2018 (11) TMI 1355 - HC - VAT and Sales Tax

Time Limitation - proceedings initiated u/s 67 of the KVAT Act, 2003 challenged on the ground of the orders passed being vitiated on the ground of period of limitation having expired - Held that - The order now issued against the purchasing dealers impugned in the writ petitions are dated 18.03.2017; within the limitation period. It is within the five year reasonable time decalred by us, if the statute does not provide for a specific period of limitation to operate. The summons issued in 2012-13 to a number of dealers, and verification of the records produced by all of them culminated in the detection of offence on 30.09.2014. The delay in detection by issuance of notice, to the selling dealer has been explained which we have found to be satisfactory. The period of three years hence commences from the date of issuance of notice to the selling dealer. The order against the purchasing dealers is passed within the period provided of limitation. The argument that notices to the purchasing dealers were delayed and was not proximate to the verification of their records, has no legs to stand since the proceedings were finalised within three years from 30.09.2014 - the petitioners would have to be relegated to the statutory remedy. The petitioners would be entitled to file appeals under the statute within 30 days from the date of receipt of a certified copy of this judgment - petition disposed off.

Summary

Issues:
Challenge to proceedings under Section 67 of the Kerala Value Added Tax Act, 2003 based on expiration of limitation period.

Analysis:
1. The judgment addresses the challenge to proceedings initiated under Section 67 of the KVAT Act on the ground of limitation having expired. The court had previously decided in W.A No.344/2017 that the limitation period for such proceedings should be five years, as provided under Section 25 for re-assessment. The commencement of the limitation period was determined to be from the detection of the offense, following a Division Bench judgment in W.A No.385/2009. The court emphasized that even in the absence of a specific limitation period in the statute, proceedings should be finalized within a reasonable time.

2. The case involved an inspection of a dealer's premises by the Commercial Taxes Department, leading to allegations of unaccounted sales. The petitioners, who were alleged purchasers, had produced their books of accounts promptly upon receiving summons. However, the Intelligence Officer delayed issuing notices to the alleged purchasers, which extended beyond the three-year limitation period under Section 67 of the KVAT Act. The delay in finalizing proceedings was argued to be unjustified, considering the records were submitted in 2012 and the notices were issued in 2017.

3. The respondent State argued that the verification of numerous records necessitated the delay in issuing notices to the alleged purchasers. It was contended that the limitation period should be related to the date on which the notice was issued against the selling dealer. The court examined the extensive order against the selling dealer and the verification process involving various transactions with dealers in Thrissur.

4. The court found that the delay in issuing notices to the purchasing dealers did not impact the limitation period, as the detection of offenses against the selling dealer was the crucial date for commencement of the limitation period. The notices issued to the purchasing dealers were within the five-year reasonable time frame determined by the court. The argument that the delay in issuing notices affected the limitation period was dismissed, as the proceedings were concluded within three years from the detection of offenses.

5. Ultimately, the court held that the petitioners should avail themselves of the statutory remedy by filing appeals within 30 days from the date of receipt of the judgment. If appeals were filed within the specified time, recovery actions would be stayed for an additional four months to consider any stay applications. The writ petitions were disposed of without costs, providing a clear direction for further legal recourse.