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2017 (1) TMI 1220 - KERALA HIGH COURT

2017 (1) TMI 1220 - KERALA HIGH COURT - TMI - Interpretation of statute - Limitation provided u/s 25(1) of the KVAT Act - whether the words employed in sub section (1) indicates only an initiation of proceedings within the limitation period and not the conclusion of the assessment? - Held that: - The proviso, as it reads, only indicates that completion of assessments including those in which an extension is made under Section 25B and expiring on 31.03.2015, would stand extended up to 31.03.2016. .....

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letion of investigation or enquiry, for good and sufficient reasons notwithstanding Sections 24 and 25, thus enabling extension of the period of completion of the assessment beyond the period specified in those Sections. Section 25(1) does not speak of any limitation for completion of the proceedings. In such circumstances, if at all extension of completion of assessment is permitted by the Deputy Commissioner, that would not enable the State to initiate proceedings after the limitation period i .....

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ompleted within a reasonable time - petition dismissed - decided against petitioner. - WP (C). No. 21077 of 2016 (H) - Dated:- 5-1-2017 - K. Vinod Chandran, J. For the Petitioner : Sri Jose Jacob For the Respondent : Sri V. K. Shamsudheen JUDGMENT The petitioner is concerned with Ext.P1 notice dated 19.03.2016 issued under Section 25(1) of the Kerala Value Added Tax Act, 2003 ('Act' for short). The ground raised is one of limitation. The learned Counsel has two contentions; one, with r .....

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cision to contend that at least after the introduction of the third proviso there is a limitation provided, which indication has been made by the Full Bench in the concluding portion. Reference is also placed on the decision dated 05.10.2016 of a learned Single Judge in W.P.(C) No.21184/2016 and connected cases. 3. The limitation provided under Section 25(1) of the Act, is a period of five years from the last date of the year to which the return relates. The limitation, as per the words employed .....

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quiry to be made. In the present case only the first stage has occurred before the limitation period and hence, there can be no enquiry made or proceedings continued after the limitation period, is the argument. This Court is unable to countenance such contention since the Full Bench has clearly held that the words 'proceed to determine' would only require initiation of proceedings before the limitation period. Initiation of proceedings can only be with a notice and the mandate of an enq .....

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tion of assessments for the year 2005-2006 upto 31.03.2011 and then of each successive year from 2005-2006 to the close of the current assessment year, by successive amendments. In such circumstance, it is contended that after 2010 at least there should be a limitation for conclusion of the proceedings; as per the third proviso as declared by the Full Bench. 6. The reliance is also on the following statement made by the Full Bench in the decision in Cholayil (supra): "All these taken togeth .....

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erring power of enlargement of time applies." The said statement made by the Full Bench is not a declaration of law especially since the Full Bench has specifically observed that this was not an issue pointedly covered by the reference order of the Division Bench to the Full Bench. It was also specifically stated so: "Though we have noted the 3rd proviso to subsection (1) of section 25 of the KVAT Act, the Full Bench is not called upon, through the reference order, to consider the impa .....

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eedings, under Section 25(1) expires only on 31.03.2016. The notice impugned herein is dated 19.03.2016; within the limitation period as provided under Section 25(1) of the Act. The argument is that the proviso deems conclusion of assessment within the extended period. 8. The proviso is a well-known devise of statutory construction, which cannot be interpreted as stating a general rule and creates either a qualification of or an exception from, what is stated in the substantive section or rule. .....

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cussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms". 9. Ram Narain Sons Ltd. v. Asst. Sales Tax Commr. - AIR 1955 SC 765 held: "It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other" (Para .....

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something which would have otherwise been within it or in some measure to modify the enacting clause." 12. The principle in Madras and Southern Maharatta Railway Co. (supra) was reiterated in Commr. of Income Tax, Mysore vs. Indo Mercantile Bank Ltd. -1959 Supp (2) SCR 256 = AIR 1959 SC 713 where it was held that : "The proper function of a proviso was merely to qualify the generality of the main enactment by providing an exception and taking out, as it were, from the main enactment a .....

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hat is in the enactment, and ordinarily, a proviso is not interpreted as stating a general rule". 14. The decision in Dwarka Prasad v. Dwarka Das Saraf - (1976) 1 SCC 128 = AIR 1975 SC 1758, declared: "If, on a fair construction, the principal provision is clear, a proviso cannot expand or limit it. Sometimes a proviso is engrafted by an apprehensive draftsman to remove possible doubts, to make matters plain, to light up ambiguous edges." [Para16] xxx xxx xxx The law is trite. A p .....

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uld be limited in its operation to the subject-matter of the enacting clause, the stand we have taken is sound. To expand the enacting clause, inflated by the proviso, sins against the fundamental rule of construction that a proviso must be considered in relation to the principal matter to which it stands as a proviso. A proviso ordinarily is but a proviso, although the golden rule is to read the whole section, inclusive of the proviso, in such manner that they mutually throw light on each other .....

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s and not completion of assessment. The extension enabled for completion of assessment, hence, is inoperative and neither saves limitation provided in Section 25(1) or provides for a limitation as such. 16. In that context, Section 25B has to be specifically referred to: "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 oth .....

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years to reject the return and complete the assessment, section 25(1) of the Act does not speak of any limitation period as to the final determination or conclusion of the proceedings and specifically refers to the initiation of the proceedings to determine the escaped assessment to tax within a period of five years from the last date of the year to which the return relates. 18. The third proviso to section 25 (1) extends period for completion of assessment including an extension made under Sect .....

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ner, that would not enable the State to initiate proceedings after the limitation period is over nor can a limitation be found from the proviso. 19. This Court has, in W.P.(C) No.21314/2016 by judgment dated 03.10.2016, on the same reasoning, held that Section 25B, as it now stands, is redundant insofar as sub section (1) of Section 25 not providing for any limitation for conclusion of the proceedings. Para 7 and 8 are extracted hereunder: "7. Both the above provisions speak of extension of .....

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oticed the Reference Order of the Division Bench which also emphasised the absence of a time frame to complete the assessment as provided under Section 25B of the K.V.A.T. Act. The Full Bench refused to answer the question; finding that it is not for the Courts to bring in a time frame and opined that suffice would be an observation that the completion should be within a reasonable period. 8. At the risk of repetition it has to be noticed that Section 25(1) of the K.V.A.T. Act does not speak of .....

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atute. In such circumstance, it has to be held that the proceedings initiated herein, by Ext.P1 dated 12.08.2014, is far beyond the limitation period and the same cannot be sustained." 20. W.P. (C) No. 21184 of 2016 also did not find anything to the contrary. The reliance placed by the learned counsel for the petitioner is on the statement made in paragraph 21 of the judgment: "Therefore, assessment starts from the time when notice is issued under Section 25 (1) of KVAT Act and it is c .....

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