2017 (1) TMI 1220 - HC - VAT and Sales Tax

Interpretation of statute - Limitation provided u/s 25(1) of the KVAT Act - whether the words employed in sub section (1) indicates only an initiation of proceedings within the limitation period and not the conclusion of the assessment? - Held that - The proviso, as it reads, only indicates that completion of assessments including those in which an extension is made under Section 25B and expiring on 31.03.2015, would stand extended up to 31.03.2016. There is no limitation for completion of assessment provided therein - In the present case the assessment year is 2010-2011 and the limitation for initiating proceedings, u/s 25(1) expires only on 31.03.2016. The notice impugned herein is dated 19.03.2016; within the limitation period as provided u/s 25(1) of the Act. The argument is that the proviso deems conclusion of assessment within the extended period. Section 25B confers powers on the Deputy Commissioner to extend the time for completion of investigation or enquiry, for good and sufficient reasons notwithstanding Sections 24 and 25, thus enabling extension of the period of completion of the assessment beyond the period specified in those Sections. Section 25(1) does not speak of any limitation for completion of the proceedings. In such circumstances, if at all extension of completion of assessment is permitted by the Deputy Commissioner, that would not enable the State to initiate proceedings after the limitation period is over nor can a limitation be found from the proviso - even if an extension is made under Section 25B, the same would not enable the State to initiate proceedings after expiry of the period of limitation provided under sub section (1) of Section 25 of the Act. The power of extension granted under Section 25B having been found to be redundant, there can be no limitation for conclusion of the proceedings and as the Full bench held, there can only be a mandate that the proceeding should be completed within a reasonable time - petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Limitation under Section 25(1) of the Kerala Value Added Tax Act, 2003.
2. Interpretation of the third proviso to sub-section (1) of Section 25 of the Act.
3. Application and relevance of Section 25B of the Act.

Detailed Analysis:

1. Limitation under Section 25(1) of the Kerala Value Added Tax Act, 2003:
The petitioner raised the issue of limitation regarding the notice issued under Section 25(1) of the Kerala Value Added Tax Act, 2003. The limitation period for initiating proceedings under Section 25(1) is five years from the last date of the year to which the return relates. The court clarified that the words "proceed to determine" in Section 25(1) indicate only the initiation of proceedings within the limitation period and not the conclusion of the assessment. Therefore, the issuance of a notice within this period satisfies the limitation requirement, and the assessment can be completed beyond this period without any specific limitation for its conclusion.

2. Interpretation of the third proviso to sub-section (1) of Section 25 of the Act:
The petitioner argued that the third proviso to Section 25(1) implies a limitation for the conclusion of assessment proceedings. The proviso extends the time for completion of assessments, including those subjected to extension under Section 25B, up to 31st March 2016. The court noted that the Full Bench had not specifically interpreted this proviso as providing a limitation for the conclusion of proceedings. The court emphasized that a proviso is meant to qualify or create an exception to the main provision and cannot be interpreted to include what is not explicitly stated in the original enactment. The third proviso does not provide a limitation for completing assessments but merely extends the period for assessments already initiated.

3. Application and relevance of Section 25B of the Act:
Section 25B allows for the extension of the period for completing assessments in cases where investigations or inquiries are pending. The court highlighted that Section 25B specifically refers to the extension of the period for completion beyond the periods specified in Sections 24 and 25. However, Section 25(1) only prescribes a limitation for initiating proceedings and not for their completion. Therefore, the extension of time under Section 25B does not impact the limitation period for initiating proceedings under Section 25(1). The court reiterated that the power of extension under Section 25B is redundant concerning Section 25(1) since there is no statutory limitation for completing assessments once initiated within the prescribed period.

Conclusion:
The court concluded that the notice issued on 19.03.2016 was within the limitation period prescribed under Section 25(1) of the Act. The third proviso and Section 25B do not impose a limitation for concluding assessment proceedings but only extend the period for completing assessments already initiated. The writ petition was dismissed as devoid of merit.