2000 (10) TMI 941 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the order passed by the Deputy Commissioner under section 35 of the Kerala General Sales Tax Act, 1963.
2. Period of limitation for invoking section 35.
3. Scope and effect of the appellate authority's remand order.

Issue-wise Detailed Analysis:

1. Validity of the order passed by the Deputy Commissioner under section 35 of the Kerala General Sales Tax Act, 1963:
The matter arises under the Kerala General Sales Tax Act, 1963. The Deputy Commissioner set aside the fresh assessment order dated September 19, 1997, passed by the assessing authority, noting that the turnover of arecanut, dry ginger, and pepper amounting to Rs. 1,97,48,510 had escaped from the levy of turnover tax. The Deputy Commissioner exercised his power under section 35 of the Act, which allows him to initiate proceedings if the assessment order is prejudicial to revenue. The Appellate Tribunal agreed with the Deputy Commissioner's view and dismissed the assessee's appeal. The High Court upheld the Tribunal's decision, noting that the Deputy Commissioner acted within his jurisdiction in invoking section 35.

2. Period of limitation for invoking section 35:
The main contention of the assessee was that the Deputy Commissioner's order under section 35 was beyond the four-year limitation period specified in the section. The assessee argued that the limitation period should be reckoned from the date of the original assessment order (February 1, 1994), not from the fresh assessment order (September 19, 1997). The High Court noted that section 35(2) of the Act imposes a four-year limitation period for the Deputy Commissioner to pass an order. However, if an appeal has been filed, the Deputy Commissioner cannot pass an order on issues decided in the appeal. Sub-section (2A) allows the Deputy Commissioner to pass an order on points not decided in the appeal within the four-year period. The Court concluded that since the original assessment order was set aside in toto by the appellate authority, the limitation period runs from the date of the fresh assessment order.

3. Scope and effect of the appellate authority's remand order:
The appellate authority had set aside the original assessment order and remitted the case to the assessing authority for de novo disposal, leaving all issues open. The assessee contended that the remand was for a limited purpose, but the Court disagreed, stating that the appellate authority did not restrict the assessing authority's powers. The High Court emphasized that once an assessment order is set aside, the entire matter is at large before the assessing authority unless specifically restricted by the appellate authority. The Court referred to the Supreme Court decision in Deputy Commissioner of Commercial Taxes v. H.R. Sri Ramulu, which held that the period of limitation should be calculated from the date of the fresh order when the original assessment is reopened or set aside. The High Court concluded that the remand by the appellate authority was an open remand, allowing the assessing authority to consider all issues afresh.

Conclusion:
The High Court dismissed the revision petition, upholding the Deputy Commissioner's order under section 35 and the Appellate Tribunal's decision. The Court found no merit in the assessee's contentions regarding the period of limitation and the scope of the remand order. The petition was accordingly dismissed.