1983 (7) TMI 280 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Unreasonable delay in passing revised assessment orders.
2. Absence of a statutory time-limit for completing assessments.
3. Validity and propriety of assessment orders issued after a long delay.
4. Preservation of accounts and documents by the assessee.

Detailed Analysis:

1. Unreasonable delay in passing revised assessment orders:
The petitioner was assessed to sales tax for the years 1964-65 and 1965-66 on 16th February 1967 and 15th February 1967, respectively. The assessments were set aside by the Appellate Assistant Commissioner on 6th March 1968 and remanded for fresh disposal. Notices for revised assessments were issued on 15th July 1981, after a delay of 13 years, which the petitioner contended was unjustified and illegal. The court observed that the unreasonable delay in completing the assessments was a significant ground for challenging the validity of the revised assessment orders.

2. Absence of a statutory time-limit for completing assessments:
The counsel for the revenue argued that there is no provision in the Kerala General Sales Tax Act or Rules that mandates a time-limit for completing assessments. However, the court questioned whether the absence of a statutory time-limit allows the assessing authority to initiate action after any number of years. The court referred to previous judgments, emphasizing that even in the absence of a statutory time-limit, the exercise of power must be reasonable and not cause undue hardship or prejudice to the assessee.

3. Validity and propriety of assessment orders issued after a long delay:
The court cited several precedents, including Deputy Commissioner of Agricultural Income-tax and Sales Tax v. P.S.B. Paul Pandian and Krishna Bhatta v. Agricultural Income-tax Officer, which established that statutory powers must be exercised within a reasonable time to avoid prejudice and hardship to the assessee. The court noted that no explanation was provided for the delay in issuing the revised assessment orders. The delay was deemed prima facie unreasonable, and the court held that the assessing authority's actions were not bona fide.

4. Preservation of accounts and documents by the assessee:
Rule 32(21) of the Kerala General Sales Tax Rules, 1963, requires dealers to preserve accounts and documents for four years after the close of the relevant year. The court observed that the notices issued to the petitioner were beyond this four-year period, making it unreasonable to expect the petitioner to produce the required documents. The court concluded that the assessee is ordinarily bound to preserve accounts and documents for a reasonable period, which, in cases of remit, should be four years from the order of the appellate authority. In the absence of a valid explanation for the delay, the court found the revised assessment orders to be unreasonable and unsustainable.

Conclusion:
The court declared that the revised assessment orders, exhibits P4 and P5, were unreasonable and unsustainable due to the inordinate delay in their issuance. The orders were quashed, and no costs were awarded.