2008 (8) TMI 822 - HC - VAT and Sales Tax

Assessments being time barred - Held that - The true purport of section 17A is to treat the assessments or reassessments as pending completion in respect of any period prior to April 1, 1993. Section 17A, as already noticed does not provide for any period of limitation. It is inconceivable that the Legislature which has inserted sub-sections (6) to (9) of section 17 would have taken out the cases covered by section 17A as beyond the purview of section 17(6) to (9) and providing the assessing authority the power to assess tax without any period of limitation. This is a clear case where the impugned assessment orders are passed far beyond the period of limitation and thus constrained to quash the same.

Summary

Issues Involved:
1. Delay in assessment orders and whether they are barred by limitation.
2. Applicability and interpretation of Section 17 and Section 17A of the Kerala General Sales Tax Act, 1963.
3. Relevance of judicial precedents, specifically Geo Seafoods v. Additional Sales Tax Officer IV [2000] and Geo Sea Foods v. Additional Sales Tax Officer IV [2006].

Issue-wise Detailed Analysis:

1. Delay in Assessment Orders and Whether They Are Barred by Limitation:
The petitioner, a legal heir of a deceased assessee, challenged the assessment orders for the years 1974-75 and 1980-81, claiming they were time-barred. The original assessments were completed, appealed, and remanded for reassessment by appellate orders in 1982 and 1989, respectively. However, reassessment notices were only issued in 2003, and the impugned assessment orders were passed in September 2003. The petitioner argued that the assessments should have been completed by September 30, 1998, as per the amended Section 17(8).

2. Applicability and Interpretation of Section 17 and Section 17A of the Kerala General Sales Tax Act, 1963:
The petitioner contended that Section 17(8) mandates completion of reassessments within four years from the expiry of the year in which the appellate order was received, or by September 30, 1998, for pending assessments as of April 1, 1993. The Government Pleader argued that Section 17A, inserted by Act 20 of 2000 and effective from April 1, 1993, treated such assessments as pending without a specific time limit for completion. However, the court clarified that Section 17A only deems assessments as pending but does not override the time limits established in Section 17. The court emphasized that Section 17A does not imply an indefinite period for completing assessments.

3. Relevance of Judicial Precedents:
The court considered previous judgments, particularly Geo Seafoods v. Additional Sales Tax Officer IV [2000] and Geo Sea Foods v. Additional Sales Tax Officer IV [2006]. The earlier decision in Geo Seafoods [2000] held that assessments must be completed within a reasonable time. The 2006 Full Bench decision in Geo Sea Foods clarified that assessments pending as of April 1, 1993, should be completed within four years from the date of the Finance Act, 1993. The court noted that Section 17A was introduced to address the issues raised by these judgments but did not eliminate the time limits for completing assessments.

Conclusion:
The court quashed the impugned assessment orders, holding that they were passed far beyond the period of limitation. The court reiterated that the legislative intent was to introduce a time limit for completing assessments, reflecting judicial decisions that assessments should be completed within a reasonable time. The court found that the assessments in question should have been completed by September 30, 1998, and the delay in issuing reassessment notices and passing orders in 2003 was unjustifiable.

Accordingly, exhibits P8 to P12 were quashed.