioner is deemed to have engaged in sale of gold or gold ornaments. 17. 17. A learned Single Judge of this Court had, when the limitation period was one year, found that the disposal of the penalty proceedings should be made within the time stipulated, from the date of detection of the offence and that the order passed beyond the period of limitation would be illegal, (Sivan Pillai v. Commercial Tax Officer(Audit Assessment)[(2010) 18 KTR 90 (Kerala). 18. In such circumstance for the short but all encompassing ground of limitation, the order Ext.P18 has to be set aside. The proceedings initiated by the Commercial Taxes Department having been set aside, no subsisting claim, can be raised on the gold retained by the Income Tax department, by the State. 19. The reliefs prayed for in W.P(C) No.11000/2010, with respect to the declaration of the entire proceedings as illegal and without sanction of law, need not be considered at this stage, since evidently, the seizure has resulted in re-opening of assessment by the Income Tax department and further additions made to the income of the petitioner. The claim for interest on the cash seized would also not survive, since admittedly, such amounts have been adjusted towards the income tax dues imposed on the petitioner. What remains for consideration is the release of gold. W.P(C) No.16554/2014 is allowed, setting aside Ext.P18 order and the consequential demand made as per Ext.P1. W.P(C)11000 of 2010 as a consequence is allowed declaring that admittedly, there is no claim for the Income Tax Department or the Commercial Taxes Department; over the gold seized by Ext.P5 mahazar. 20. In such circumstance there shall be a further direction in W.P(C)11000/2010, to the Commissioner of Income Tax, the 4th respondent to release the gold immediately to the petitioner, without fail and within two weeks from the date of production of the certified copy of this judgment. 21. It is pertinent that in Ext.P18, the default of the petitioner in not having taken registration under Section 15 of the KVAT Act, was specifically noticed. The learned Government Pleader would point out that the same is a continuing offence. However, when Ext.P18 order has been set aside by this Court, the said observation is of no consequence. The Department being aware of the seizure of gold in the year 2010, and having initiated proceedings for penalty, chose not to take any proceedings against the petitioner for assessment or for failure to take out registration. However, when Ext.P18 order has been set aside by this Court, the said observation is of no consequence. The Department being aware of the seizure of gold in the year 2010, and having initiated proceedings for penalty, chose not to take any proceedings against the petitioner for assessment or for failure to take out registration. The penalty proceedings too have been set at naught for reason of the same being barred by limitation. Even otherwise, the income tax authorities having found no sale of gold, being effected by the petitioner, it is a moot question as to whether the commercial tax authorities could ferret out a sale from the facts disclosed. In such circumstance there is absolutely no reason to take any proceedings at this point of time, under the Kerala Value Added Tax Act, Writ petitions are allowed, leaving the parties to suffer their costs.