2017 (1) TMI 1561 - HC - VAT and Sales Tax

Time Limitation - assessment order passed under Section 25(1) read with Section 25A of the Kerala Value Added Tax Act, 2003 - Held that - The ground of limitation cannot be sustained since, the notice under Section 25(1) of the KVAT Act is dated 24.01.2014 and the same has been validly initiated within the limitation provided under the provision. The petitioner has a contention that the objections, as noticed under Section 25(1) of the KVAT Act has been finalised and a verification of the check note in the files would reveal that the earlier officer had closed the proceedings. However, the learned Government Pleader, on a verification of the files, submits that there is no such check note available. The said contention, hence, cannot be sustained. It is made clear that the setting aside of Ext.P5 is only to the extend of the objections raised on audit and revision attempted under Section 25A. Whatever proposals notified under Section 25(1) of the KVAT Act, and finalised by the assessment order shall not be upset by this judgment and the petitioner shall be entitled to file an appeal from the said order. Petition allowed in part.

Summary

Issues:
Limitation period for notice under KVAT Act, objection raised by Comptroller and Auditor General, requirement of supplying objections to assessee, setting aside Ext.P5 order for failure to supply objections, final decision-making authority under KVAT Act.

Analysis:
The petitioner challenged the Ext.P5 order passed under Section 25(1) and 25A of the Kerala Value Added Tax Act, 2003 (KVAT Act) for the Assessment Year 2009-2010. The notice under Section 25(1) was issued within the limitation period on 24.01.2014, and a subsequent notice under Section 25A was sent on 09.09.2016. The petitioner contended that the objection raised by the Accountant General did not meet the requirements specified in Section 25A of the KVAT Act.

The Court examined the functions of the Comptroller and Auditor General of India and the Accountant General, emphasizing that objections raised during an audit should be communicated to the assessee, even if not explicitly required by the statute. The Court cited the case of Mohinder Singh Gill v. Chief Election Commissioner to highlight the importance of putting an assessee on notice of audit objections that could lead to revising the assessment.

The petitioner argued that the objections under Section 25(1) had been finalized previously, but the Government Pleader refuted this claim, stating that no such record existed. Consequently, the Court set aside the Ext.P5 order due to the failure to supply objections raised in the audit to the assessee. The Court directed that relevant objections be communicated to the petitioner within two weeks, allowing the petitioner to respond and granting a hearing. The final decision on revising the assessment rested with the assessing officer under the KVAT Act.

It was clarified that setting aside Ext.P5 only pertained to objections raised during the audit and attempted revision under Section 25A. Any proposals finalized under Section 25(1) and reflected in the assessment order would not be affected by the judgment. The petitioner retained the right to appeal the assessment order. Ultimately, the Writ Petition was partly allowed, with no costs imposed.