Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (10) TMI 814 - KERALA HIGH COURT

2016 (10) TMI 814 - KERALA HIGH COURT - TMI - Levy of Penalty - Best judgment assessment - Period of limitation - Whether the initiation of proceedings and completion of assessment is within 5 years from last date of the return period or that there is an automatic extension of time as per the third proviso inserted from time to time - Held that: - Section 25(1) has to be taken only after issuing a notice on the dealer which apparently has to be done within five years from the last date of the ye .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s invoked, it has to be within the period of limitation and no exclusion can be claimed by the department merely for the reason that the assessee had opted for compounding and a procedure under Section 22(10) is being followed - Assessment proceedings are barred by limitation. - Every dealer, either registered or liable to be registered under the Act, is bound to file a return under Section 20 of the KVAT Act. The VAT regime had contemplated a self assessment which indicates that once the retu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

AT Act or any other law, or in instances where the assessment cannot be completed - It is clear from the statutory provisions aforestated that the penalty proceedings had to be completed within a specified time, i.e., within one year under Section 67 from the date of detection of offence mentioned under this section except where the extension of time is granted by the Deputy Commissioner. One year period aforementioned has been amended as three years with effect from 1/04/2005 - Held that: - B .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

C) Nos. 10979, 27736, 28422/2014, 1489, 12066, 17769, 20497, 21123, 21230, 21285, 22481, 24864, 31360, 32836/2015, 1617, 3116, 11463, 12708, 12716, 12717, 12723, 12725 13183, 13959, 14350, 14355 14426, 14600, 16716, 17390, 17392, 17393, 17394 - Dated:- 5-10-2016 - A.M. SHAFFIQUE, J. 17398, 17399, 17400, 17428, 17660, 18048, 18403, 18405, 19366, 19472, 19492, 19493, 20442, 20521, 20995, 21184, 21378, 22181, 22479, 23170, 23185, 23377 & 26723/2016 FOR THE PETITIONER : ADV. SRI.S.ANIL KUMAR (TR .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion 25(1) and whether penalty proceedings could be taken against an assessee beyond the period specified under section 67(1) read with section 25(1) of the Act, or under section 45A read with section 19(1) of the Kerala General Sales Tax Act, 1963 (hereinafter referred as the KGST Act). 2. The cases on hand can be categorised under different groups for an easy analysis of the facts and disputed questions. GROUP-A. These are cases wherein the contention urged is that the notice for assessment or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e assessment order dated 19/8/2014. The notice under section 25(1) is issued on 30/4/2014 and 11/8/2014 in respect of assessment year 2008- 2009. (4) In W.P.(C) No.20497/2015, Exts.P3 and P4 are the assessment orders dated 21.1.2015. The notice under section 25 (1) is issued on 28/11/2014 in respect of assessment years 2007- 2008 and 2008-2009. (5) In WP(C) No. 21123/2015, Ext.P1 is the assessment order dated 18/5/2015. Notice under Section 25(1) has been issued on 14/10/2014 and 6/5/2015. (6) I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

respect of assessment year 2008-2009 and 2009-2010. (9) In WP(C) No. 1617/2016, Ext.P3 is the assessment order dated 30/11/2015. Ext.P1 is the pre-assessment notice issued on 7/10/2015 with reference to assessment year 2007-08. (10) In WP(C) No. 11463/2016, Ext.P3 is the assessment order dated 29/2/2016 with reference to assessment year 2009- 10. Notice under Section 25(1) was issued only on 10/8/2015 beyond the period of limitation. In this case, a counter affidavit has been filed wherein it i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

respondent, the time for completion of the assessment has not expired. (11) In WP(C) No. 13959/2016, Ext.P1 is the assessment order dated 29/3/2016 in respect of assessment year 2007-08. Pre-assessment notice was issued only on 3/3/2016. (12) In W.P.(C) No.14350/2016, Ext.P2 is the assessment order dated 3/3/2016. The notice under section 25(1) is issued on 2/12/2015 in respect of assessment year 2008-2009. (13) In WP(C) No. 14355/2016 petitioner challenges Ext.P4 order of assessment dated 15/3/ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

petitioner preferred an appeal as KVAT Appeal No.1060/2014. In the meantime, on 18/10/2014, another pre-assessment notice for best judgment for the same assessment year was issued. Petitioner challenged the same by filing WP(C) No. 28422/2014. However, the respondent finalised the second best judgment assessment on 30/10/2014. The assessment order was challenged by amending WP(C) No. 28422/14 in which further proceedings were stayed. Petitioner was served with another notice dated 13/2/2015 und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n WP(C) No. 17660/2016, Ext.P4 order is under challenge. Ext.P4 is in respect of assessment year 2008-2009 after issuing the assessment notice dated 10/7/2015. (18) In WP(C) No. 18048/2016, Ext.P8 is the assessment order with reference to assessment year 2009-10. Ext.P8 is dated 28/3/2016. Notice under section 25(1) was issued on 21/1/2016. (19) In WP(C) No. 19366/16, Ext.P2 is the assessment order dated 29/2/2016 with reference to assessment year 2009-10. Pre-assessment notice was issued under .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 22479/2016, petitioner challenges preassessment notice issued under Section 25(1) on 14/6/2016 intending to reopen an assessment, which is of the year 2009-10. GROUP-B: These are cases in which notice for assessment or assessment orders are under challenge wherein the Deputy Commissioner has extended the time for completing assessment under section 25B of the Act. (1) In WP(C) No. 28422/2014, Ext.P7 is the assessment order dated 30/10/2014. Notice under Section 25(1) is issued on 10/10/2014. I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

account of the dealer. Therefore, time is required for completing the assessment and if hasty steps are taken, it would be harmful to the revenue as well as to the assessee. It is further observed that the enquiry based on the offence detected is still pending and it is not possible to be done before 31/3/2014. The assessment is with reference to the assessment year 2007-08. (2) In W.P.(C) No.17769/2015, Ext.P3 is the assessment order dated 21/3/2015. The notice under section 25(1) is issued on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssioner had extended the time invoking Section 25B of the Act. In Ext.P3, it is observed that the period for completing assessments had been extended upto 31st March, 2014 as per the proviso to Section 25(1) and on the request of the assessing authority, time is extended till 30/9/2015. (4) In WP(C) No. 21285/2015, Ext.P1 is the order dated 29/9/2014 issued by the Deputy Commissioner under Section 25B of the Act extending the time for completing enquiry upto 30/9/2015. Exts.P2 and P3 are the ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) In WP(C) No. 20442/2016, Ext. P4 assessment order dated 12/5/2016 in respect of assessment year 2008-2009 is under challenge. It is stated that the Deputy Commissioner had issued Ext.P2 order dated 28/3/2016 extending the period to complete the assessment upto 31/3/2017. Petitioner has a contention that no specific reason had been stated in Ext.P2 order for extending the time to complete the assessment. (7) In WP(C) No. 20521/2016, petitioner challenges Exhibit P3 and P4 orders passed by the D .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sment notice has been issued on 18/1/2016. The officer refers to Deputy Commissioner's order dated 23/3/2016 issued under Section 25B by which time had been extended for completing the assessment for the year 2009-10 and 2010-11 for a further period of one year beyond 31/3/2016. (9) In WP(C) No. 23377/2016, petitioner challenges Exts.P12, P13 and P14. Ext.P12 is an assessment order dated 29/6/2016 with reference to assessment year 2006-07. Preassessment notices had been issued on 4/4/2016, 2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

006-2007 upto 31/3/2017 and Ext.P2 assessment order dated 15/7/2016. It is contended that the preassessment notice under section 25(1) was served on the assessee only on 6/6/2016. GROUP-C: [W.P.(C) Nos. 12708, 12716, 12717, 12723, 12725, 17390, 17392, 17393, 17394, 17398, 17399, 17400, 17428, 18403, 18405, 19472, 19492, 19493, 23170 & 23185/2016]. These are cases in which orders are passed by the Deputy Commissioner under Section 25B of the KVAT Act. Petitioners challenge those orders inter .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of penalty proceedings. The time limit fixed originally was one year from the date of detection of offence, which has been enhanced to 3 years by Finance Act, 2009. The contention urged is that the impugned orders are passed solely relying on the communication received from the Customs Department. According to the petitioner, it is rather clear from Ext.P7 letter dated 5/9/2008 issued by the Commercial Tax Department to the Commissioner of Customs and also the impugned orders that the offence al .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under the statute. It is submitted that Exts. P4 and P4(A) penalty orders are issued in regard to assessment years 2003-2004 and 2004-2005 under section 45A of the KGST Act, where no time limit is prescribed for imposing penalty. The argument is that even if no time limit is specified, action is to be initiated within a reasonable period. Exts.P4(B) and P4(C) are penalty orders issued under section 67 (1) of the Act and it relates to the assessment years 2005-2006 and 2006-2007. In regard to th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e reference is made to section 25A, there is no reference to an audit report as contemplated under the said provision. It is contended that the proceedings are therefore taken under section 25, which is beyond the period of limitation specified under section 25(1). The Deputy Commissioner has extended the time for completion of assessment upto 31/3/2016 as per order dated 19/3/2015 in terms of section 25B, which acccording to the petitioner is beyond the period of limitation. (2) In W.P.(C) No.1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.-(1) Where for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to tax in any year or has been underassessed or has been assessed at a rate lower than the rate at which it is assessable or any deduction has been wrongly made there from, or where any input tax credit has been wrongly availed of, the assessing authority may, at any time within five years from the last date of the year to which the return relates, proceed to determine, to the best of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an assessment under this sub-section the dealer shall be given a reasonable opportunity of being heard. Provided further that where the escapement is due to the application of incorrect rate of tax, no assessment under this sub-section shall be made where the dealer files revised return and pays the tax which has escaped assessment along with interest under sub-section (5) of section 31 and thrice the interest as settlement fee." Section 25(1) permits the assessing authority at any time wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Provisos to Section 25(1) has been inserted from time to time under the respective Finance Act's which reads as under:- K erala Finance Act, 2010 In section 25(1), after the existing provisos, the following proviso was inserted- Provided also that the time limit for the completion of assessments for the year 2005-06, under this section shall be extended upto 31st March, 2011 . Kerala Finance Act, 2011 In section 25(1), for the third proviso was substituted as under: Provided also that the ti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed also that the assessments pending as on 31st March, 2013 under this section shall be completed on or before 31st March, 2014. Kerala Finance Act, 2015 In section 25(1), for the third proviso, the following proviso was substituted : Provided also that the period for the completion of assessments including those subjected to extension under section 25B which expires on 31st March, 2015, shall be extended up to 31st March, 2016. Provisos virtually extends the period for completing assessments un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s for assessment remained stayed under the orders of a Civil Court or other competent authority shall be excluded. 4. Section 25B reads as under: "25B. Extension of period of limitation for assessments in certain cases.-Notwithstanding anything contained in section 24 or in section 25, in cases where any investigation or inquiry is pending under this Act or any other law or where any assessment cannot be completed within the period specified under the said sections, the Deputy Commissioner .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

id sections. 5. The main moot point raised by the petitioners with respect to the limitation as provided under Section 25(1) is that in order to invoke Section 25(1), a notice under the said provision has to be issued as provided under the first proviso and the assessment has to be completed within 5 years from the last date of the year to which the return relates, failing which the assessments made pursuant to the same are barred by limitation and even an order under section 25B issued after th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ees to have finalisation of their returns within a specified time, extending the period at the whims and fancies of the Department without hearing the assessee and without any enquiry, is arbitrary and hence extension of time under Section 25B shall not enable the Department to extend the period of limitation for issuance of notice and for completing the assessment. 7. The contention urged by the State is that, by way of successive amendments made to the Finance Act, provisos had been incorporat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ned counsel appearing for the petitioners and the learned Government Pleader appearing on behalf of the State and its authorities. 9. The main contention urged by the petitioners is with reference to judgment of the Apex Court in State of Punjab v. Shreyans Industries Ltd.[(2016) 4 SCC 769] wherein the Apex Court while considering the provisions under the Punjab General Sales Tax Act, 1948, (hereinafter referred as the Punjab Act) held that in the context of the Punjab Act, it can be said that t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nder the Act, it will give him right to exercise such a power at any time after the last date of assessment. It was therefore held that when the last date of assessment in respect of the assessment year expires, it vests with the assessee a valuable right which cannot be lightly taken away and Section 11(10) has to be interpreted in the manner which is equitable to both the parties and therefore the only way to interpret the said provision is by holding that the power to extend the time is to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r (Assessment) {2015 (4) KLT 516(F.B)}. The Full Bench in the above case held that section 25(1) of the VAT Act is in pari materia with section 19 of the KGST Act. The Full Bench was considering the question as to whether the judgment in Tirur Medical Stores v. State of Kerala (1978 KLT 415) was correctly decided by the Division Bench. It was held that though Tirur Medical Stores (supra) considered the use of the word proceed to determine under section 19 of the KGST Act, it is in pari materia w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the issuance of notice within the period prescribed in section 19 of the KGST Act. Further, the Division Bench proceeded to consider the scope of the 3rd proviso to sub section (1) of section 25 incorporated as per Kerala Finance Act, 2010 and later by Kerala Finance Act, 2011. It was held that the net effect of the introduction of the 3rd proviso to Sub section (1) of section 25 and the inclusion of section 25 within the canopy of section 25B is indicative of the fact that for all intents and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by passage of the prescribed period, which cannot be disturbed without hearing the assessee. One of the questions considered was whether the Deputy Commissioner could exercise power under Section 17(7) of the KGST Act to extend the period of limitation. It was held that the assessments as evident from the substituted provisos should be pending respectively on the specified dates. Only the time for completing the assessments has been extended. It was held at para 9 as under:- 9. The next question .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for the Deputy Commissioner to be clothed with the power of extension. The Legislature has carefully provided such authority with a rider; and that does not amount to extending the period of limitation at the sweet will of the Department. The Legislature definitely has the power to extend the period of limitation of assessments by granting successive leases of life as is demonstrated earlier or even to resurrect such assessments barred by limitation. But, this power and authority is conferred e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

GST Act in regard to the escaped assessment wherein the Apex Court considered as to what is the meaning of the words proceed to assess and determine . Para 4 is relevant which reads as under: 4. Rule 33 of the relevant rules is in these terms: Rule 33(1) If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority as the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s under the Sales Tax Act must be held to be pending from the time the proceedings are initiated until they are terminated by a final order of assessment. The distinguishing feature on which emphasis has been laid by the counsel for the respondent is that the language employed in Rule 33 is such as to lead to only one conclusion that the final determination of the turnover which has escaped assessment and the assessment of the tax have to be done within three years. It is pointed out that in the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e limit within which the final order in the matter of assessment should be made, the limit being three years. We find it difficult to accept that in the context of sales tax legislation the use of the words proceed to assess and determine would lead to different consequences or result. In this connection the words which follow the word determine in Rule 33 must be accorded their due signification. The words assess the tax payable cannot be ignored and it is clearly meant that the assessment has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ust be followed as otherwise the purpose of a provision like Rule 33 can be completely defeated by taking certain collateral proceedings and obtaining a stay order as was done in the present case or by unduly delaying assessment proceedings beyond a period of three years. (v) State of Punjab and Others v. Bhatinda District Coop. Milk P.Union Ltd. [(2007) 11 SCC 363]. In this case, the Apex Court held that the question of limitation being a jurisdictional question, writ petition was maintainable. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at the amendment applies to the assessment year 1998-99 and therefore the assessment completed before 31/3/2004 is well within time. (ii) Commissioner of Income Tax. V. T.O.Abraham & Co. (2011(2) KLT SN 117). The question considered was regarding the limitation for completing block assessment under section 158BE of the Income Tax Act, 1961. (iii) R.K.Upadhyaya v. Shanabhai P.Patel [(1987) 3 SCC 96]. In this case, Apex Court considered the question whether service of notice under Section 148( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

v. Income Tax Officer, Calcutta and Others [(1980) 2 SCC 191]. That was a case arising under the Income Tax Act, 1961 wherein the Apex Court held that when the assessment proceedings remained stayed for over two years by successive court orders, the said period could be excluded while computing the period of limitation and therefore the order of assessment cannot be stated to be time barred. (v) Indian Aluminum Cables Ltd. v. Excise and Tax Officer [(1977) 1 SCC 120]. That was a case arising und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

999) 2 SCC 77]. In this case, the Apex Court considered the question whether an amendment with retrospective operation could be made to reopen assessments which had been completed earlier. The Apex Court held that at para 25 as under:- 25. The two decisions in the cases of Ahmedabad Manufacturing & Calico Printing Co. Ltd. and Biswanath Jhunjhunwalla are more closer to the issue involved in the present case before us. They laid down that it is the language of the provision that matters and w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e service of the notice which is the sine qua non, an indispensable requisite, for the initiation of assessment or reassessment proceedings where income had escaped assessment. That is not so in the present case. Under sub-section (1) of Section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Subsection (2) provided that except as otherwise pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o not think that sub-section (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment before the expiration of 8 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r of Sales Tax, its service on the assessee is not a condition precedent to reopen the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to sub-section (2) of Section 21 of the Act becomes redundant. Commencement of the Act can be different than the operation of the Act though sometimes, both may be the same. The proviso now added to sub-section (2) of Section 21 of the Act does not p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reassessment could have been completed within four years of that particular assessment year and now by the amendment adding the proviso to Section 21(2) of the Act it is eight years. The only safeguard being that it is after the satisfaction of the Commissioner of Sales Tax. The proviso is operative from 19-2-1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to the previous eight assessment years. We need not refer to the provisions of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

period during which draft assessment was forwarded to the Inspecting Assistant Commissioner till the date of receiving instructions from Inspecting Assistant Commissioner under Section 144B of the Income Tax Act were to be excluded from computing the time limit for assessment. It was held that when no such power had been exercised, the department was not entitled for the exclusion. (viii) VLS Finance Ltd. v. Commissioner of Income Tax [(2016) 384 ITR 1 (SC)]. This case arises under the Income T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or before 31st March, 2000.' Unlike in the case of enlargement of the period of limitation generally made, in the present case, the legislature has specifically stated that the assessment relating to the year 1994-95 shall be completed on or before 31.3.2000. In view of this special provision regarding the completion of assessment for the year 1994-95 it is not the decision of the Supreme Court in Gadgil's case that is applicable to the present case, but the decisions of the Supreme Cou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n of the Madras High Court in N.K.C.Syed Mohemmed Ravoother v. The Deputy Commercial Tax Officer, Tirukoilur (1958 (9) STC 1), the decision of the Madhya Pradesh High Court in Kanhayyalal Shivsahay Sharma v. Deputy Commissioner of Sales Tax, M.P and others (1958 (9) STC 503), the decision of this Court in Ernakulam Radio Company v. State of Kerala (1966 (18) STC 445), the decision of the Andhra Pradesh High Court in The Guntur District Co-operative Marketing Society Ltd. v. The State of Andhra P .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eted within a period of four years from the date of publication of the Kerala Finance Act, 1993.: The second proviso inserted by the Finance Act, 1999 (Act 23 of 1999) published in the KGX.No.1476 dt. 27.7.1999 with effect from 1.4.1999 reads thus: Provided further that the assessment relating to the year 1994-95 shall be completed on or before 31st March, 2000. The assessment for the year 1994-'95, as already noted, was completed as per Order dt.30.10.1999. Under the provisions of Sec.17(6) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1994-95 was completed well before 31.3.2000. Thus by virtue of the second proviso the assessment is well within time. The contention of the assessee, as already noted is that the second proviso added for extending the period of limitation for completion of the assessment for the year 1994-95 did not serve the purpose for the reason that the said proviso was inserted only with effect from 1.4.1999 when the time limit provided under Section 17(6) (unamended) had expired before the said date on 31 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

utional the said provision has to be given its full effect, which will clearly save the period of limitation provided under the unamended Sec.17(6) so far as the assessment year 1994-'95 is concerned. 8. Let us now examine the correctness of the rival contentions. No doubt the second proviso was inserted only with effect from 1.4.1999 and the assessment under the then existing provisions got barred on 31.3.1999. It must be noted that the legislature was very well aware of the fact that as on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has to be completed. Really it is not the question of retrospective operation at all. It only provides a special time limit for completion of the assessment for 1994-95. The Supreme Court in Gadgils case supra was not concerned with a situation as obtained in the present case. Thus it cannot be said that the assessment for the year 1994-95 was barred on 31.10.1999 when the assessment order was passed." (x) Commercial Tax Officer v. M/s.Biswanath Jhunjhunwala (AIR 1997 Supreme Court 357). Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r authority to whom power in this behalf has been delegated by the Commissioner) from revising of his own motion any assessment made or order passed under the Act or the rules if the assessment has been made or the order has been passed more than six years previous to 1st November, 1971. Put conversely, with effect from 1st November, 1971, Rule 18 (80) (5) (ii) permits the Commissioner (or other authority) to revise of his own motion any assessment made or order passed under the Act or the rules .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t the Legislature intended the amended provision to apply even to assessments that had so become final; if the intention was otherwise, the Legislature would have so stated. (xi) Commissioner of Trade Tax v. Lohia Machines Ltd. [(1999) 7 KTR 145 (SC)]. This was also a case where amendment was made to the UP Trade Tax Act enlarging the period of limitation. It was held at para 18 as under:- "18. The two decisions in the cases of Ahmedabad Manufacturing and Calico Printing Co. Ltd. Vs. S.G.Me .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re could not be any limits to its operation. This Court in Biswanath Jhunjhunwala case (1996) 5 SCC 626 said that if the language expressly so states or clearly implies, retrospectivity must be given to the provision. Under section 34 of the Income-tax Act, 1922, it is the service of the notice which is sine qua non, an indispensable requisite, for the initiation of assessment or reassessment proceedings where income had escaped assessment. That is not so in the present case. Under sub-section ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

authorises the assessing authority to make assessment or reassessment after the expiration of 4 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force with effect from February 19, 1991. We do not think that sub-section (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessmen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to March, 31, 1994. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under sub-section (1) of section 21 have to be completed within 8 years of the particular assessment year. Notice to the assessee follows the authorisation by the Commissioner of Sales Tax, its service on the assessee is not a condition precedent to reopen the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, it has to be given its full effect. To reasssure oneself, one may go into the intention of the Legislature in enacting such provision. The date of commencement of the proviso to section 21(2) of the Act does not control its retrospective operation. Earlier the assessment/reassessment could have been completed within four years of that particular assessment year and now by the amendment adding proviso to section 21(2) of the Act it is eight years. The only safeguard being that it is after satis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Commissioner of Sales Tax and notices issued by the assessing authority in pursuance thereto." (xii) Sureshlal v. State of Kerala [(2013) 21 KTR 261 (Ker)]. In the above case, it was held by this Court at para 10 as under:- 10. As far as Rules 35 and 24D(4) which we have referred to are concerned, it may be true that the officers ought to have been more diligent and should have rejected the return. Under the KVAT Act and the scheme, the law provides for selfassessment. But, at the same time .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

came into force by a public document. Petitioner has shown the rate of tax incorrectly, rendering the return an incorrect return. Therefore, we do not think that in the facts of this case we should interfere with the decision of the authority as confirmed by the two appellate authorities to impose penalty on the petitioner. But, we also feel that having regard to all circumstances, in particular, the provisions contained in Rules 24D (4) and 35 and also the admitted fact that the petitioner has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and Others [1966 (LX) ITR 392]. This case had arisen under the Income Tax Act, 1922. It was held that in a taxing statute, one has to look merely at what is stated and in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. However, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. The underlined principle is that the meaning and intention of the statute must be collected from the plain and unambiguous expres .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Legislature by making the relevant amendments has succeeded to effectuate its intention. To state it differently, do the amended provisions carry out its intention ? Section 34(1)(a), as it now stands on the statute book, expressly states that in cases falling under clause(a) of sub-s. (1) notice can be served thereunder on an assessee at any time. The terms of s. 34(a) read with the second proviso, take in the concealed incomes of all the years commencing from the year ending on March 31, 194 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sub-s.(1A) was introduced in s. 34, no proceedings under s. 34(1)(a) could be initiated except for the assessment year 1946-47 in respect of the previous years that fell within the period beginning on September 1, 1939, and ending on March 31, 1946, for they were barred under the unamended section. Sub-section (1A), therefore, practically governed a situation that was not governed by the provisions of s. 34(1)(a). It was intended to catch escaped incomes of the war years which were out of the r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be operative in the sense that no notice could thereafter be given thereunder. It worked itself out. The Legislature could have extended the period under the second proviso to sub-s. (1A), but it did not do so. It did not give a further lease of life to it; instead it removed the period of limitation under sub-s. (1)(a), as sub-s. (1A) had become practically defunct. The wide phraseology of sub-s. (1)(a) takes in all the escaped concealed incomes during all the years commencing from 1941 and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

this view, no question of carving out a species out of a genus arises. It conferred a special power on the Income-tax Officer and the said power expired on April 1, 1956. There is yet another way of looking at the problem. The non-obstante clause in sub-s. (1A) indicates that it was enacted to operate notwithstanding that the period of 8 years had expired. The said sub-section served its purpose only when the period of 8 years governed a notice under sub-s. (1)(a). But when that bar of limitati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d apply for such a relief to the Central Board of Revenue. The years 1941 to 1948 are the war years. This sub-section, therefore, assumes that notice could be issued in respect of the war years under sub-s. (1)(a). The notice contemplated by sub-s. (1B) could only be a notice after the amendment of 1956, for such notice could not have been issued earlier under the sub-s. (1) (a) in respect of the said years. The notice under sub-s. (1A) obviously refers to the notice issued before the amendment .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

usibility, if the Legislature assumed that sub-s. (1A) ceased to be operative, why it was retained along with its proviso prescribing a period of limitation in the amended section. Though no new notices could be issued under that sub-section after April 1, 1956. notices already issued before that date were pending. They would be disposed of in the manner prescribed by the sub-s. (1A), (1B), (1C) and (1D) of s. 34. All the said sub-s. formed and integral code. The Legislature, presumably, intende .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at the Bar. We received considerable help from the reasonings contained in the said judgments. As we have in the course of the judgment dealt with the conflicting reasons given by the High Courts, we do not think it necessary to consider each of the four judgments in detail. For the reasons mentioned above, we agree with the conclusions arrived at by the Bombay and Calcutta High Courts in preference to those reached by the Madhya Pradesh and Gujarat High Courts. In the result, the order of the H .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter service of the notice that the assessee becomes a party to the proceedings. (xv) P.Munirathnam Chetty and P.Satyanarayana Chetty v. Income-Tax Officer [(1975) 101 ITR 385]. This is a judgment of the Andhra Pradesh High Court wherein it was held that when the Income Tax Officer gives reasons for reopening the assessment, the Commissioner of Income Tax must be understood to have given a sanction after going through the said reasons. Therefore, notice is not vitiated merely because the Commissi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d for furnishing the last return in respect of such period. (2) If the assessing authority is not satisfied without requiring the presence of dealer who furnished the returns or production of evidence that the returns furnished in respect of any period are correct and complete, he shall serve on such dealer a notice in the prescribed manner requiring him, on a date and at place specified therein, either to attend in person or to produce or to cause to be produced any evidence on which such deale .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

comply with the terms of notice issued under sub-section (2), the assessing authority shall, within a period of three years from the 1st date prescribed for furnishing the last return in respect of such period, pass an order of assessment to the best of his judgment. (5) If a dealer does not furnish returns in respect of any period by the last date prescribed the assessing authority shall within a period of five years from the last date prescribed for furnishing the return in respect of such pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

proceed to assess, to the best of his judgment the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and in case where such dealer has wilfully failed to apply for registration, the assessing authority may direct that the dealer shall pay by way of penalty, in addition to the amount so assessed, a sum not exceeding one-and-a-half times that amount. (7) The amount of any tax, penalty or interest payable under this Act shall be paid by the dealer in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

antee. (8) If the tax assessed under this Act or any instalment thereof is not paid by any dealer within the time specified thereof in the notice of assessment or in the order permitting payment in instalments, the Commissioner or any other person appointed to assist him under sub-section (1) of Section 3 may, after giving such dealer an opportunity of being heard, impose on him a penalty not exceeding in amount the sum due from him. (9) Any assessment made under this section shall be without pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g authority may, on his own motion, review any assessment order passed by him and such review shall be completed within a period of one year from the date of order under review. (emphasis supplied) Section 11(1) imposes an obligation on the assessing officer to pass an order of assessment on the basis of returns within a period of three years. Even in respect of instances where the assessee is to be heard, on account of the assessing authority not being satisfied with the returns after hearing t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment within a period of five years from the last date prescribed for furnishing return and pass an order of assessment to the best of his judgment. Section 11(6) contemplates a penalty procedure. Where the assessing authority comes to a finding that any dealer who is liable to pay tax has failed to apply for registration, he shall, within five years from the date of expiry of prescribed period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 13. Now coming to the Scheme of KVAT Act, Chapter V deals with assessment, recovery of tax and penalty. Section 20(1) imposes an obligation on the part of every registered dealer and every dealer liable to be registered under the Act to submit to the assessing authority such return or returns before the dates and in such manner along with the documents as may be prescribed. Section 21 indicates that the return submitted under sub section (1) of section 20 in the prescribed manner and accompani .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e fresh return, the assessing authority is entitled to estimate the turnover of the return period and complete the assessment. Other procedural formalities had also been indicated in the said provision. Section 23 relates to the power given to the officers to conduct audit at the business place of any dealer. Section 24 relates to assessment to be made after the audit or if the dealer fails to make available any accounts or other records required by the audit officer. Section 25 deals with asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

its judgment the turnover which has escaped assessment to tax or in respect of other eventualities where tax is not being paid. Therefore, the power given to the assessing officer is to determine at any time within five years from the last date of the year to which the return relates, whether the turnover has escaped assessment. Proviso to Section 25 (1) further makes it clear that before making an assessment under sub section (1), the dealer shall be given a reasonable opportunity of being hear .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

marked difference between the Punjab Act and the KVAT Act in respect of assessment. As already indicated, every dealer, either registered or liable to be registered under the Act, is bound to file a return under Section 20 of the KVAT Act. The VAT regime had contemplated a self assessment which indicates that once the return had been submitted under Section 20(1) in the prescribed manner and accompanied by the prescribed documents, the assessment relating to the return period is deemed to have b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the KGST Act, Chapter V deals with assessment, collection and penalty. As per Section 17, every registered dealer and every dealer liable to take out registration under the Act has to submit return or returns relating to his turnover in such manner and within such period as may be prescribed. Sub section (2) indicates that if the assessing authority is satisfied that any return submitted under sub section (1) is correct and complete, it shall assess the dealer on the basis thereof. Sub section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any part of the turnover of business of a dealer has escaped assessment to tax in any year or has been under assessed or has been assessed at a rate lower than the rate at which it is assessable or any deduction has been wrongly made there from, the assessing authority may, at any time within five years from the expiry of the year to which the tax relates, proceed to determine to the best of its judgment the turnover which has escaped assessment to tax or has been under assessed or has been asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment relates to any business done by such dealer as benamidar or through a benami or where it relates to dealer, who being liable to get himself registered under this Act and the rules made there under has failed to do so. (2) In making an assessment under sub-section (1), the assessing authority may, if it is satisfied that the escape from assessment is due to willful nondisclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under sub-section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

thority even though the original order of assessment, if any, passed in the matter, has been the subject matter of an appeal or revision. (4) In computing the period of limitation for the purposes of this section, the time during which the proceedings for assessment remained stayed under the orders of a Civil court or other competent authority shall be excluded. 17. Therefore, Sections 25 of KVAT Act and 19 of the KGST Act, which are concerned with, relate to an assessment being taken for escape .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ise the power to extend the period of limitation and whether it is exercised for valid reason based on material consideration and that power is not abused by exercising it without any application of mind, or mala fide or on irrelevant considerations or for extraneous purposes. Such an order of extension of time is also open to judicial review, of course, within the confines of law on the basis of which judicial review is permissible. The Apex Court after considering the respective arguments held .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cise power at any time even much later after the last date of assessment. 19. In Cholayil (supra), the Full Bench held that section 25 (1) of the VAT Act is in pari materia with section 19 of the KGST Act. It was held that the use of the word proceed to determine under section 19 of the KGST Act is in pari materia with section 25 (1) of the KVAT Act. It was held that the proceedings for the determination of the escaped turnover must commence within the period stipulated and the word assess in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(supra), a Division Bench of this Court held that the prescription of period of limitation result in rights accrued to the assessee, by passage of the prescribed period, which cannot be disturbed without hearing the assessee. In regard to the power exercised by the Deputy Commissioner under Section 17(7) of the KGST Act to extend the period of limitation, it was held that the assessments as evident from the substituted provisos should be pending respectively on the specified dates. In Sundaram .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

time limit specified under the statute can be modified by amendment. In Indian Aluminum Cables Ltd. v. Excise and Tax Officer (supra), Apex Court held that the expression proceed to assess in sub sections (5) and (6) of section 10 means taking some effective step towards proceeding to make the best judgment assessment in accordance with sub section which may be applicable. In Jyoti Traders (supra), it was held by the Apex Court that an amendment with retrospective operation could be made to reop .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d that the Legislature intended the amended provision to apply even to assessments that had become final; if the intention was otherwise, the Legislature would have so stated. In Lohia Machines Ltd. (supra), earlier the assessment/reassessment could have been completed within four years of that particular assessment year and now by the amendment adding proviso to section 21(2) of the Act, it is eight years. The only safeguard being that it is after satisfaction of the Commissioner of Sales Tax a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is an automatic extension of time as per the third proviso inserted from time to time. Facts disclose that in all those cases notice has been issued under section 25(1) after 5 years. The question is whether the provisos will save the period of limitation. Power is vested with the assessing officer to take proceedings under Section 25(1), within five years from the last date of the year to which the return relates. The words proceed to determine under Section 25(1) is further qualified by the w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f assessments. It could only mean that time is extended only for completing assessment which have already been initiated after issuing notice under Section 25(1) within five years from the last date of the year to which the return relates. Therefore, the provisos which extend the period to complete the assessments, are only in respect of those assessments in which notices under the first proviso to Section 25(1) had been issued within the five year period as specified therein. As held in Shreyan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Act. Perusal of Ext.P1 notice would also indicate that proceedings had been taken under Section 25(1) when the assessee failed to file revised return under Section 22(10) of the KVAT Act and therefore the return already filed is treated as incorrect and the turnover involved had escaped assessment. Section 22(10) reads as under:- 22(10) Where the proceedings referred to in the above sub-section are finalised under section 74 on payment of tax due along with the compounding fee, the dealer may .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce with the provisions of sections 24 and 25, as the case may be. A bare reading of Section 22(10) by itself indicates that the said procedure is subject to Section 25. Therefore, even if there is non compliance of non filing of revised return in terms of Section 22 (10), there is no prohibition on the part of the officer in invoking Section 25(1). It cannot be stated that Section 25 could be invoked only after a revised return is filed under Section 22(10) of the KVAT Act. Therefore, when a pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion 25B. In all these cases, the power under section 25B is exercised after the five year period as specified under section 25(1). Section 25B starts with a non obstante clause, which takes into consideration a different situation for completing the assessment beyond the period specified under the Act in cases where any investigation or inquiry is pending under the Act or any other law or where any assessment cannot be completed within the period specified under sections 24 and 25. Section 25B h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion of assessment beyond the period specified under Section 25 cannot be curtailed in any manner. This power can be exercised at any time but before exercising such power, the Deputy Commissioner will have to satisfy the preconditions specified therein, which are as follows:- (i) It can be exercised only in cases where any investigation or inquiry is pending under the Act or any other law, or (ii) Where any assessment cannot be completed within the period specified under Sections 24 and 25. (ii .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

prescribed. The period of limitation starts from the last date of the year to which the return relates. When a return is filed under the KVAT regime, the assessment is deemed to be completed, if the return and documents are in order, unless it is modified in terms of Sections 22, 24 and 25. Therefore, the very filing of the return complete in all respects amounts to deemed assessment. Now coming to Section 25(1), it is an instance where already there is an assessment and what the statute permits .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

scribed date. But in view of the non obstante clause under section 25B, the Deputy Commissioner has the power to extend the time for taking steps under Section 25(1) in an instance where an investigation or enquiry is pending under the KVAT Act or any other law, or in instances where the assessment cannot be completed. But in cases where power is exercised to extend the period for completing the assessment, does it mean that the said power can be exercised to extend the period of limitation for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by issuance of a notice. Further, while exercising power under section 25B, the Deputy Commissioner is bound to state reasons. In none of these cases, no specific reason has been stated to invoke section 25B. In the result, Group-B cases are to be allowed as in all such cases orders are passed under section 25B beyond the period specified under Section 25(1), which will not save the period of limitation. 22. Group-C concerns cases wherein challenge has been made to the orders passed by the Deput .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een extended for completing the assessment. As already held, unless the procedure prescribed under Section 25(1) is commenced within the period of limitation, time cannot be extended for completing the assessment. Therefore, orders passed by the Deputy Commissioner beyond the five year period and that too for completing the assessment have no relevance in so far as no action had been taken by the assessing authority to issue notice to the assessee under Section 25(1) within the time limit provid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

originated from a confidential report from Directorate of Revenue Intelligence (DRI). An investigation was conducted against the firm by DRI, and it was revealed that the firm has been importing base oil and blended lubricants by misdeclaring the same as rubber processing oil. Based on such investigation, notice was issued demanding differential duty. Huge amount of tax evasion was also suspected. Based on the said information, the books of account of the assessee was called for. In the meantime .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re the Central Government authorities which has a direct bearing on the violation under the provisions of KGST Act and KVAT Act. 24. The main contention urged by the petitioner is that the offence was detected when the Commercial Taxes Department had come to know about the action taken by DRI. From Ext.P7, it can as well be seen that the Commercial Tax Department was aware of the proceedings. Necessary action ought to have been taken within a specified time under the concerned enactments and atl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

.I.D.Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes and Another [(2000) 117 STC 457. (SC)]. This judgment is relied upon to emphasize the point regarding imposition of penalty, wherein it was held that if the correct position of law was in doubt and the amounts had not been included in the return of turnover on the bona fide belief that they were not includable in the taxable turnover, penalty cannot be levied. (ii) Sreekrishna Electricals v. State of Tamil Nadu [(2009) 23 VST 249 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oner, Commercial Taxes (2014 (3) KHC 55). This judgment is passed by the learned Single Judge wherein it is held that penalty proceedings cannot be initiated on the basis of a mere dispute in classification. (iv) Cement Marketing Company of India Ltd. v. Assistant Commissioner of Sales Tax, Indore and others [(1980) 1 SCC 71]. This is also a case in which the Apex Court was considering whether mens rea was essential for taking penalty proceedings under the sales tax laws. It was held that where .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in its returns. The penalty was imposed under Section 43 of the Madhya Pradesh General Sales Tax Act, 1958 and Section 9 sub-section (2) of the Central Sales Tax Act, 1956 on the ground that the assessee had furnished false returns by not including the amount of freight in the taxable turnover disclosed in the returns. Now it is difficult to see how the assessee could be said to have filed false returns, when what the assessee did, namely, not including the amount of freight in the taxable turno .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

son why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now, it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the Court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover could not be said to be mala fide or unreasonable. Wha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

turn may be liable to be branded as a false return. But where the assessee does not include a particular Item in the taxable turnover under a bona fide belief that he is not liable so to include it, it would not be right to condemn the return as a false return inviting imposition of penalty. This view which is being taken by us is supported by the decision of this Court in Hindustan Steel Limited v. State of Orissa where it has been held that even if a minimum penalty is prescribed, the authorit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ind, the section cannot be invoked for imposing penalty. If the view canvassed on behalf of the Revenue were accepted, the result would be that even if the assessee raises a bona fide contention that a particular Item is not liable to be included in the taxable turnover, he would have to show it as forming part of the taxable turnover in his return and pay tax upon it on pain of being held liable for penalty in case his contention is ultimately found by the Court to be not acceptable. That surel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is the law regarding penalty contained in the amended provision that is applicable. In the facts of the said case, the power to assess the dealer for escaped assessment had to be exercised within six years of expiry of the relevant assessment year. The Full Bench was interpreting the two periods of limitation prescribed for escapement of assessment and it was held that sub sections (4) and (4)(a) of section 14 has been provided to take care of instances where there is escapement of turnover from .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

from the assessment proceedings themselves, they are not wholly independent from the assessment proceedings. It is therefore argued that penalty proceedings also require to be adjudicated within a reasonable time, failing which it has to be held that it is barred by limitation. (vi) State of Andhra Pradesh v. Dhanalakshmi General Stores [(1998) 26 STL 185]. This is a Division Bench judgment of the Andhra Pradesh High Court in which it is held that penalty proceedings being ancillary to the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t July, 1979. Simultaneously penalty proceedings were also initiated, but for one or the other reason, which is not Clear from the record, the order of penalty was made only on 15th February, 1983. It was served on the assessee on 3rd March, 1983. It needs no reiteration that this penalty was levied under sub-section (4) itself. Subsection (4-A) prescribes the period of limitation for any ion under sub-section (4). It says : "Any assessment or levy under sub-section (4) shall be made within .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ngs under sub-section (4). If so, the period of limitation prescribed by sub-section (4-A) applies equally to an order levying penalty as it applies to reassessment order. Indeed, this is the decision of this Court in State of Andhra Pradesh v. Sri Ganesh Bhavan Hotel [1983] 53 STC 169 which, in turn, refers to, and follows the decision in M. Sayanna and Garikapati Narasimhulu v. State, a decision dated 18th August, 1969 in W.P. No. 338 of 1965 [reported as an Appendix in [1974] 33 STC 144 (AP)] .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Case, accordingly, fails and is dismissed. No costs. (vii) St.Mary's Hotels (P) Ltd. v. Intelligence Officer (LAWS (KER) 2010-2-75) This case was decided by learned Single Judge of this Court. In this case, the dictum laid down is that limitation for taking action for penalty starts from the date of detection of offence and not from the date of inspection by the authorities concerned. It is only after verification of the books of accounts and in the light of the incriminating circumstances .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e respondents 1 to 3 in that Writ Petition have preferred this Writ Appeal. The brief facts of the case are the following. 2. Respondents 1 and 2 herein have filed the above Writ Petition. They have approached this Court challenging Exts.P1 and P2 orders of the District Educational Officer (D.E.O.), Thrissur. A vacancy arose in the school of the 3rd respondent in the post of Peon on 01.10.03 as a result of the retirement of the existing Peon on 30.09.2003. The 2nd respondent who was working as F .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t the relevant time, though he was permitted by the Government to function as Manager, was restrained from making any appointments. The D.E.O. declined to approve the appointment of 2nd respondent on the same ground mentioned in Ext.P1. Feeling aggrieved by Exts.P1 and P2 the Writ Petition was filed by respondents 1 and 2. The learned Judge quashed Exts.P1 and P2 and directed the D.E.O. to approve their appointments, provided, they are otherwise qualified and eligible. It was observed that the d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#39;s school), which was lying vacant for more than one year. So, there is no post of Peon with effect from 28.07.07, it is submitted. In view of Annexures I and II, the appellants would submit that the direction of the learned Single Judge given in the judgment under appeal is unsustainable. 4. We notice that creation of posts, abolition and retrenchment of staff etc. in aided schools are governed by the provisions of Chap.XXIII and XXIVA KER. Of course, R.9 of Chap.XXIVA enables the Government .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Annexure II would show that it is a general order applicable to all Government departments and therefore the same would apply to Government Schools also. Since the creation of posts, retrenchment of staff etc. in aided schools are governed by statutory rules, if the Government wanted to apply Annexure II to aided schools also, there should have been a separate order. In this case, there is no such separate order. Therefore, we are of the view that, Annexure II order does not apply to aided sc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

XIV A. 6. We notice that whoever be the Manager, the 1st respondent is entitled to get promotion. In the resultant vacancy of FTM, the Manager can appoint any qualified hand from the open market. Government is not concerned whether 'A' is appointed or 'B' is appointed and the appointment is made by the Manager 'C' or Manager 'D'.Regarding the fresh appointment made, the rival claimant to the post of Manager may have grievance. But, Government have no locus standi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed from the Director of Revenue Intelligence as early in the year 2008 as evident from Ext.P7. When such an information is received, necessarily, penalty proceedings, if any, has to be initiated within a reasonable time. Section 45A of the KGST Act reads as under:- 45A. Imposition of penalty by officers and authorities (1) Notwithstanding anything contained in section 46 if the assessing authority or the Appellate Assistant Commissioner is satisfied that any person,- (a) being a person required .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

spect of which he has made a declaration under proviso to subsection (3) of section 5 , has failed to make use of the goods for the declared purpose; or (g) has acted in contravention of any of the provisions of this Act or any rule made there under, for the contravention of which no express provision for payment of penalty or for punishment is made by this Act; (h) or has abetted the commission of any of the above offences. Such authority or officer may direct that such person shall pay, by way .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ales Tax Officer specified by the Government in this behalf by notification in the Gazette. (2) No order under sub-section (1) shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter. (3) The Deputy Commissioner may, on application by any person on whom a penalty is imposed under sub-section (1) within thirty days from the date of receipt by him of the order imposing such penalty, for reasons to be recorded in writing c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion (5), be final. (5) The Board of Revenue may, either suo-motu or on application, call for and examine the record of any order passed under sub-section (1) or subsection (3) and make such order as it thinks fit. Provided that the Board of Revenue shall not admit an application made after the expiry of thirty days from the date of receipt by the applicant of the order under sub-section (1) or sub-section (3), as the case may be, unless it is satisfied that the applicant had sufficient cause for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it is specified under section 45A for initiating or completing the penalty proceedings. Section 67(1) of the KVAT Act (as on 31/3/2005) reads as under: 67. Imposition of penalty by authorities (1) Notwithstanding anything contained in section 71 if any authority empowered under this Act is satisfied that any person,- (a) being a person required to register himself as a dealer under this Act, did not get himself registered; or (b) has failed to keep true and complete accounts; or (c) has failed t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

so; or (i) has failed to comply with all or any of the terms of any notice or summons issued to him by or under the provisions of this Act or the rules made thereunder; or (j) has acted in contravention of any of the provisions of this Act or any rule made thereunder, for the contravention of which no express provision for payment of penalty or for punishment is made by this Act; or (k) has abetted the commission of the above offences, or (l) has abetted or induced in any manner another person .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

authority empowered under this section shall dispose off the case within one year from the date of detection of offence mentioned under this section except where the extension of time is granted by the Deputy Commissioner. It is clear from the statutory provisions aforestated that the penalty proceedings had to be completed within a specified time, i.e., within one year under Section 67 from the date of detection of offence mentioned under this section except where the extension of time is grant .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nalty proceedings after detecting the offence. Necessarily a question arises when the offence was detected. Ext.P7 would indicate that the department was aware of the alleged offence as early as on 25/4/2008. However, a contention had been urged stating that they were awaiting further orders. But no materials are produced to support the stand that even after 25/4/2008, there was difficulty in taking penalty proceedings against the petitioners. When a specific contention is raised regarding limit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

section 45A, no specific period of limitation has been specified. However, as held by the Full Bench of Andhra Pradesh High Court, penalty proceedings have to be completed within a reasonable time from the date of detection. In Eastern Ore Corporation (supra), it was held that penalty proceedings do not stand by themselves but are dependent upon a finding by the assessing authority that the whole or any of the turnover of the business of a dealer has escaped assessment. While these proceedings .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of detection of offence and not from the date of inspection by the authorities concerned, after verification of the books of accounts and in the light of the incriminating circumstances brought out in the course of inspection that the offence can be detected. Therefore, even in respect of penalty under section 45A, the same has to be completed within a reasonable time and at any rate within 5 years provided for completing assessment under section 19 of the KGST Act. In the light of the above d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt or reassessment made or scrutiny of any return filed under this Act, and if the assessing authority is satisfied that such objection is lawful, the assessing authority shall proceed to re-assess the dealer or dealers with respect to whose assessment or re-assessment or scrutiny as the case may be, the objection has been made: Provided that no order under this section shall be passed without giving the dealer an opportunity of being heard. An eventuality to invoke Section 25A arises when there .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ge is with reference to a penalty order issued in respect of the year 2008-09 by issuing notice on 31/10/2015. Nothing is stated in the notice regarding the time when the offence is detected. Apparently, when a notice for penalty is issued, necessarily, time limit has to be specified which is lacking in the case. Hence this writ petition is liable to be allowed. In the light of the above discussion and findings, the cases are disposed in the following manner:- (1) Group-A cases:- {WP(C) Nos.1097 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version