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2024 DIGILAW 402 (KER)

V2 Associates v. State of Kerala

2024-03-27

M.A.ABDUL HAKHIM

body2024
JUDGMENT : M.A. ABDUL HAKHIM, J. 1. The petitioner, a partnership firm claims to be a registered dealer under the Kerala Value Added Tax Act, (for short “KVAT Act”) has filed this writ petition challenging Ext.P3 Order under Section 25(1) of the KVAT Act and consequent Ext.P5 Demand on the ground it pertains to the Assessment Year 2009-10; that the limitation period of five years provided in Section 25(1) got expired on 31/03/2015; and that the proceedings leading to Ext.P3 was initiated after the said date and hence the same is barred by limitation. 2. It is true that Ext.P3 order is appealable as contended by the learned Government Pleader. But this Writ Petition has been remaining in this Court since the year 2016 with an unconditional interim order staying all further proceedings pursuant to Ext.P3 and P5 in favour of the petitioner, I am of the view that the interest of justice would demand disposal of this writ petition on merits without relegating the petitioner to alternate remedy available under the Statute. That apart, the Respondent No. 2 has expressed his stand through the Counter Affidavit dated 29/06/2016 in answer to the contentions raised in the writ petition. This Court would be fully justified in considering long pending cases on merits, when the liscould be decided without spending much judicial time and without resorting to much adjudicatory process on the basis of admitted set of facts or facts revealed from admitted documents. For disposal of the writ petitions like this, the judicial time to be spent on it would be same, either it be for considering the matter on merits or for relegating the matter to the Statutory Authority. When long pending matters are listed for final hearing, the Court has to compare the amount of official time and energy required to be spent to bring the matter before the Statutory Authority and to decide the matter by the Statutory Authority with the judicial time required by this Court for considering the matter on merits. If this Court disposes such matters, much official and adjudication time could be spared and better utilised. If this Court disposes such matters, much official and adjudication time could be spared and better utilised. But, If the decision is to be taken after undertaking long and time consuming adjudicatory process or the adjudicatory process involves answering multiple questions of law and/or facts or findings on factual issues it is better for this Court to leave the matter for the decision of the Statutory Authority. This principle shall be applied only in the cases of long pending matters and shall not be understood to enable bypassing of statutory remedies. The Court has to exercise its discretion applying the facts and circumstances of each case. I lend support from the Division Bench judgment of this Court in Sujatha M. vs. Secretary, Cochin Devaswom Board, Thrissur, 2014 (4) KLT 79 which specifically held that the rule of alternate remedy is not an absolute bar but only a self imposed restriction. So exercising my discretionary power applying the relevant inputs in the present case, since the issue to be decided is only the question of limitation on the admitted facts, I deem it fit to decide the writ petition on merits. Relegating the writ petitioner to alternative remedy available under the statute at this distance of time would quite be inappropriate and would amount travesty of justice. 3. As per the Counter Affidavit of the Respondent No. 2, the proceedings leading to Ext.P3 was initiated on the basis of two OR files viz. Order No. OR 418/09-10 dated 26.09.2012 and Order No. OR 85/09-10 dated 15.02.2016; that the assessment of the petitioner relates to the year 2009-10 and that the Pre-Assessment Notice under Section 25(1) of the KVAT Act was issued on 18.01.2016; and that as per Finance Act, 2015, the period for completion of assessment expired on 31.03.2015 was extended up to 31.03.2016 by Section 25B and hence the Pre-Assessment Notice dated 18.01.2016 is well within the extent period of limitation. 4. It is well settled by the decision of the Hon'ble Supreme Court in Assistant Commissioner (Assessment) vs. M/s. Cholayil Private Limited, 2023 KHC Online 7078 that the limitation period of five years mentioned in S.25(1) of the KVAT Act is to “proceed to determine’ the assessment of escaped turnover where as the time extended in the Third Proviso to S.25(1) (as existed before the amendment as per Kerala Finance Act, 2017) is for the completion of assessment. According to the Hon'ble Supreme Court, the Third Proviso to S.25(1) does not extent the period of limitation for the initiation of proceedings for assessment provided in S.25(1). 5. The aforesaid decision of the Supreme Court arose from the Full Bench Decision of this Court in Cholayil Private Limited v. Assistant Commissioner (Assessment) 2015 (4) KLT 516 . The Full Bench of this Court answered the Reference after entering the following findings: “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.25-B 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.25 -B 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.25 -B 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(l) 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.25 -B 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.” 6. In S.25B also the words used is “completion of assessment” like the words used in un-amended Third Proviso to S.25 (1) and not “proceed to determine” as used in S.25(1). Hence the extension of period of limitation provided in S.25B is not for extending the period of limitation of five years provided in S.25(1) for initiation of the proceedings. The limitation period for completion of assessment cannot be for the initiation of proceedings. I find no merit in the contention put forward in the Counter Affidavit of the Respondent No. 2 on the strength of S.25B. That apart, there is no case for the respondents that the limitation period is extended by the Deputy Commissioner invoking his power under S.25B. 7. I find no merit in the contention put forward in the Counter Affidavit of the Respondent No. 2 on the strength of S.25B. That apart, there is no case for the respondents that the limitation period is extended by the Deputy Commissioner invoking his power under S.25B. 7. Ext.P1 Pre-Assessment Notice under S.25(1) with respect to Ext.P3 Order was issued on 18.01.2016. This is admitted by the Respondent No. 2 in his Counter Affidavit. It is after the completion of five year limitation period on 31.03.2015. 8. I hold that the proceedings leading to Ext.P3 orders were initiated as per Ext.P1 Pre-Assessment Notice after the limitation period prescribed under S.25(1) of the KVAT ACT and that Ext.P3 order is bad in law. Ext.P5 Demand is issued for recovery of the amount in Ext.P3 order and hence Ext.P5 does not have leg to stand. 9. Accordingly I allow this Writ petition setting aside Ext.P3 Order and Ext.P5 demand notice.