2016 (10) TMI 1016 - HC - VAT and Sales Tax

Whether the completion of assessment has to be made within the time stipulated and it was found that there is no warrant for such an interpretation especially since the words employed was proceed to determine which indicated only a proceeding to be initiated and not the assessment itself completed? - Held that - the statute provides for self assessment and the provision for assessment of escaped turnover specifically provides a limitation of five years within which the proceedings to determine the escaped turnover had to be initiated. The power of extension conferred on the Deputy Commissioner was with respect to the completion of assessment, which has no relevance to the initiation of the proceedings as such. In such circumstance, Section 25B of the K.V.A.T. Act has to be held to be redundant insofar as the period provided under Section 25(1). Obviously, it is a mistake occurred in drafting which, however, being explicit and clear and not being in any manner ambiguous, would not be open for any purposive interpretation by this Court. The Government would be advised to look into the said provision and make suitable amendments. The amendments, if so made, definitely would not revive the cause of action in the present case; where a right has accrued and the liability to reassessment having been extinguished. The Assessing Officer would issue fresh orders of assessment within a period of one month from the date of receipt of the certified copy of the judgment only dealing with the specific instances of escaped turnover taken up in Exts.P1 and P2 - petition allowed.

Summary

Issues:
Challenge to assessment order under Article 226 based on limitation; Interpretation of Section 25(1) of the Kerala Value Added Tax Act, 2003; Extension of period for assessment under Section 25B; Impact of limitation on completion of assessment; Application of legal principles from State of Punjab v. Shreyans Indus Ltd.; Assessment orders issued beyond limitation period; Fresh notices issued post-remand and their validity.

Analysis:

1. The petitioner challenged an assessment order under Article 226, claiming the proceedings for reassessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 were time-barred. The notice of reassessment was issued beyond the limitation period, raising issues related to subsidy and discounts in the turnover.

2. Section 25(1) allows assessing authorities to determine escaped turnover within five years from the relevant year. The Full Bench clarified that the provision mandates initiation of proceedings within the timeframe, not completion of assessment. The absence of a specific timeframe for assessment completion under Section 25(1) was highlighted.

3. The Special Government Pleader argued for an extension of the limitation period under Section 25B, but the court emphasized that Section 25B pertains to assessment completion, not initiation. The court noted that the completion of assessment should be within a reasonable period, as per legal precedents.

4. Citing the State of Punjab v. Shreyans Indus Ltd. case, the court emphasized that once the limitation period expires, the right to make assessment extinguishes. The court held that the power of extension under Section 25B does not affect the initiation period specified in Section 25(1).

5. In another case, post-remand fresh notices were issued beyond the limitation period, raising new issues not addressed in the original notices. The court ruled that only issues raised in the original notices within the limitation period could be considered post-remand, and any new issues raised in fresh notices were time-barred.

6. The court set aside assessment orders issued beyond the limitation period and directed the Assessing Officer to issue fresh orders within the specified timeframe, addressing only the specific instances of escaped turnover raised in the original notices. The court clarified that issues not raised in the original notices could not be re-agitated post-remand.

7. The judgment focused on the question of limitation, without delving into the substantive issues of discounts or subsidies, which should ideally be raised before the appellate forum. The court's decision highlighted the importance of adhering to statutory limitation periods in tax assessments.