1987 (7) TMI 557 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of sales tax for the year 1962-63.
2. Bar on the assessment due to limitation.
3. Inclusion of opening stock in revised assessment.
4. Interpretation of "escaped assessment."

Analysis:

1. The petitioner, an assessee to sales tax, challenged the assessment finalized by the assessing authority for the year 1962-63. The Appellate Assistant Commissioner set aside the assessment order and directed a re-examination of the liability to tax on the closing stock of cashew and pepper. The Appellate Tribunal upheld the fresh assessment by the assessing authority on a taxable turnover of Rs. 26,92,382.04. The petitioner contended that the original assessment was barred by limitation and objected to the inclusion of the opening stock in the revised assessment.

2. The petitioner argued before the High Court that the original assessment was time-barred. The Court rejected this plea, emphasizing that the assessment proceedings were initiated within the statutory period. The Court noted that the General Sales Tax Act, 1125, was repealed, and proceedings had to be continued under the new Act. The notices issued to the assessee within the three-year period indicated that the assessment was not time-barred.

3. The petitioner further contended that the inclusion of the opening stock in the revised assessment was illegal. The Court disagreed, stating that when an assessment order is set aside, the assessing authority has the discretion to consider any relevant matter, even if it was not addressed in the original assessment. The Court clarified that the concept of "escaped assessment" does not apply when the entire assessment is under review, and all matters are subject to reassessment.

4. The Court dismissed the petitioner's arguments, emphasizing that once an assessment is remitted for reconsideration, all aspects of the assessment are open for review. The Court rejected the petitioner's interpretation of "escaped assessment" and cited precedent to support its position. Ultimately, the High Court found no merit in the petitioner's case and dismissed the tax revision in limine, upholding the assessment made by the authorities.

Conclusion:
The High Court of Kerala dismissed the petitioner's case challenging the sales tax assessment for the year 1962-63, ruling that the original assessment was not time-barred and that the inclusion of the opening stock in the revised assessment was lawful. The Court clarified that when an assessment order is set aside, all aspects of the assessment are subject to review, and the concept of "escaped assessment" does not apply in such circumstances.