1997 (9) TMI 567 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of section 5(3-D) of the Karnataka Sales Tax Act, 1957.
2. Validity of proposition notices dated February 19, 1991.
3. Limitation period for completing the assessment under section 12(5) of the Karnataka Sales Tax Act, 1957.
4. Competence of the Commissioner to defer assessments under section 12(6)(b) of the Act.
5. Validity of the Commissioner's deferment order without notice to the petitioner.

Issue-Wise Detailed Analysis:

1. Constitutional Validity of Section 5(3-D) of the Karnataka Sales Tax Act, 1957:
The petitioner initially challenged the constitutional validity of section 5(3-D) of the Karnataka Sales Tax Act, 1957. The Supreme Court's decision in Vasavadatta Cements' case [1996] 101 STC 168 upheld the constitutional validity of section 5(3-D). Consequently, the petitioner conceded that no further consideration was necessary regarding this challenge.

2. Validity of Proposition Notices Dated February 19, 1991:
The petitioner contested the validity of the proposition notices issued on February 19, 1991, arguing that they were issued beyond the period prescribed by section 12(5) of the Act. The petitioner contended that the limitation period for completing the assessment expired on April 30, 1990, making the notices issued in February 1991 illegal.

3. Limitation Period for Completing the Assessment Under Section 12(5) of the Karnataka Sales Tax Act, 1957:
Section 12(5) stipulates that no assessment is permissible after three years from the date the return is filed. However, section 12(6) allows the exclusion of the time during which proceedings are deferred due to a stay order. The interim stay order was in effect from October 30, 1986, to December 13, 1990, a period of three years, seven months, and 13 days. Excluding this period, the second proposition notice dated February 19, 1991, fell within the extended limitation period, making it valid.

4. Competence of the Commissioner to Defer Assessments Under Section 12(6)(b) of the Act:
The petitioner argued that the Commissioner was not competent to defer assessments based on an interim stay order. However, section 12(6)(b) allows the Commissioner to defer assessments for reasons recorded in writing, including situations necessitated by a court's interim stay order. The court found no limitation on the Commissioner's power to defer assessments in such cases, validating the Commissioner's deferment order.

5. Validity of the Commissioner's Deferment Order Without Notice to the Petitioner:
The petitioner claimed that the deferment order was invalid as it was issued without notice and not communicated to the petitioner. While the court acknowledged that a notice should precede such orders, it held that the absence of notice did not vitiate the order in this case. The deferment was based on an interim stay order obtained by the petitioner itself, making any notice to the petitioner unnecessary. The court also noted that the petitioner did not amend the writ petition to challenge the deferment order's validity, despite having ample time to do so. Therefore, the court found no merit in the petitioner's argument against the deferment order.

Conclusion:
The court dismissed the petitions, finding no merit in the challenges raised by the petitioner. The proposition notices were deemed valid, and the Commissioner's deferment order was upheld. The constitutional validity of section 5(3-D) was no longer in question following the Supreme Court's decision in Vasavadatta Cements' case. The petitions were dismissed without costs.

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