1998 (8) TMI 563 - HC - VAT and Sales Tax

Issues Involved:
1. Limitation for initiation and termination of proceedings under section 22-A of the Karnataka Sales Tax Act, 1957.

Issue-wise Detailed Analysis:

1. Limitation for Initiation of Proceedings Under Section 22-A:

The primary issue canvassed before the court was the limitation period for initiating and terminating proceedings under section 22-A of the Karnataka Sales Tax Act, 1957. The appellant, a registered dealer, filed returns for the assessment year 1983-84, claiming certain exemptions which were disallowed by the assessing authority. The appellant's appeal was accepted by the first appellate authority on March 12, 1987. The Additional Commissioner, exercising suo motu revisional jurisdiction under section 22-A, sent for the records on June 8, 1987, and issued a notice to the appellant on March 22, 1994.

Section 22-A(1) and (3) of the Act were crucial in determining the controversy. According to the appellant's counsel, the revisional authority could exercise its powers within four years of the passing of the order by issuing a notice to the appellant. Since the order by the first appellate authority was on March 12, 1987, the notice issued on March 22, 1994, was beyond the prescribed limitation period. However, the Government Pleader argued that the revisional jurisdiction was initiated by calling for the records within the four-year period, thus meeting the limitation requirement.

2. Interpretation of Section 22-A:

The court referred to three previous judgments to address the issue. The first judgment was S. Subba Rao v. Commissioner of Commercial Taxes in Mysore, Bangalore [1967] 19 STC 257 (Mys.), where it was held that the limitation for initiation of proceedings is complete upon summoning the records and not from the date the notices were sent to the parties or the termination of the proceedings. The second judgment was Busunur Industries v. State of Karnataka [1986] 61 STC 123 (Kar), which followed the decision in Subba Rao's case, emphasizing that the period of limitation should be reckoned from the date the records were called for.

The third case was Keshawa Trading Company v. Commissioner of Commercial Taxes, Bangalore [1986] 62 STC 102, where the court dismissed the writ petition filed by the assessee, holding that the initiation of proceedings was within the prescribed period of limitation when the records were received by the Commissioner.

3. Supreme Court's Reversal on a Point of Fact:

The Supreme Court in a later case reversed the High Court's decision on a point of fact, stating that the Commissioner did not initiate action after receiving the records and postponed the decision until the Supreme Court's judgment in another case. This indicated that the initiation of proceedings was not within the prescribed period of limitation.

4. Reasonable Time for Issuing Notices:

The court acknowledged the appellant's contention that notices should be sent within a reasonable time from the receipt of the records and not delayed unreasonably. The court noted that section 22-B, inserted by Act No. 7 of 1997, now provides a two-year period for passing orders after initiating proceedings or calling for records.

5. Differing Views and Larger Bench Consideration:

The court declined the appellant's request to refer the matter to a larger Bench, despite a differing view by the Andhra Pradesh High Court in State of Andhra Pradesh v. Toshiba Anand Batteries Ltd. [1995] 96 STC 664. The court upheld its previous judgments, finding no merit in the appeal and dismissing it with no order as to costs.

Conclusion:

The appeal was dismissed, with the court affirming that the initiation of proceedings under section 22-A is complete upon summoning the records within the four-year period from the passing of the order sought to be revised.

Appeal Dismissed.

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