TMI Blog1998 (5) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... rther that nothing in this sub-section limiting the time within which assessment may be made, shall apply to an assessment made in consequence of, or to give effect to, any findings, directions, or orders made under sections 20, 21, 22 or 22-A or any judgment or order made by any court. The section makes it clear that the statutory bar of limitation will debar the completion of assessment on the lapse of three years from the date on which the return was filed by the assessee under section 12(1) of the Act. In all these cases, it is not in dispute that three years have lapsed since the last day of filing of the return by the assessee before the assessment was made under section 12(3) of the Act. The main defence raised by the department is the plea based on section 12(6) of the Act and in particular section 12(6)(b). The said sub-section reads as under: (b) the time during which the assessment has been deferred in any case or cases by the Commissioner for reasons to be recorded in writing shall be excluded; Sub-clause (b) of section 12(6) in brief postulates a deferment of the assessment at the instance of the authority named therein on the basis of an order made recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would also be excluded. The question then would be, if a unilateral order is passed with respect to a class of cases to which assessee belongs, deferring such assessment, would such an order bind the assessee in the absence of notice of such an order? 6.. The learned counsel for the petitioners strenuously submitted that in the absence of a notice of the order, the same will not affect them and section 12(5) will have its full swing. The learned Government Advocate submits that it is not necessary to pass any such order deferring the assessment with notice to the petitioners. We will now examine the rival contentions in detail. 7.. It is not in dispute that, on the lapse of three years made mention of in section 12(5) of the Act the right of the department to assess an assessee gets extinguished. That extinction confers a very valuable right on the assessee. The rigour of this rule is diluted by existence of the circumstances made mention of in section 12(6)(a) and (b). In other words, section 12(6)(a) and (b) stays the operation of section 12(5) of the Act. Section 12(6)(a) contemplates that any interim order secured by the assessee stopping the assessment proceedings cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y power administrative or quasi-judicial or judicial cannot make orders which are arbitrary for the same is and them to article 14 of the Constitution as has been explained in various decisions of the Supreme Court including in the decision rendered in Indian Express Newspapers (Bombay) Private Ltd. v. Union of India AIR 1986 SC 515. Therefore, the question that arises for consideration is whether in the present case the Commissioner should have exercised the power or not and whether any notice should have been given to the petitioner before making order of deferment. There is no material for becoming to show before making the order any notice had been issued to the petitioner nor any communication thereto after the order was made. In the circumstances, I must proceed on the basis that no notice has been issued to the petitioner before making an order of deferment as contemplated under section 12(6) of the Act. 4.. It is well-settled that when a party is affected even though the provisions of law may not provide for issue of notice, in order to comply with the principles of natural justice, must issue notice. This proposition of law is laid down in several decisions including in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to put in writing the reasons and circumstances that necessitate the stay of proceedings. The stay of assessment proceedings has consequences of a civil nature upon an assessee, which the High Court has, as aforesaid, noted. The more the time that elapses the more difficult it is for the assessee to prove his accounts and claim set-off, exemptions and the like. We take the view that, in the circumstances, the power under rule 37-A may not be exercised by the Commissioner without first giving to the assessee notice to show cause why his assessment proceedings should not be stayed for a stated period. The notice should set out what the reasons and circumstances are which, according to the Commissioner, necessitate such stay so that the assessee has the opportunity of meeting the same. This is a requirement of natural justice that, having regard to the scope of rule 37-A, requires to be read into it. The abovesaid observations of the Supreme Court declares that the exercise of the power of stay or deferment could be only after hearing and for valid reasons. If the contention of the State that the affected party is not entitled to be heard in the matter and that he need no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after the period fixed under section 12(5) the assessee willingly participates, such conduct on the part of the assessee would amount to acknowledgement of the order of deferment made and is sufficient to attract the rule under section 12(6)(b). In the light of the wording of section 12(5) and section 12(6)(b) of the Act as understood, this plea has to be rejected. In the first place, one cannot acknowledge an order, whose existence he is never aware of. The question is not merely whether the assessee had notice of the order of deferment; but as to how the order was made and when it was made. When an order of deferment is made, then the time fixed under section 12(5) stops to run. Therefore, when such an order of deferent is being made, it should be during the period when the period under section 12(5) is current. Hence, if such period had already come to an end, and the right to assess stood extinguished, then, the deferment contemplated under section 12(6)(b) cannot stop the running of the period mentioned in section 12(5). Therefore, it is crucial that such an order should come into existence after hearing the assessee and before the time under section 12(5) has expired. Mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and were not communicated. (vii) On March 24, 1997 the first respondent issued proposition notices along with incomplete copies of the deferment orders, annexures E1 to E3. The petitioners impugned annexures C1 to C3 and annexures E1 to E3. (viii) The facts admitted are that, within the period of limitation the deferment order was admittedly not communicated. The petitioners first ever objection to the proceedings alleging the bar of limitation were on October 16, 1996 and October 28, 1996. Still the first respondent discloses the deferment orders only on March 24, 1997. In such circumstances it has to be held that the assessment proceedings are barred by limitation. W.P. 21319 of 1991: 14.. The petitioner challenges the validity of annexure A order as also the constitutional validity of section 12(6)(b) of the Karnataka Sales Tax Act. The petitioner filed the return under section 12(1) of the Act on April 9, 1987, with respect to the year ending with March 31, 1987. The three years contemplated as per section 12(5) then in force ended with April 19, 1990. Annexure A order deferring the assessment was made on April 3, 1990, but the order was communicated to the petitioner on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on July 21, 1988, annexure A proceedings were initiated deferring the assessment proceedings against the said firm under section 12(6)(b) of the Act. The reason given is as hereunder: 1. Chandraprabha Trarding Group of 1968-69 Certain administrative difficulties and awaiting a fresh JDN Notification allowing the file to him or to transfer the case to Commercial Tax Officer, Jamakhandi." The Deputy Commissioner of Commercial Taxes has therefore requested that these assessment cases be deferred as per the provisions of section 12(6)(b) of the Karnataka Sales Tax Act, 1957 in order to allow the assessing officer to have sufficient time to conclude the assessment. 2.. In the circumstances reported by the Assistant Commissioner of Commercial Taxes (Assessments) Dharwad Division, Dharwad, it is found necessary to defer conclusion of assessments in all the cases cited above under section 12(6)(b) of the Karnataka Sales Tax Act, 1957. Hence the following order: Order No. MSR. SR. 23/88-89, Bangalore dated July 21, 1988. In exercise of the powers conferred on me under section 3A, 12(6)(b) and all other enabling provisions of the Karnataka Sales Tax Act, 1957 and the rules frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12-A proceeded and concluded. The same is not barred by limitation. Annexure A is therefore not liable to be interfered with. Writ Petition No. 19503 of 1990 is hence dismissed. 21.. Now as regards the validity of annexure B is concerned, admittedly, the period of limitation is sought to be saved on the basis of the deferment order made. Though the order of deferment is not before the court, the assessment order produced mentions the reasons for the deferment. In this behalf, the order of assessment states as follows: ............For this, the assessee has filed the objections within a given time, which are perused and found not acceptable for the reasons that for the say of the assessee that assessment is not made within 4 years from the date of filing the return and the proposal to make assessment over and again is opposed to law is not acceptable, as the extension of time for conclusion of assessment has already been taken from the Commissioner of Commercial Taxes in view of the adjournment for production of books of accounts prayed by the dealer, vide order No. MSR. SR. 50 of 1989-90 July 25, 1989 and revocation Order No. MSR. SR. 147 of 1990-91 dated August ..... X X X X Extracts X X X X X X X X Extracts X X X X
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