Limitation for escaped turnover reassessment bars both tax addition and penalty when the reassessment is time-barred.

The limitation period for reassessing escaped turnover under the Tamil Nadu General Sales Tax Act governs reopening by the revisional authority as well, and reassessment initiated or concluded beyond the prescribed five-year period is invalid. Here, although notice was issued within time, the reassessment itself was completed after expiry of the statutory period, so the additional turnover could not be sustained. Once the reassessment was time-barred, the basis for penalty also disappeared, and penalty proceedings could not survive. The tribunal's order setting aside both the reassessment and penalty was therefore affirmed.

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Issues: (i) whether the suo motu reopening and reassessment of escaped turnover was barred by limitation under the Tamil Nadu General Sales Tax Act; (ii) whether penalty proceedings could be sustained when the reassessment itself was time-barred.

Issue (i): whether the suo motu reopening and reassessment of escaped turnover was barred by limitation under the Tamil Nadu General Sales Tax Act.

Analysis: The Deputy Commissioner exercised suo motu power under section 32 of the Tamil Nadu General Sales Tax Act in relation to the assessment year 1976-77. The original assessment was made on 28 February 1978, and the period for exercising the power of reopening expired on 28 February 1983. Although notice was issued on 19 January 1983, the reassessment of escaped turnover could still proceed only if it was within the five-year period prescribed by section 16(1)(a) of the Act. The court held that section 16(1)(a) governs reassessment of escaped turnover and binds the revisional authority as well. Since the reassessment action culminated beyond the permissible period, the inclusion of the additional turnover could not be sustained.

Conclusion: The reopening and reassessment of the escaped turnover were barred by limitation and were invalid.

Issue (ii): whether penalty proceedings could be sustained when the reassessment itself was time-barred.

Analysis: Once the reassessment was held to be barred by limitation, the escaped turnover could not be brought to tax. In that situation, the foundation for penalty also disappeared, and the authority had no basis to proceed with penalty on the time-barred reassessment.

Conclusion: The penalty proceedings were unsustainable and were rightly set aside.

Final Conclusion: The revisional challenge failed, and the order of the Tribunal setting aside the reassessment and penalty was affirmed.

Ratio Decidendi: The statutory period of limitation for bringing escaped turnover to tax applies to all authorities exercising jurisdiction under the Act, and once reassessment is time-barred, penalty proceedings based on that reassessment cannot survive.

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