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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether proceedings initiated under Section 67 of the Kerala Value Added Tax Act, 2003 were barred by limitation and whether the delay in issuing summons and notice could be justified by the assessee's alleged non-cooperation.
Analysis: The limitation under Section 67, as understood in the earlier Division Bench decisions, runs from the date of detection of offence, and detection must be reasonably proximate to the date of inspection or verification of accounts. Even after the statutory limitation was removed, proceedings under Section 67 had to be concluded within a reasonable period, taken as five years by analogy to Section 25. The inspection was in June 2010, the first summons was issued only in December 2011, and the matter was taken forward much later. The Court held that repeated summons and the alleged failure of the assessee to produce books did not justify keeping the matter pending for years, since the Department could have proceeded on the materials already recovered.
Conclusion: The proceedings were held to be hit by delay and limitation, and the impugned notice was set aside.
Ratio Decidendi: Where limitation under Section 67 is linked to detection of offence, the detection and consequent action must occur within a reasonably proximate time from inspection, and unexplained departmental delay cannot be saved by repeated summons or alleged non-cooperation of the assessee.
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