2016 (6) TMI 1339 - HC - VAT and Sales Tax

Reopening of assessment - time limitation - case of petitioner is that the reassessment had been made beyond the period of limitation - whether there is any limitation for reopening an assessment when it is at the instance of the Commissioner? Held that - Section 17D has incorporated a proviso to Section 17 (2) (d) which clearly indicates that the assessment may be reopened with the prior permission of the Commissioner. No specified time had been mentioned under Section 17D for reopening the assessment at the instance of the Commissioner. In fact Section 17D is a special procedure, which contemplates the assessment by fast track team. The Department is justified in taking a view that when the assessment has been reopened with the permission of the Commissioner, time limits prescribed in Section 19 shall not apply - there is no bar of limitation for reopening the assessment - petition dismissed.

Summary

Issues:
1. Reopening of assessment beyond the period of limitation.
2. Application of Section 19 of the Kerala General Tax Act.
3. Interpretation of Section 17D and its proviso.
4. Effect of Finance Act amendments on assessment reopening.

Analysis:
1. The petitioner challenged assessment orders Exts.P1 and P2 as illegal, arguing that reassessment beyond the limitation period was impermissible. The original assessment for 2003-04 and 2004-05 was completed in 2007, but reopened in 2014. The main contention was that proceedings were time-barred under Section 19 of the Kerala General Tax Act, which allows reopening within five years of the relevant year. The Assessing Officer rejected this argument, citing permission from the Commissioner for reopening.

2. The petitioner relied on the Finance Act, 2010, which stated that in cases where assessments were reopened with the Commissioner's permission, the time limit in Section 19 would not apply. However, the amendment introducing this provision came into force only in 2010, while the fast track assessment method under Section 17D was established in 2007. Section 17D outlines a special procedure for fast track assessment by a team designated by the Commissioner, with a proviso allowing reopening with the Commissioner's permission.

3. The court considered whether there was a limitation for reopening assessments at the Commissioner's instance. It noted that Section 19 applies when the assessing officer reopens assessments, not when the Commissioner directs it. Section 17D, with its proviso allowing reopening with the Commissioner's permission, does not specify a time limit for such reopening. The Finance Act, 2010, further supported this by exempting assessments reopened with the Commissioner's permission from the time limits in Section 19.

4. Ultimately, the court found that assessments reopened with the Commissioner's permission were not bound by the time limits in Section 19. It upheld the Department's view that such assessments could proceed without limitation constraints. Consequently, the court dismissed the writ petition challenging the reopening and completion of assessments under Exts.P1 and P2, concluding that there was no limitation bar for these actions.