2007 (11) TMI 693 - HC - VAT and Sales Tax

Court rules notices for production of accounts time-barred, quashes penalty proposal (21)

The court ruled in favor of the petitioners, holding that the notices for production of books of accounts for 1994-95 and 1995-96 were time-barred as per ... - Issues involved: Challenge to notices for production of books of accounts for 1994-95 and 1995-96 on the ground of limitation.Summary:The petitioners challenged the notices (Exts. P7 to P9) to produce books of accounts for 1994-95 and 1995-96, arguing that the proceedings were time-barred. The petitioners relied on Rule 32(21) of the KGST Rules, which specifies the period for preservation of accounts by dealers. The rule mandates that accounts must be preserved for two years from the date of completion of final assessment or from the date of disposal of any appeal or revision related to the assessment. The petitioners contended that since there were no pending appeals or revisions, and the assessments had become final, the notices were issued beyond the prescribed time limit for book preservation. Consequently, the court disposed of the petition, directing the first respondent not to compel the petitioners to produce the books of accounts for the mentioned years. The penalty proposal contained in the notices was also quashed. However, the court clarified that the department could still collect information, compare it with the filed returns, and revise assessments if they find discrepancies, after issuing a notice to the petitioners. The respondents were permitted to disregard the limitation period for initiating proceedings from the date of filing the original petition until the judgment was produced.In conclusion, the court ruled in favor of the petitioners, holding that the notices for production of books of accounts for 1994-95 and 1995-96 were time-barred as per the provisions of Rule 32(21) of the KGST Rules.