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2014 DIGILAW 817 (KER)

Cholayil Private Limited v. Assistant Commissioner (Assessment)

2014-10-16

BABU MATHEW P.JOSEPH, C.T.RAVI KUMAR, T.B.RADHAKRISHNAN

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ORDER : T.B. Radhakrishnan, J. 1. Heard the learned counsel on all sides. This Writ Appeal is before the Full Bench on a reference by the Division Bench, pointedly on the issue as to whether Tirur Medical Stores v. State of Kerala ( 1978 KLT 415 , (1978) 42 STC 118 (Ker.)) was correctly decided by the Division Bench. The issue that arose before the Division Bench in the case in hand was on a plea as to the scope of sub-section (1) of S.25 of the Kerala Value Added Tax Act, 2003, for short, the 'K.V.A.T. Act'. The Division Bench noted that the said provision and S. 19 of the Kerala General Sales Tax Act, 1963, for short, the 'KGST Act', as it then stood, are in pari materia. Though Tirur (supra) was rendered construing S. 19 of the K.G.S.T. Act, that decision became relevant for the present case and hence, a reference doubting the correctness of that precedent. 2. Tirur (supra) was rendered holding that the phrase 'proceed to determine' in S. 19 of the K.G.S.T. Act does not require the determination and assessment, to the best of judgment, being completed within the period of time mentioned in S. 19 of the K.G.S.T. Act and all that was required was that the relevant proceeding was initiated within the statutory time frame. In that case, the Bench referred to the decisions of the Hon'ble Supreme Court of India in Sales Tax Officer, Special Circle, Ernakulam & Anr. v. Sudarsanam Iyengar & Sons ( (1970) 25 STC 252 (SC)), State of Punjab v. Murlidhar Mahabir Parshad ( (1968) 21 STC 29 (SC)), Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur & Ors. ( (1963) 14 STC 976 (SC)) and State of Punjab & Ors. v. Tara Chand Lajpat Rai ( (1967) 19 STC 493 (SC)). In Sudarsanam Iyengar (supra), the Hon'ble Supreme Court considered the other decisions referred here. ( (1963) 14 STC 976 (SC)) and State of Punjab & Ors. v. Tara Chand Lajpat Rai ( (1967) 19 STC 493 (SC)). In Sudarsanam Iyengar (supra), the Hon'ble Supreme Court considered the other decisions referred here. Assimilating the ratio in those precedents, the Bench took the view that the use of the 'proceed to determine' in S. 19 of the K.G.S.T. Act which provides for best judgment of escaped turnover, means that the assessing authority has to proceed to determine, in the sense, that the proceedings for the determination of the escaped turnover must commence within the period stipulated and the word 'assess' in that section is used in the wider sense as given to it by the Hon'ble Supreme Court in Sudarsanam Iyengar (supra), so as to include the proceeding leading to the final order of assessment. In Tirur (supra), it was also laid down that it does not matter that the final order itself was passed beyond the period stipulated in S. 19 of the K.G.S.T. Act. Tirur is precedent for the principle that proceeding has to be initiated by the issuance of notice within the period prescribed in S.19 of the K.G.S.T. Act. The next specific view taken in Tirur is that the phrase 'proceed to determine' in S. 19 of the K.G.S.T. Act only requires the assessing authority to proceed to determine and commence such activity of decision making by issuance of notice within the period fixed in S. 19 of the K.G.S.T. Act. Having regard to the law laid down in Sudarsanam Iyengar (supra) which is binding, we see no reason to persuade ourselves to disagree with the decision in Tirur (supra) on the interpretation of S. 19 of the K.G.S.T. Act as it stood at that relevant point of time. That statutory provision is in pari materia with sub-section (1) of S. 25 of the K.V.A.T. Act which falls for consideration in the case in hand. So much so, to the aforesaid extent, Tirur applies to cases falling under S. 25(1) of the K.V.A.T. Act as well, including the case in hand. 3. That statutory provision is in pari materia with sub-section (1) of S. 25 of the K.V.A.T. Act which falls for consideration in the case in hand. So much so, to the aforesaid extent, Tirur applies to cases falling under S. 25(1) of the K.V.A.T. Act as well, including the case in hand. 3. Noticing that S. 19 of the K.G.S.T. Act is in pari materia with the provision in S. 25 the K.V.A.T. Act as it stood before the introduction of the third proviso to sub-section (1) of S. 25, at the first instance with effect from 1.4.2010 as per the Kerala Finance Act, 2010 and later by the Kerala Finance Act, 2011 with effect from 1.4.2011, we see no reason to take a different view but to follow Tirur (supra) which is correctly decided on a proper interpretation of S. 19 of the K.G.S.T. Act. The effect of the aforenoted third proviso introduced with effect from 1.4.2010, which says that the time limit for the completion of assessment under sub-section (1) of S. 25 of the K.V.A.T. Act shall be extended upto a particular date given in that proviso, may appear to indicate that the legislature had understood sub-section (1) of S. 25 of the K.G.S.T. Act as having provided an outer limit, as to time for completion of assessment proceedings in terms of S. 25(1). We may hasten to add that this is not an issue pointedly covered by the Reference Order of the Division Bench to the Full Bench which is only on the premise that if no outer time limit is conceived for in sub-section (1) of S. 25 of the K.V.A.T. Act, there would be unending delay, and proceedings will lie without any conclusion for years to come. While dealing with fiscal matters and judicial review of legislations including by its interpretation, such factors relating to the time frame for disposal of matters by the assessing authorities cannot by themselves be the yardstick to judicially lay down any structured time frame for any particular proceeding. Primarily, that is a matter in the legislative domain including through subordinate legislations, if duly authorised. Though we have noted the third proviso to sub-section (1) of S. 25 of the K.V.A.T. Act, the Full Bench is not called upon, through the Reference Order, to consider the impact of that proviso. Primarily, that is a matter in the legislative domain including through subordinate legislations, if duly authorised. Though we have noted the third proviso to sub-section (1) of S. 25 of the K.V.A.T. Act, the Full Bench is not called upon, through the Reference Order, to consider the impact of that proviso. Similarly, we may also indicate that the introduction of third proviso to sub-section (1) of S. 25 of the K.G.S.T. Act was made contemporaneous with similar amendment by including a proviso to S. 24 of that Act. Later, S. 25B was introduced to K.V.A.T. Act giving authority to the Deputy Commissioner to extend the period of completion of assessment under S. 25 or in S. 24 notwithstanding anything contained in those sections provided the conditions laid down in S. 25B are satisfied. All these taken together, the net effect of the introduction of the third proviso to sub-section (1) of S. 25 and the inclusion of S. 25 within the canopy of S. 25B is indicative of the fact, that for all intents and purposes, the legislature fixed an outer time limit for completion of assessment proceedings under sub-section (1) of S.25, at least, in cases to which the provision in S. 25(1) as amended by the Kerala Finance Act, 2010 and the later amendments sustaining that provision or conferring power of enlargement of time applies. Obviously, even if S. 25B is to guide the Deputy Commissioner, the time limit has to be reasonable because, there cannot be an indefinite proceeding under S. 25(1) in view of the third proviso to that section. We answer the reference as aforesaid. The files will be placed before the Division Bench for further consideration.