2000 (11) TMI 1201 - HC - VAT and Sales Tax

Summary

Issues involved:
Assessment year 1987-88, liability to pay tax as second sellers, notice under section 17(3) of the Act, proposal to complete assessment on best judgment, question of limitation, power under section 17 of the Act for escaped assessment, application of section 19 for escaped assessments, relevance of notices like form 51, interpretation of court decisions on limitation in tax assessments.

Detailed Analysis:

1. The case involves a tax revision filed by the assessee against the Tribunal's order in T.A. No. 94 of 1997 for the assessment year 1987-88. The assessee, a partnership-firm, contended that as second sellers, they were not liable to pay tax and thus did not file any monthly or annual returns as required under section 17(1) of the Act and Rule 21 of the Kerala General Sales Tax Rules, 1963. The assessing authority proposed to complete the assessment on the best judgment after serving a notice dated June 24, 1996, which the petitioner argued was barred by limitation under section 19 of the Act.

2. The Tribunal's decision was based on the view that there was no question of escaped assessment when the original assessment was not concluded. It held that the power to assess the dealer to the best of judgment under section 17(3) could be exercised even if no return was filed. The Tribunal also considered the nonproduction of stock register for estimation of turnover. Ultimately, the Tribunal set aside the assessment and remitted it back for fixing stock verification and reasonable estimation of turnover based on the inspection dated November 13, 1987.

3. The main contention raised by the petitioner was that the assessment was barred by limitation as the notice under section 17(3) was served nearly nine years after the end of the assessment year. The petitioner cited court decisions to support the argument that in cases where no return was filed, the power under section 17 should be deemed to be exercised for escaped assessment, and thus, the limitation under section 19 should apply.

4. The court referred to previous decisions to analyze the issue of limitation in tax assessments. It discussed cases where failure to submit returns led to assessments based on best judgment. The court emphasized that in such cases, the limitation period under section 19 should apply. It also examined the significance of notices like form 51 in relation to limitation and concluded that the assessment proceedings in the present case were indeed barred by limitation.

5. In light of the above analysis, the court allowed the tax revision case, setting aside the entire orders and dismissing the related petitions. The judgment highlighted the importance of adherence to statutory provisions and timelines in tax assessments, especially in cases involving escaped assessments and best judgment determinations.

This detailed analysis of the judgment from the Kerala High Court provides a comprehensive understanding of the issues involved, the arguments presented, the Tribunal's decision, the legal principles applied, and the final ruling by the court.