Suo motu revision power becomes arbitrary when exercised after substantial unexplained delay, despite falling within the outer limitation period.

A suo motu revision notice under the Karnataka Value Added Tax Act was held unsustainable where it was issued nearly ten years after the appellate order and after substantial unexplained delay. Even though the proceedings were said to fall within the outer limit under Section 64(3)(c), the unexplained lapse between calling for records, receiving the file, and issuing notice rendered the exercise of revisional power arbitrary and unreasonable. The notice and resulting revision were set aside, and the issue was decided in favour of the assessee.

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Issues: Whether the notice initiating suo motu revision under Section 64(1) of the Karnataka Value Added Tax Act, 2003, issued nearly ten years after the appellate order and after substantial unexplained delay, was sustainable in law.

Analysis: The dispute concerned an old tax period, and the authority itself had called for records long before the notice was issued. The delay between calling for records, receipt of the file, and issuance of notice was not explained. Even if the proceedings were said to fall within the outer period contemplated under Section 64(3)(c), the Court held that the unexplained lapse of time made the exercise of suo motu power unreasonable and arbitrary in the circumstances of the case.

Conclusion: The notice and the resulting revision could not be sustained. The issue was answered in favour of the assessee.

Final Conclusion: The impugned suo motu revision order was set aside and the appeal succeeded.

Ratio Decidendi: An otherwise permissible suo motu revision may still be invalid where the authority acts after substantial unexplained delay, because such delay can render the exercise of revisional power arbitrary and unreasonable.

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