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2017 DIGILAW 761 (KER)

Parisons Foods (P) Ltd. v. State of Kerala

2017-04-12

A.HARIPRASAD, P.R.RAMACHANDRA MENON

body2017
JUDGMENT : P.R. Ramachandra Menon, J. 1. A common thread connects all these cases and hence they have been grouped together and heard accordingly. The question to be considered is, whether the assessment under the Central Sales Tax Act ['C.S.T. Act' in short] could be completed by the authorities of the Department of Commercial Taxes of the State availing the extended time for the relevant year, in terms of the Kerala General Sales Tax Act/Rules ['K.G.S.T. Act/Rules' in short], tracing the source of power to S. 9(2) of the C.S.T. Act, R.6(5) of the C.S.T. [Kerala] Rules, S. 17 of the K.G.S.T. Act, S. 25 of the Kerala Value Added Tax Act [K.V.A.T. Act in short] and the relevant Rules thereunder. The appellant in the Writ Appeal is a limited Company engaged in the manufacture of refined, bleached and deodorised palm oil [RDB Palm Oil] and a registered dealer on the rolls of the second respondent for the purpose of assessment under the K.G.S.T. Act, C.S.T. Act and K.V.A.T. Act. In respect of the assessment year 2003-04, returns were filed by the assessee, disclosing a total interstate sales turnover of Rs.77,77,79,4446.50 and claimed exemption on the turnover of Rs.77,08,88,957.81, being consignment sales. It is stated that though returns were filed within the prescribed period of C.S.T. Act and C.S.T. (Kerala) Rules, the appellant was asked to produce the books of accounts for the year 2003-04 only on 27.05.2009. It was thereafter, that Ext. P1 pre-assessment notice dated 30.05.2009 was issued under R.6(5) of the C.S.T. (Kerala) Rules by four members of the 'Fast track team' under S. 17D of the K.G.S.T. Act. On receipt of Ext. P1, the appellant submitted Ext. P2 reply dated 15.06.2009, whereupon Ext. P3 fresh reassessment notice dated 22.12.2009 was issued, which was followed by Ext. P4 revised pre-assessment notice dated 22.01.2010. Contending that all the aforesaid proceedings were hopelessly barred by limitation, the appellant approached this Court by filing W.P.(C) No. 4832 of 2010. 2. The main contention raised before the learned single Judge was that, the course stipulated under S. 9(2) of the C.S.T Act is subject to other provisions under the C.S.T. Act and Rules made thereunder. Invoking the power under S. 13(3) and (4) of the C.S.T. Act, the State of Kerala formulated C.S.T.(Kerala) Rules. 2. The main contention raised before the learned single Judge was that, the course stipulated under S. 9(2) of the C.S.T Act is subject to other provisions under the C.S.T. Act and Rules made thereunder. Invoking the power under S. 13(3) and (4) of the C.S.T. Act, the State of Kerala formulated C.S.T.(Kerala) Rules. Though no specific time limit is prescribed under S. 6(5) of the C.S.T. Rules, it has to be completed within reasonable time. Maximum period for completing the re-assessment under the C.S.T. Act, as stipulated under R.6(7)/6(8) is 'four' years and under such circumstances, it is contended that the original assessment should have been completed within the maximum period of 'four' years under R.6(5) as well. In other words, the maximum period of 'four' years stipulated under R.6(7) of the C.S.T. (Kerala) Rules was sought to be read into R.6(5) of the C.S.T. Rules. It was accordingly, that interference was sought for, seeking to set aside Exts. P1, P2, P3 and P4 notices and all further proceedings. After hearing both the sides, the learned single Judge, adverting to the relevant provisions of law and the judicial precedents in the subject matter held that, in so far as there was no time limit under R.6(5) of the C.S.T. (Kerala) Rules, the request made by the appellant, to read time factor in respect of reassessment under Rules 6(7) and 6(8) of the Rules, into R.6(5) was not liable to be acceded to, and that S. 17 of the K.G.S.T. Act would come to the rescue of the authorities of the Commercial Taxes Department. S. 17 of the K.G.S.T. Act, as amended by the Finance Act 2009, has extended the time to complete assessment in question upto 31.03.2010 and this being the position, Ext. P1, P3 and P4 notices were well within time. It was accordingly, that interference was declined and the Writ Petition was dismissed, however, without prejudice to the right of the petitioner to file objection to Exts. P1, P3 and P4 notices and raise all available contentions. This, in turn, is under challenge in the Appeal. 3. When the matter came up for consideration before the Bench on 22.07.2013, the appeal was admitted, also granting interim stay of all further proceedings pursuant to Ext. P1, P3 and P4 notices and raise all available contentions. This, in turn, is under challenge in the Appeal. 3. When the matter came up for consideration before the Bench on 22.07.2013, the appeal was admitted, also granting interim stay of all further proceedings pursuant to Ext. P1 notice issued by the second respondent/Subsequently, another Bench of this Court modified the said interim order on 12.12.2013 directing that, it will be open for the second respondent to proceed with the matter and make assessment, however, making it clear that recovery will be kept in abeyance. Since the said interim order came to be expired, it was sought to be revived by filing I.A. No. 135 of 2014, wherein an order was passed on 04:02.2014, granting interim stay of recovery pursuant to Exts. P1, P3 and P4 notices; leaving it open to the second respondent to complete the assessment which was to be provisional; subject to the result of the Writ Appeal. 4. It has been brought to the notice of this Court by the respondent/State, as per memo dated 17.10.2013 filed by the Government Pleader, that the Commercial Tax Officer, Avinashi, vide letter dated 07.06.2004 had informed the second respondent that they had invalidated the 'F' Forms issued to the dealer by name M/s. Sakthi Murugan Agro Foods, Annur [registered under the said authority], who happens to be the consignee, to whom goods were sold by the appellant/assessee herein. A copy of the said letter is also produced [along with the said memo], whereby the Commercial Tax Officer, Avinashi has requested the second respondent [assessing authority of the appellant herein] that 15 form 'F' declarations issued in connection with the transaction between the appellant and the Sakthi Murugan Trading Company, were to be considered as invalid and that the exemption claimed based on the said 'F' forms as 'consignment sales' might be negated. 5. Coming to O.T. Rev. No. 180 of 2015, the petitioner therein is a dealer engaged in the business of 'Timber' and is an assessee on the rolls of the Commercial Tax Officer, Chavakkad. In respect of the assessment year 2005-06, C.S.T. assessment was completed by passing Annexure A1 assessment order in the year 2011, which was stated as far beyond limitation. No. 180 of 2015, the petitioner therein is a dealer engaged in the business of 'Timber' and is an assessee on the rolls of the Commercial Tax Officer, Chavakkad. In respect of the assessment year 2005-06, C.S.T. assessment was completed by passing Annexure A1 assessment order in the year 2011, which was stated as far beyond limitation. It was sought to be challenged by filing an appeal, which however did not turn to be successful and the appeal was dismissed as per Annexure II order dated 20.09.2011 passed by the first appellate authority. Though the petitioner/assessee had moved the Forum by way of second appeal, it also did not yield any result and the appeal was dismissed as per Annexure A III, holding that. there was no time limit under R.6(5) of the C.S.T (Kerala) Rules and that the time limit prescribed for reassessment under Rr.6(7) and 6(8) of the Rules, could not be read into R.6(5) of the said Rules. It was observed that, under such circumstances, the authority could fall back to S. 17 of the K.G.S.T. Act, as mentioned in the Finance Act 2009, which enabled the authority to complete assessment for the year 2005-2006 on or before 31.03.2011. Since the assessment was effected within time, it was held that no interference was warranted. This is under challenge in this Revision Petition, raising similar contentions as raised in the Writ Appeal. Though an interim order of stay was granted for a period of four months on 13.11.2015 in I.A. No. 2916 of 2015, it is seen that same was not extended any further. 6. Petitioner in W.P.(C) No. 40931 of 2016 is an assessee on the rolls of the second respondent for the purpose of assessment under the C.S.T. Act/K.V.A.T. Act. In respect of the assessment year 2010-11, Ext. P1 pre-assessment notice was issued by the second respondent under S. 6 (5) of the C.S.T. Rules, which was followed by Ext. P2 revised notice dated 27.09.2016. On submitting Ext. P3 reply dated 25.10.2016 by the petitioner, Ext. P4 notice came to be issued on 31.10.2016. Petitioner submitted Ext. P5 reply dated 18.11.2016; pursuant to which the assessment came to be finalized as per Ext. P6 order dated 25.11.2016, fixing liability on the petitioner. It is stated that the petitioner had preferred Ext. P7 application for rectification, but the outcome is not revealed from the materials on record. P4 notice came to be issued on 31.10.2016. Petitioner submitted Ext. P5 reply dated 18.11.2016; pursuant to which the assessment came to be finalized as per Ext. P6 order dated 25.11.2016, fixing liability on the petitioner. It is stated that the petitioner had preferred Ext. P7 application for rectification, but the outcome is not revealed from the materials on record. Apprehending coercive proceedings, the petitioner approached this Court by filing the Writ Petition, which was admitted, also granting interim stay. The contention raised by the petitioner is exactly similar; in terms of the contentions in the Writ Appeal and the O.T. revision. 7. Heard the learned counsel for the appellant/writ petitioner/revision petitioner as well as Sri. C.K. Govindan, the learned Special Government Pleader [Taxes]. 8. As mentioned already, the submissions made before the learned single Judge in W.P.(C) No. 4832 of 2010 [forming subject matter of Writ Appeal] have been reiterated before this Court as well, also trying to place reliance on the verdict rendered by the Apex Court in State of Punjab & Ors. v. Bhatinda District Co-operative Milk Producers Union Ltd., (2007 (4) KLT SN 52 (C. No. 57) SC : (2007) 11 SCC 363 ) to contend that the proceedings initiated by the authorities/second respondent are highly barred by limitation. It is contended by the learned counsel that, in so far as the wordings under S. 9(2) of the C.S.T. Act are quite categoric, that the power given there under being subject to other provisions given under the C.S.T. Act, the course open to the authorities of the Commercial Tax Department of the State in relation to the assessment under Section K.C.G.S.T./K.V.A.T. Act cannot be made use of for completing assessment under the C.S.T. Act/C.S.T. (Kerala) Rules. 9. On going through the verdict reported in (2007) 11 SCC 363 (cited supra), the law declared is only that the power to revise assessment/proceedings 'suo motu' under S. 21 of the Punjab General Sales Tax Act, 1948 should be exercised within a reasonable period. There cannot be any dispute with regard to the dictum therein. Admittedly, no time limit is prescribed under R.6(5) of the C.S.T. (Kerala) Rules to complete the C.S.T. assessment and as such, it has to be completed within reasonable time, following the dictum laid down by the Apex Court in the said decision. "What is the reasonable time", alone forms the significant question. Admittedly, no time limit is prescribed under R.6(5) of the C.S.T. (Kerala) Rules to complete the C.S.T. assessment and as such, it has to be completed within reasonable time, following the dictum laid down by the Apex Court in the said decision. "What is the reasonable time", alone forms the significant question. In this context, the appellant/petitioners seek to contend that, in so far as the re-assessment under R.6(7) and 6(8) of the C.S.T. (Kerala) Rules is stipulated to be completed within 'four' years, this period shall be considered as the reasonable period, to be read into Rule 6(5) of the C.S.T. (Kerala) Rules. This proposition does not appear to be attractive, as the field is governed by S. 9(2) of the C.S.T. Act, read with Rule 6(5) of C.S.T. (Kerala) Rules. The power and procedure under the relevant provisions of State enactments/Rules enables the authorities to complete assessment under the respective Statute. 10. Section 9(2) of C.S.T. Act reads as follows: 9. This proposition does not appear to be attractive, as the field is governed by S. 9(2) of the C.S.T. Act, read with Rule 6(5) of C.S.T. (Kerala) Rules. The power and procedure under the relevant provisions of State enactments/Rules enables the authorities to complete assessment under the respective Statute. 10. Section 9(2) of C.S.T. Act reads as follows: 9. Levy and collection of tax and penalties:- (1) xxxxxx xxxxxx (2) Subject to the other provisions of this Act and the rules made thereunder the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, re-assess, collect and enforce payment of tax, including any interest or penalty, payable by a dealer under this Act as if the tax or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any or the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relation to returns, provisional assessment advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, interest of penalty charging or payment of interest compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: (emphasis supplied) 11. It is true that the proceedings had to be finalized by the authorities of the State as if it were the proceedings in respect of assessment/collection of tax payable to the State. Thus, a 'deeming provision' is introduced, enabling the authorities to bank upon the provisions of the State law, to deal with the situation. It is true that the proceedings had to be finalized by the authorities of the State as if it were the proceedings in respect of assessment/collection of tax payable to the State. Thus, a 'deeming provision' is introduced, enabling the authorities to bank upon the provisions of the State law, to deal with the situation. The position may be different, if any specific provision is incorporated under the C.S.T. Act/Rules in relation to the issue in question, by virtue of incorporation of term 'subject to other provisions of this Act and the rules made thereunder' under S. 9(2). In so far as the petitioners/appellant have admitted that Rule 6(5) of the C.S.T. (Kerala) Rules does not prescribe any limitation, although limitation is prescribed in respect of re-assessment under Rules 6(7) and 6(8) of the Kerala Rules, the field is left open and not governed by any restriction under the Central Act/Rules. Obviously, a conscious decision was made by the 'law making authority' to deal with the proceedings under Rule 6(5) and Rule 6(7) of the C.S.T. [Kerala] Rules. Enquiry to ascertain the logic behind such conscious decision is not the job of this Court. The law has to be taken as it is, more so, when there is no ambiguity as to the scope of the provision. By virtue of the words "subject to other provisions...." under S. 9(2) of the C.S.T. Act, the effect is only that, where there is any specific provision in the C.S.T. Act/Rules, the corresponding provision made under State Act/Rules cannot be made applicable. Admittedly, since no time limit is prescribed for the assessment under the C.S.T. Act, and as per Rule 6(5) of the C.S.T. (Kerala) Rules, it is quite open for the authorities to bank upon similar provision under the K.G.S.T. Act and K.V.A.T. Act and the Rules to have the assessment proceedings finalized. By virtue of the relevant provisions in the Finance Act, time for completing assessment in respect of the assessment year has been specifically extended by the State Government, to the requisite extent and as such, the C.S.T. assessment proceedings initiated/finalized by the authorities by issuing pre-assessment notice cannot be held as barred under any circumstances. 12. By virtue of the relevant provisions in the Finance Act, time for completing assessment in respect of the assessment year has been specifically extended by the State Government, to the requisite extent and as such, the C.S.T. assessment proceedings initiated/finalized by the authorities by issuing pre-assessment notice cannot be held as barred under any circumstances. 12. It is also relevant to mention in this context, that a single Judge of this Court [one of us - PRRM (J)] had occasion to consider the question whether S. 17D of the K.G.S.T. Act is applicable to C.S.T. assessment, which was answered in 'positive', as per the decision rendered in Wilson Joseph v. Commercial Tax Officer (Ker.), (2011) 42 VST 173 (Ker.). The said decision was confirmed by a Division Bench of this Court as per the verdict reported in ( 2010 (1) KLT 201 : (2011) 42 VST 174 (Ker.) : 2010 (18) KTR 335). In W.P.(C) No. 4832 of 2010 [subject matter of W.A. No. 1096 of 2013], the challenge was against Exts. P1, P3 and P4 notices, which came to be stayed by virtue of the interim order of stay granted by this Court. But for the stay granted by this Court, nothing would have prevented authorities in finalizing the proceedings in accordance with law. The principle of "actus curiae neminem gravabit" (an act of the Court shall prejudice no man) is attracted in such situation and as such, the assessment permitted to be finalized by virtue of the modification of the interim order already passed has to be reckoned as well within time. If the appellant/petitioners are aggrieved of fixation of the liability on any ground other than limitation, it is still open for them to challenge the same in accordance with law. We find no merit in the Writ Appeal, Revision Petition and the Writ Petition. They are dismissed accordingly.