2005 (12) TMI 535 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Time-limit for completing assessments under the Kerala General Sales Tax Act, 1963.
2. Interpretation of the term "assessment pending" as per the second proviso to section 17(6).
3. Constitutionality and impact of section 17A introduced by the Kerala Finance Act, 2000.
4. Precedential value of the judgment in State of Kerala v. C.M. Meerannan [2004] 137 STC 304.

Detailed Analysis:

1. Time-limit for Completing Assessments:
The Kerala General Sales Tax Act, 1963 initially did not prescribe a time-limit for completing assessments, which were to be completed within a "reasonable time." The Kerala Finance Act, 1993 introduced an amendment to section 17, prescribing a period of four years for completing assessments. For assessments pending as of April 1, 1993, the second proviso to sub-section (6) stipulated that such assessments should be completed within four years from the date of publication of the Kerala Finance Act, 1993.

2. Interpretation of "Assessment Pending":
The term "assessment pending" was scrutinized in Geo Seafoods v. Additional Sales Tax Officer IV, where it was contended that the term should not include cases where no final orders were passed for an unreasonably long period, rendering the matter stale. The division bench upheld this contention, but the Supreme Court later remitted the matter back to the High Court for fresh consideration, particularly in light of the newly introduced section 17A by the Kerala Finance Act, 2000.

3. Constitutionality and Impact of Section 17A:
Section 17A was introduced to clarify that all assessments or reassessments for any period prior to April 1, 1993, shall be deemed pending if certain conditions were met. This provision was later deleted by the Kerala General Sales Tax (Amendment) Act, 2005. The High Court noted that section 17A, which was introduced after the Geo Seafoods case, deemed all assessments prior to April 1, 1993, as pending, thereby overriding any previous judgments or orders. The court emphasized that section 17A took away the period of limitation for completing such assessments, making the concept of "reasonable time" irrelevant for assessments prior to April 1, 1993.

4. Precedential Value of State of Kerala v. C.M. Meerannan:
In the case of State of Kerala v. C.M. Meerannan, the division bench observed that even with section 17A, assessments made beyond a reasonable period were impermissible. However, the High Court in the present judgment clarified that this observation was made without considering the full scope of section 17A and without reference to the Supreme Court's order remitting the Geo Seafoods case. The court concluded that the Meerannan judgment was rendered sub silentio regarding section 17A and thus did not have binding precedential value.

Conclusion:
The High Court held that under section 17A, all assessments prior to April 1, 1993, and not completed as of that date, shall be deemed pending. The Revenue is permitted to complete such assessments in accordance with the law. The writ petitions were disposed of accordingly.