1984 (9) TMI 267 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether inordinate delay in making an assessment to sales tax in a case remanded by the Appellate Assistant Commissioner will vitiate the assessment.

Analysis:
The High Court of Kerala deliberated on the issue of whether a significant delay in conducting an assessment for sales tax, following a remand by the Appellate Assistant Commissioner, would render the assessment invalid. The Sales Tax Officer, the respondent in the original petition, challenged the judgment of the learned single Judge that annulled the assessments. The appellant had initially assessed the respondent for sales tax for the years 1964-65 and 1965-66. Subsequently, the Appellate Assistant Commissioner set aside the assessments and remanded the cases for fresh disposal. However, the actual assessments were completed only after a substantial delay, leading to the respondent's contention that the prolonged delay had vitiated the revised assessments. The Court examined whether there was a time limit for initiating or continuing proceedings for revised assessment post a remand by an appellate or revisional authority. The Court emphasized that statutory powers must be exercised reasonably, without negligence, and for the intended purpose. It was observed that the assessing authority failed to provide a valid explanation for the delay, which was deemed unreasonable and prejudicial to the assessee. The Court highlighted the necessity for the assessee to preserve accounts and documents for a reasonable period, typically four years from the order of remit by the appellate authority, to facilitate a proper assessment. Failure to initiate proceedings within this reasonable timeframe without valid grounds was considered unreasonable and improper, leading to the assessments being deemed bad in law.

The Court further analyzed the concept of 'remand' in legal terms, emphasizing that a remand is primarily for reconsideration and not for prolonging the assessment process indefinitely. The Court clarified that while an assessing authority may delay the reassessment post a remand, the assessee should proactively engage with the authority if prejudiced by such delays. Additionally, the Court noted that the direction in rule 32(21) of the Kerala General Sales Tax Rules, 1963, mandating the preservation of accounts for four years, does not absolve the assessee from preserving records until the assessment is finalized. The Court also considered the health condition of the assessee during the assessment process, highlighting that the delay was not solely due to the assessee's readiness for the hearing. The judgment referenced previous decisions where the Court intervened due to inordinate delays by assessing authorities, distinguishing cases based on the nature of the delay and legal provisions applicable.

In conclusion, the High Court allowed the writ appeal, setting aside the judgment that annulled the assessments, emphasizing the importance of reasonable and timely assessment procedures to prevent prejudice to the assessee. The Court's decision underscored the necessity for assessing authorities to act promptly and reasonably in conducting assessments post a remand, failing which assessments could be deemed improper and bad in law.