2002 (10) TMI 757 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Reassessment of escaped turnover under Section 19 of the Kerala General Sales Tax Act, 1963.
2. Invocation of revisional powers under Section 35 of the Act by the Deputy Commissioner.
3. Limitation period for reassessment under Section 19 and its applicability to Section 35.

Detailed Analysis:

1. Reassessment of Escaped Turnover under Section 19:
The petitioner, a partnership firm running a bar-attached hotel, filed a return for the assessment year 1989-90, which was completed by the assessing authority. However, the assessing authority later issued a notice under Section 19 of the Act, indicating that the petitioner had underreported the sales turnover, leading to an escapement of turnover and a short levy of sales tax. The petitioner objected, arguing that the reassessment was barred by limitation, resulting in the reassessment proposal being dropped.

2. Invocation of Revisional Powers under Section 35:
Subsequently, the Deputy Commissioner issued a notice under Section 35 of the Act, proposing to set aside the assessment and remand the case for reassessment, citing irregularities and improprieties in the original assessment. The petitioner challenged this notice, arguing that the Deputy Commissioner lacked the power to invoke Section 35 for reassessment purposes, which should be exclusively dealt with under Section 19.

3. Limitation Period for Reassessment and Applicability to Section 35:
The petitioner contended that even if the Deputy Commissioner had the power under Section 35, it should be subject to the same limitation period as Section 19. The Government Pleader countered that the powers under Sections 19 and 35 are distinct and mutually exclusive, and the limitation period for Section 19 does not apply to Section 35.

Legal Provisions and Judicial Precedents:
The court referred to the provisions of Section 35, which allows the Deputy Commissioner to revise any order passed by a subordinate authority, provided it is within four years of the order and not subject to an appeal or revision. The court cited several judicial precedents, including decisions of the Supreme Court and Full Bench of the Kerala High Court, which clarified that the revisional power under Section 35 is distinct from the reassessment power under Section 19 and can be exercised to correct errors, irregularities, or improprieties in the original assessment.

Conclusion:
The court concluded that the Deputy Commissioner has the authority to invoke Section 35 to address escaped turnover, provided the conditions for its exercise are met. The limitation period for Section 19 does not constrain the Deputy Commissioner's powers under Section 35. Consequently, the petitioner's objections were dismissed, and they were directed to file their objections to the notice within one month, with the Deputy Commissioner required to decide the matter within two months thereafter.

Order:
The original petition was dismissed. The petitioner was instructed to file objections to the notice within one month, and the Deputy Commissioner was directed to pass orders within two months. The court emphasized the importance of resolving the matter promptly due to its long-standing nature.