2007 (6) TMI 553 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the revisional order under Section 35 of the KGST Act.
2. Limitation period for initiating revisional proceedings under Section 35(2) of the KGST Act.

Summary:

Issue 1: Validity of the Revisional Order u/s 35 of the KGST Act

The petitioner, a partnership firm engaged in the jewellery business, challenged the revisional order passed by the Deputy Commissioner under Section 35 of the Kerala General Sales Tax Act, 1963 (KGST Act). The initial assessment for the year 1997-98 was completed on 14.01.1999. The petitioner filed appeals, and the Kerala Sales Tax Appellate Tribunal eventually allowed the appeal, directing the assessing authority to accept the accounts. Consequently, a fresh assessment order was passed on 26.12.2002.

The revisional authority issued a notice u/s 35 of the KGST Act on 2.8.2004, proposing to revise the assessment order dated 26.12.2002, citing irregularities and prejudice to the Revenue. The petitioner contended that the notice was beyond the prescribed time limit and requested the proceedings be dropped. However, the revisional authority proceeded to revise the order, leading to the petitioner filing an appeal before the Kerala Sales-tax Appellate Tribunal, which was rejected.

Issue 2: Limitation Period for Initiating Revisional Proceedings u/s 35(2) of the KGST Act

The petitioner argued that the notice issued by the revisional authority was beyond the time limit prescribed under Section 35(2) of the KGST Act. According to the petitioner, the revisional authority should have initiated proceedings on or before 13.01.2003 or at least by 19.04.2003. The Revenue contended that the revisional authority was revising the fresh assessment order dated 26.12.2002, and the notice issued on 2.8.2004 was within the limitation period.

The Court examined Section 35 of the KGST Act, which provides the Deputy Commissioner with the power of suo motu revision. Sub-section (2) prohibits revising an order if more than four years have elapsed after the passing of the order. Sub-section (2A) allows the Deputy Commissioner to revise an order on any point not decided in an appeal or revision within one year from the date of the order in such appeal or revision or within four years, whichever is later.

The Court concluded that the revisional authority was revising the order dated 26.12.2002, not the original order dated 14.1.1999, which had merged with the Tribunal's order dated 20.4.2002. Therefore, the notice issued on 2.8.2004 was within the time limit prescribed under Section 35(2) of the Act. The Tribunal rightly rejected the appeal filed by the assessee.

Conclusion:

The questions of law framed by the assessee were answered in the negative and in favor of the Revenue. The revision petition was rejected, and each party was directed to bear its own costs.