2025 (1) TMI 61 - HC - VAT / Sales Tax

Jurisdiction of Additional Commissioner to pass an order u/s 64 of the Karnataka Value Added Tax Act, 2003 after the expiry of more than 4 years since the passing of the original order - HELD THAT - In the instant case, the order sought to be revised was passed on 31.07.2017. The records were called for under letter dated 13.07.2021 which was dispatched on 14.07.2021 and records were received by the Additional Commissioner on 22.07.2021 and notice under Section 64 (1) of KVAT Act was issued to the appellant on 28.07.2021. If the proceedings is initiated within 4 years from the date of order sought to be revised, the date of serving notice on the assessee would have no consequence. Initiation of proceedings and issuance of notice under Section 64 (1) of KVAT Act is relevant for computing limitation of 4 years and not service of notice or passing of order under Section 64 (1) of KVAT Act. The Full Bench of this Court in M/S.KHIMIJIBHAI MILLS 2000 (12) TMI 883 - KARNATAKA HIGH COURT held that ' Emphasis in the earlier provision was in affirmative terms to exercise the power only within 4 years, whereas now the emphasis is in the negative terms by saying that the authority shall not exercise the power beyond the period of 4 years. There is no material difference either to the exercise of the power to revise or to the period of limitation prescribed.' It is clear from the above that four years limitation prescribed under Section -64 of KVAT Act is to call for records and to initiate proceedings and not to pass final order. Conclusion - The limitation period under Section 64 of the KVAT Act pertains to the initiation of revisional proceedings, not the conclusion of such proceedings. Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal question in this judgment is:

• Whether the Additional Commissioner can pass an order under Section 64 of the Karnataka Value Added Tax Act, 2003 (KVAT Act) after the expiry of more than 4 years since the passing of the original order?

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Timeliness of the Revisional Order under Section 64 of the KVAT Act

Relevant Legal Framework and Precedents:

Section 64 of the KVAT Act outlines the revisional powers of the Additional Commissioner and Commissioner. Sub-section (3) specifically states that these powers cannot be exercised if more than four years have expired after the passing of the order sought to be revised. The appellant relied on precedents such as STATE OF ANDHRA PRADESH v/s M. RAMAKISHTAIAH AND CO. and A. VYKUNTAPPA SETTY & CO. to argue that the revisional proceedings must be completed within four years.

Court's Interpretation and Reasoning:

The court interpreted Section 64 to mean that the initiation of proceedings, i.e., calling for records and issuing notice, must occur within four years, but the final order can be passed beyond this period. The court relied on the Full Bench decision in M/S. KHIMIJIBHAI MILLS, which held that the limitation period pertains to the initiation of proceedings, not the conclusion.

Key Evidence and Findings:

The records were called for by a letter dated 13.07.2021, dispatched on 14.07.2021, and received by the Additional Commissioner on 22.07.2021. The notice under Section 64 (1) was issued on 28.07.2021, within four years from the original order dated 31.07.2017.

Application of Law to Facts:

The court applied the legal interpretation that initiation of proceedings within four years is sufficient. The issuance of the notice on 28.07.2021 satisfied the requirement of initiating proceedings within the statutory period.

Treatment of Competing Arguments:

The appellant's argument that the final order must also be passed within four years was rejected based on the interpretation that the limitation period only applies to the initiation of proceedings. The court found no merit in the contention that the notice was antedated, as the records showed compliance with the statutory timeline.

Conclusions:

The court concluded that the initiation of proceedings was timely and that the appeal lacked merit. Consequently, the appeal was rejected.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"It is clear from the above that four years limitation prescribed under Section -64 of KVAT Act is to call for records and to initiate proceedings and not to pass final order."

Core Principles Established:

• The limitation period under Section 64 of the KVAT Act pertains to the initiation of revisional proceedings, not the conclusion of such proceedings.
• Calling for records and issuing a notice within four years satisfies the statutory requirement, even if the final order is passed later.

Final Determinations on Each Issue:

• The court determined that the revisional proceedings were initiated within the permissible period, and the appeal was dismissed as it did not raise a substantial question of law.