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2019 (2) TMI 928 - HC - VAT and Sales TaxTime limitation for making assessment - assessment to be initiated within five years - argument is that this would create an anomaly insofar as permitting assessments to be initiated within five years while re-assessment can only be within four years - Held that - The limitation so provided for re-assessment again is a measure to ensure finality to proceedings already concluded. In the case of a regular assessment as has been found, the proceedings commence with the filing of return and this return is the basis on which the assessment is completed. There is hence no limitation provided for commencement of proceedings and the mandate could only be of a completion within a reasonable period. However the general sales tax law as also the Rules under the CST Act does not contemplate a period of limitation for conclusion of proceedings. All the same both contemplate a period of limitation for initiation of proceedings for re-assessment. It is only proper that in determining the reasonable time for initiation of proceedings for assessment, for which there is no specific time provided, the longer period prescribed for re-assessment is adopted. Notice for assessment for the year 2005-06 has been initiated respectively on 29.12.2012 and 26.12.2011, both beyond the five year period. Hence, necessarily the same has to be set aside - petition allowed in part.
Issues:
Assessment under the Central Sales Tax Act, 1956 and Central Sales Tax (Kerala) Rules, 1957; Limitation period for assessments under the CST Act; Application of provisions of general sales tax laws post introduction of Kerala Value Added Tax Act, 2003; Conflict between limitation periods under CST Act and KVAT Act; Interpretation of limitation periods for assessment and re-assessment under CST Act. Analysis: The judgment concerns writ petitions challenging assessments and notices issued under the Central Sales Tax Act, 1956 (CST Act) and Central Sales Tax (Kerala) Rules, 1957. The main issue revolves around the limitation period for assessments under the CST Act. The petitioners argued that the limitation period should be four years from the expiry of the year to which the tax relates, as per Rule 6(7) of the CST (K) Rules. However, the respondents contended that the limitation period should be five years, as per the Kerala Value Added Tax Act, 2003 (KVAT Act), for completion of assessments under the CST Act. The court analyzed the provisions of Section 9(2) of the CST Act, which empowers authorities to assess, re-assess, and collect taxes under the CST Act using powers available under the general sales tax law of the state. The introduction of the KVAT Act led to changes in the provisions of general sales tax laws, particularly emphasizing self-assessment under Section 21 of the KVAT Act. The court noted that under the KVAT Act, re-assessment alone is contemplated, with a five-year period for initiating such proceedings under Section 25. The judgment discussed previous decisions like Parisons Food (P) Ltd. and C.T.O. v. Fijo Joseph, which imported the limitation period of five years under the KVAT Act for completing assessments under the CST Act. The court highlighted the need to address the conflict between the limitation periods of the CST Act and the KVAT Act, emphasizing the application of CST Act provisions and rules for assessments under the CST Act, even after the introduction of the KVAT Act. The court further examined the principles under Section 9 of the CST Act, distinguishing between regular assessment under the CST (K) Rules and self-assessment under the KVAT Act. It concluded that for inter-State turnover, regular assessment under Rule 6(5) of the CST (K) Rules is necessary, with a reasonable period for initiating proceedings. The judgment cited precedents like Madhya Pradesh Industries and Regional Assistant Commissioner of Sales Tax, Indore v. Malwa Vanaspati & Chemical Company Ltd., to support the differential treatment in limitation periods for assessments and re-assessments. It emphasized the importance of finality in proceedings and reasonable timeframes for initiating assessments and re-assessments. Ultimately, the court set aside assessments and notices issued beyond the five-year limitation period for the year 2005-06, while allowing assessments within the limitation period to proceed. The judgment clarified the application of limitation periods for assessments and re-assessments under the CST Act, providing guidance for future proceedings and appeals.
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