TaxTMI 
TaxTMI 
2016 (10) TMI 814
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....inafter referred as the Act), power exrecised by the Deputy Commissioner under section 25B of the Act to extend the time for completing the assessment beyond the period specified under Section 25(1) and whether penalty proceedings could be taken against an assessee beyond the period specified under section 67(1) read with section 25(1) of the Act, or under section 45A read with section 19(1) of the Kerala General Sales Tax Act, 1963 (hereinafter referred as the KGST Act). 2. The cases on hand can be categorised under different groups for an easy analysis of the facts and disputed questions. GROUP-A. These are cases wherein the contention urged is that the notice for assessment or assessment orders passed under section 25(1) are barred by limitation. (1) In W.P.(C) No.10979/2014, Ext.P6 is the assessment order dated 28.3.2014, which is rectified as per Ext.P6A order. The notice under section 25(1) is issued on 28/3/2014 in respect of assessment year 2005-2006. (2) In W.P.(C) No.27736/2014, Ext.P2 is the assessment order dated 31/7/2014. The notice under section 25(1) is issued on 14/7/2014 in respect of assessment year 2006-2007. (3) In W.P.(C) No.1489/2015, Ext.P5 is th....
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....respect of assessment year 2008-2009. (13) In WP(C) No. 14355/2016 petitioner challenges Ext.P4 order of assessment dated 15/3/2016 in respect of assessment year 2009-2010. The pre-assessment notice was issued on 5/2/2016. (14) In WP(C) No. 14426/2016, Ext.P3 is the assessment order dated 19/3/2016 in respect of assessment year 2009-10. Pre-assessment notice was issued only on 14/01/2016. (15) In WP(C) No.14600/2016, Ext.P5 is the assessment order dated 25/2/2016 in respect of assessment year 2007-08. The facts of the case would disclose that best judgment assessment was completed for the year 2007-08 on 31/12/2013. The petitioner preferred an appeal as KVAT Appeal No.1060/2014. In the meantime, on 18/10/2014, another pre-assessment notice for best judgment for the same assessment year was issued. Petitioner challenged the same by filing WP(C) No. 28422/2014. However, the respondent finalised the second best judgment assessment on 30/10/2014. The assessment order was challenged by amending WP(C) No. 28422/14 in which further proceedings were stayed. Petitioner was served with another notice dated 13/2/2015 under Section 25(1) of the Act proposing to reopen the assessment f....
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....der Section 47 of the KVAT Act and the offence still exists in the account of the dealer. Therefore, time is required for completing the assessment and if hasty steps are taken, it would be harmful to the revenue as well as to the assessee. It is further observed that the enquiry based on the offence detected is still pending and it is not possible to be done before 31/3/2014. The assessment is with reference to the assessment year 2007-08. (2) In W.P.(C) No.17769/2015, Ext.P3 is the assessment order dated 21/3/2015. The notice under section 25(1) is issued on 2/3/2015 in respect of assessment year 2006-2007. It is stated that the Deputy Commisssioner has extended the time upto 31/3/2015 as per Ext.P4 dated 28.3.2014. (3) In WP(C) No. 21230/2015, Ext.P2 is the order of assessment dated 20/5/2015. The date of issuance of the order is not clear. However, it is stated that notice was served on the dealer on 25/4/2015 in relation to assessment year 2007-08. Petitioner is served with Ext.P3 order dated 23/9/2014 by which it is stated that the Deputy Commissioner had extended the time invoking Section 25B of the Act. In Ext.P3, it is observed that the period for completing assessme....
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....nd 9/5/2016 which apparently were beyond the period of limitation. Ext.P13 is an order passed by the Deputy Commissioner extending the time for completing the assessment under Section 25B for the year 2006-07 for six months till 31/3/2015 and by Ext.P14, the period was extended upto 31/3/2016. (10) In W.P.(C) No. 26723/2016, petitioner challenges Ext.P1 order dated 31/3/2016 issued by the Deputy Commissioner extending the period of completion of assessment for the years 2005-2006 and 2006-2007 upto 31/3/2017 and Ext.P2 assessment order dated 15/7/2016. It is contended that the preassessment notice under section 25(1) was served on the assessee only on 6/6/2016. GROUP-C: [W.P.(C) Nos. 12708, 12716, 12717, 12723, 12725, 17390, 17392, 17393, 17394, 17398, 17399, 17400, 17428, 18403, 18405, 19472, 19492, 19493, 23170 & 23185/2016]. These are cases in which orders are passed by the Deputy Commissioner under Section 25B of the KVAT Act. Petitioners challenge those orders inter alia contending that the power under section 25B cannot be exercised beyond the period of limitation. In some of the cases, the impugned orders are challenged in part only. GROUP-D: In this case, penalt....
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....under the said provision. It is contended that the proceedings are therefore taken under section 25, which is beyond the period of limitation specified under section 25(1). The Deputy Commissioner has extended the time for completion of assessment upto 31/3/2016 as per order dated 19/3/2015 in terms of section 25B, which acccording to the petitioner is beyond the period of limitation. (2) In W.P.(C) No.13183/2016, Exts.P1 and P1(a) are under challenge. Ext.P1 is an order passed on 31/10/2015 in respect of assessment year 2008-2009. Proceedings were taken under section 8 read with 25A of the Act. Ext.P1(a) is the penalty order issued in respect of assessment year 2008-2009 by issuing notice on 14/10/2015. The contention is that both the orders have been initiated beyond the period prescribed under section 25(1) of the Act. 3. Section 25(1) reads as under: "25. Assessment of escaped turnover.-(1) Where for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to tax in any year or has been underassessed or has been assessed at a rate lower than the rate at which it is assessable or any deduction has been wrongly made there from, o....
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.... In section 25(1), for the third proviso was substituted, as follows:- "Provided also that the time limit for the completion of assessments for the years up to 2007-08 under this section shall be extended upto 31st March, 2013." Kerala Finance Act, 2013 In section 25(1), for the third proviso, the following proviso was substituted: "Provided also that the assessments pending as on 31st March, 2013 under this section shall be completed on or before 31st March, 2014." Kerala Finance Act, 2015 In section 25(1), for the third proviso, the following proviso was substituted : "Provided also that the period for the completion of assessments including those subjected to extension under section 25B which expires on 31st March, 2015, shall be extended up to 31st March, 2016." Provisos virtually extends the period for completing assessments under section 25(1), upto 31/3/2011 in respect of assessment year 2005-06, upto 31/3/2012, in respect of assessment years 2005-06 and 2006-07, upto 31/3/2013 in respect of assessment year 2007-08, which was extended to 31/3/2014 and upto 31/3/2016 for the completion of assessments including those subjected to extension under section....
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....time under Section 25B shall not enable the Department to extend the period of limitation for issuance of notice and for completing the assessment. 7. The contention urged by the State is that, by way of successive amendments made to the Finance Act, provisos had been incorporated from time to time extending the period of limitation by one year which permits extension of period for completing the assessment. The contention is that when time is extended to complete the assessment, virtually it includes a right to issue notice under Section 25(1) as well. Further section 25B of the Act gives power to the Deputy Commissioner to extend the period of limitation on certain eventualities and once such a power is exercised, it is not open for judicial review. 8. Heard the learned counsel appearing for the petitioners and the learned Government Pleader appearing on behalf of the State and its authorities. 9. The main contention urged by the petitioners is with reference to judgment of the Apex Court in State of Punjab v. Shreyans Industries Ltd.[(2016) 4 SCC 769] wherein the Apex Court while considering the provisions under the Punjab General Sales Tax Act, 1948, (hereinafter refer....
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....e, Ernakulam v. Sudarsanam Iyengar & Sons [(1970) 25 STC 252 (SC)]. It was therefore held that Tirur Medical Stores (surpa) is a precedent for the principle that proceedings have to be initiated by the issuance of notice within the period prescribed in section 19 of the KGST Act. Further, the Division Bench proceeded to consider the scope of the 3rd proviso to sub section (1) of section 25 incorporated as per Kerala Finance Act, 2010 and later by Kerala Finance Act, 2011. It was held that the net effect of the introduction of the 3rd proviso to Sub section (1) of section 25 and the inclusion of section 25 within the canopy of section 25B is indicative of the fact that for all intents and purposes, the legislature fixed an outer time limit for completion of assessment proceedings under sub section (1) of section 25 at least in cases to which the provision in Section 25 (1) as amended by the Kerala Finance Act, 2010 and the later amendments sustaining that provision or conferring power of enlargement of time applies. (ii) State of Kerala v. Abhilash T.Mathew (2013 (1) KLT S.N.119). It was held that the prescription of period of limitation result in rights accrued to the assesse....
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....t to tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority as the case may be, subject to the provisions of sub-rule (2) may at any time within three years next succeeding that to which the tax or licence fee relates determine to the best of his judgment the turnover which has escaped assessment and assess the tax payable or levy the licence fee in such turnover after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary." Now in view of the previous decisions the principle is firmly established that assessment proceedings under the Sales Tax Act must be held to be pending from the time the proceedings are initiated until they are terminated by a final order of assessment. The distinguishing feature on which emphasis has been laid by the counsel for the respondent is that the language employed in Rule 33 is such as to lead to only one conclusion that the final determination of the turnover which has escaped assessment and the assessment of the tax have to be done within three years. It is pointed out that in the other sales tax provisions which came up for consideratio....
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....rought out making it effective from 31/3/2002 to 31/3/2003. It was held that the amendment applies to the assessment year 1998-99 and therefore the assessment completed before 31/3/2004 is well within time. (ii) Commissioner of Income Tax. V. T.O.Abraham & Co. (2011(2) KLT SN 117). The question considered was regarding the limitation for completing block assessment under section 158BE of the Income Tax Act, 1961. (iii) R.K.Upadhyaya v. Shanabhai P.Patel [(1987) 3 SCC 96]. In this case, Apex Court considered the question whether service of notice under Section 148(1) of the Income Tax Act, 1961 is a condition precedent to confer jurisdiction on the Income Tax Officer. It was held that once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income Tax Officer to proceed to reassess. It was held that issuance of notice within the period of limitation under Section 149(1) by itself was enough and the fact that the assessee had received the notice after the expiry of that period is not relevant. (iv) Grindlays Bank Limited v. Income Tax Officer, Calcutta and Others [(1980) 2 SCC 191]. That was a case arising under the Income Tax Act,....
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....wise provided in this section, no order for any assessment year shall be made after the expiry of 4 years from the end of such year. However, after the amendment, a proviso was added to subsection (2) under which the Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment before the expiration of 8 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force w.e.f. 19-2-1991. We do not think that sub-section (2) and the proviso added to it leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment before the expiration of 8 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under sub-section (2) of Section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reassessment under Section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 19....
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....ssioner till the date of receiving instructions from Inspecting Assistant Commissioner under Section 144B of the Income Tax Act were to be excluded from computing the time limit for assessment. It was held that when no such power had been exercised, the department was not entitled for the exclusion. (viii) VLS Finance Ltd. v. Commissioner of Income Tax [(2016) 384 ITR 1 (SC)]. This case arises under the Income Tax Act in relation to the limitation provided under 158BE. (ix) Paul Varghese v. State of Kerala [(2005) 13 KTR 29(Ker)]. This is also a case arising under Section 17(6) of the KGST Act. It was held at paras 6, 7 and 8 as under:- "6. The assessment in this case was legally made well before the period of limitation provided under the second proviso to Sec. 17(6) of the Act. The second proviso clearly provided the period of limitation for completion of the assessment for the year 1994-95 as 'on or before 31st March, 2000.' Unlike in the case of enlargement of the period of limitation generally made, in the present case, the legislature has specifically stated that the assessment relating to the year 1994-95 shall be completed on or before 31.3.2000. In v....
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....for the year 1994-'95 was due to expire on 31.3.1999. Hence the assessment for the year 1994-95 made on 30.10.1999 is barred being beyond the period of limitation provided under Sec.17(6). However, by virtue of the second proviso added by the Finance Act, 1999 there was time for completion of the assessment for the year 1994-95 till 31.3.2000. Admittedly, the assessment for the year 1994-95 was completed well before 31.3.2000. Thus by virtue of the second proviso the assessment is well within time. The contention of the assessee, as already noted is that the second proviso added for extending the period of limitation for completion of the assessment for the year 1994-95 did not serve the purpose for the reason that the said proviso was inserted only with effect from 1.4.1999 when the time limit provided under Section 17(6) (unamended) had expired before the said date on 31.3.1999. It s the contention of the assessee that in a case where the assessment is already barred by limitation it cannot be saved by subsequent amendment enlarging the period of limitation thereafter. On the other hand the contention of the State, as already noted, is that the second proviso is inserted sole....
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....nt has been made or the order has been passed more than six years previous to 1st November, 1971. Put conversely, with effect from 1st November, 1971, Rule 18 (80) (5) (ii) permits the Commissioner (or other authority) to revise of his own motion any assessment made or order passed under the Act or the rules provided the assessment has not been made or the order passed more than six years previously. This being the plain meaning, the said Notification must be given full effect. Full effect can be given only if the said Notification is read as being applicable not only to assessments which were incomplete but also to assessments which had reached finality by reason of the earlier prescribed period of four years having elapsed. Where language as unambiguous as this is employed, it must be assumed that the Legislature intended the amended provision to apply even to assessments that had so become final; if the intention was otherwise, the Legislature would have so stated." (xi) Commissioner of Trade Tax v. Lohia Machines Ltd. [(1999) 7 KTR 145 (SC)]. This was also a case where amendment was made to the UP Trade Tax Act enlarging the period of limitation. It was held at para 18 as....
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....sessment under section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 1985-86 could be reopened up to March, 31, 1994. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under sub-section (1) of section 21 have to be completed within 8 years of the particular assessment year. Notice to the assessee follows the authorisation by the Commissioner of Sales Tax, its service on the assessee is not a condition precedent to reopen the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to sub-section (2) of section 21 of the Act becomes redundant. Commencement of Act can be different that the operation of the Act though sometimes both may be the same. Proviso now added to sub-section (2) of section 21 of the Act does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if period, as prescribed earlier, had expired before the proviso came into operation. One has to see the language of the provi....
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....rcumstances, in particular, the provisions contained in Rules 24D (4) and 35 and also the admitted fact that the petitioner has paid the entire amount of tax with interest and settlement fee, the amount of penalty should be further reduced." This judgment is relied upon only to indicate that under the KVAT regime, the law provides for self assessment. There is a time limit for rejecting the return and conveying the reasons. The petitioner has shown the rate of tax incorrectly, which amounts to an incorrect return and therefore becomes liable for penalty. (xiii) Commissioner of Income Tax, Patiala v. Shahzada Nand and Sons and Others [1966 (LX) ITR 392]. This case had arisen under the Income Tax Act, 1922. It was held that in a taxing statute, one has to look merely at what is stated and in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. However, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. The underlined principle is that the meaning and intention of the statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be en....
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....) expired on March 31, 1956. Thereafter, Sub-s. (1A) ceased to be operative in the sense that no notice could thereafter be given thereunder. It worked itself out. The Legislature could have extended the period under the second proviso to sub-s. (1A), but it did not do so. It did not give a further lease of life to it; instead it removed the period of limitation under sub-s. (1)(a), as sub-s. (1A) had become practically defunct. The wide phraseology of sub-s. (1)(a) takes in all the escaped concealed incomes during all the years commencing from 1941 and confers a power of the Income-tax Officer to give notice thereunder in respect of the said incomes without any bar of limitation. There is, therefore, no conflict after April 1, 1956, between sub-s.(1)(a) and sub-s. (1A), as the latter ceased to be operative. There is another way of looking at the problem. Sub-section (1A) does not really prescribe any period of limitation. It enables the Income-tax Officer to take proceedings within a particular time, though period of limitation had expired. In this view, no question of carving out a species out of a genus arises. It conferred a special power on the Income-tax Officer and ....
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....tended to keep the said sub-sections whereunder proceedings had already been initiated and make available to the said proceedings the procedure prescribed under the said provisions. It may also be that sub-s. (1A) was kept in super-abundant caution. Whatever that may be, it cannot, in the circumstances mentioned by us, detract from the clear provisions of sub-s. (1)(a). We have carefully gone through the judgments of the various High Courts, namely Bombay, Madhya Pradesh, Gujarat and Calcutta, cited at the Bar. We received considerable help from the reasonings contained in the said judgments. As we have in the course of the judgment dealt with the conflicting reasons given by the High Courts, we do not think it necessary to consider each of the four judgments in detail. For the reasons mentioned above, we agree with the conclusions arrived at by the Bombay and Calcutta High Courts in preference to those reached by the Madhya Pradesh and Gujarat High Courts. In the result, the order of the High Court is set aside and the petition field under Article 226 of the Constitution is dismissed. The appeals are allowed with costs one hearing fee." (xiv) S.Narayanappa v. ....
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....ion (2), the assessing authority shall, within a period of three years from the 1st date prescribed for furnishing the last return in respect of such period, pass an order of assessment to the best of his judgment. (5) If a dealer does not furnish returns in respect of any period by the last date prescribed the assessing authority shall within a period of five years from the last date prescribed for furnishing the return in respect of such period and after giving the dealer a reasonable opportunity of being heard, pass an order of assessment to the best of his judgment. (6) If upon information which has come into his possession, the assessing authority is satisfied that any dealer has been liable to pay tax under this Act in respect of any period but has failed to apply for registration, the assessing authority shall, within five years after the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to assess, to the best of his judgment the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and in case where such dealer has wilfully failed to apply for registration, the assessing authority ....
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....e prescribed for furnishing the last return in respect of any period. If the assessee fails to comply with notice issued under sub section (2), the assessing authority shall, within three years from the first date prescribed for furnishing the last return, pass an order to the best of his judgment. If the dealer does not file a return, the assessing authority shall complete the assessment within a period of five years from the last date prescribed for furnishing return and pass an order of assessment to the best of his judgment. Section 11(6) contemplates a penalty procedure. Where the assessing authority comes to a finding that any dealer who is liable to pay tax has failed to apply for registration, he shall, within five years from the date of expiry of prescribed period, after giving the dealer a reasonable opportunity of being heard, proceed to assess to the best of his judgment the amount of tax, if any, due from the dealer. Section 11(10) further gives a power to the Commissioner for reasons to be recorded in writing to extend the period of three years from the order of assessment for such period that he may deem fit. The provisions of the Punjab Act apparently indicate that ....
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....in five years from the last date of the year to which the return relates, whether the turnover has escaped assessment. Proviso to Section 25 (1) further makes it clear that before making an assessment under sub section (1), the dealer shall be given a reasonable opportunity of being heard. 14. Section 25B has been incorporated in the statute w.e.f. 01/04/2013 which gives power to the Deputy Commissioner to extend the period of completion of assessment beyond the period specified in Section 24 or 25 in cases where any investigation or inquiry is pending under the Act or any other law or where any assessment cannot be completed, within the period specified under the said sections. The other provisions may not have any relevance and I do not intend to deal with it. 15. There is a marked difference between the Punjab Act and the KVAT Act in respect of assessment. As already indicated, every dealer, either registered or liable to be registered under the Act, is bound to file a return under Section 20 of the KVAT Act. The VAT regime had contemplated a self assessment which indicates that once the return had been submitted under Section 20(1) in the prescribed manner and accompanied....
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....sub-section the dealer shall be given a reasonable opportunity of being heard. Provided further that the time limit mentioned in this sub-section shall not apply where the turnover which escaped assessment relates to any business done by such dealer as benamidar or through a benami or where it relates to dealer, who being liable to get himself registered under this Act and the rules made there under has failed to do so. (2) In making an assessment under sub-section (1), the assessing authority may, if it is satisfied that the escape from assessment is due to willful nondisclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under sub-section (1) a penalty as provided in Section 45A: Provided that no such penalty shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition. Explanation:- Notwithstanding anything contained in the Indian Evidence Act, 1872, the burden of proving that the escape from assessment was not due to willful non-disclosure of assessable turnover by the dealer shall be on the dealer. (3) The powers under sub-section (1) may be exercised by the....
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....e proceedings for the determination of the escaped turnover must commence within the period stipulated and the word "assess" in that section is used in the wider sense as given to it by the Apex Court in Sudarsanam Iyengar & Sons [(1970) 25 STC 252 (SC)]. The Full Bench further held that the net effect of the introduction of the 3rd proviso to Sub section (1) of section 25 and the inclusion of section 25 within the canopy of section 25B is indicative of the fact that for all intents and purposes, the legislature fixed an outer time limit for completion of assessment proceedings under section 25(1). In Abhilash T.Mathew (supra), a Division Bench of this Court held that the prescription of period of limitation result in rights accrued to the assessee, by passage of the prescribed period, which cannot be disturbed without hearing the assessee. In regard to the power exercised by the Deputy Commissioner under Section 17(7) of the KGST Act to extend the period of limitation, it was held that the assessments as evident from the substituted provisos should be pending respectively on the specified dates. In Sundaram Iyengar and Sons [(1969) 2 SCC 396], the Apex Court considered as to what ....
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....f the return period or that there is an automatic extension of time as per the third proviso inserted from time to time. Facts disclose that in all those cases notice has been issued under section 25(1) after 5 years. The question is whether the provisos will save the period of limitation. Power is vested with the assessing officer to take proceedings under Section 25(1), within five years from the last date of the year to which the return relates. The words "proceed to determine" under Section 25(1) is further qualified by the words "after issuing a notice on the dealer and after making such enquiry as it may consider necessary". Therefore, any step under Section 25(1) has to be taken only after issuing a notice on the dealer which apparently has to be done within five years from the last date of the year to which the return relates. The first proviso relates to a dealer being heard before making assessment under Section 25(1). The third proviso which was subsequently incorporated provides extended time for completion of assessments. It could only mean that time is extended only for completing assessment which have already been initiated after issuing notice under Section 25(1) wi....
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....ithin the period of limitation and no exclusion can be claimed by the department merely for the reason that the assessee had opted for compounding and a procedure under Section 22(10) is being followed. Hence, I am of the view that the assessment proceedings are barred by limitation. 21. Group-B relates to cases where notice and assessment orders under section 25(1) are issued on the basis of orders passed by the Deputy Commissioner under Section 25B. In all these cases, the power under section 25B is exercised after the five year period as specified under section 25(1). Section 25B starts with a non obstante clause, which takes into consideration a different situation for completing the assessment beyond the period specified under the Act in cases where any investigation or inquiry is pending under the Act or any other law or where any assessment cannot be completed within the period specified under sections 24 and 25. Section 25B has been incorporated in the statute to enable the Deputy Commissioner under certain circumstances to extend time for completing assessment. As held by the Apex Court in Shreyans Industries Ltd. (supra), such power has to be exercised by giving approp....
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....g steps under Section 25(1) in an instance where an investigation or enquiry is pending under the KVAT Act or any other law, or in instances where the assessment cannot be completed. But in cases where power is exercised to extend the period for completing the assessment, does it mean that the said power can be exercised to extend the period of limitation for invoking section 25(1). The statute having conciously used the words "or where any assessment cannot be completed within the period specified under the said sections, the Deputy Commissioner may, for good and sufficient reasons, extend the period of completion of the assessment beyond the period specified in those sections", it has to be held that such a power can be exercised only to extend the time for completing the assessment and not for initiating a proceeding under section 25(1) by issuance of a notice. Further, while exercising power under section 25B, the Deputy Commissioner is bound to state reasons. In none of these cases, no specific reason has been stated to invoke section 25B. In the result, Group-B cases are to be allowed as in all such cases orders are passed under section 25B beyond the period specified under S....
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....as issued for the respective years. It is contended that the investigation relating to the nature of offence committed by the dealer is a time-consuming process and it requires sufficient time to analyse the case. The matter was pending adjudication before the Central Government authorities which has a direct bearing on the violation under the provisions of KGST Act and KVAT Act. 24. The main contention urged by the petitioner is that the offence was detected when the Commercial Taxes Department had come to know about the action taken by DRI. From Ext.P7, it can as well be seen that the Commercial Tax Department was aware of the proceedings. Necessary action ought to have been taken within a specified time under the concerned enactments and atleast within a reasonable period, and it cannot be more than five years from the date on which the alleged offence came to the notice of the Commercial Tax Department. 25. On facts, there is no dispute that the proposal for penalty in all these cases were issued beyond five years from the date of Ext.P7. The question is whether the assessment orders can be set aside on the ground of limitation in taking action. Learned counsel for the pe....
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....n the returns. Now it is difficult to see how the assessee could be said to have filed "false" returns, when what the assessee did, namely, not including the amount of freight in the taxable turnover, was under a bona fide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee throughout was that on a proper construction of the definition of "sale price" in Section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958 and Section 2(h) of the Central Sales Tax Act, 1956, amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now, it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the Court and the belief entertained by the assessee that it was not liable to include the amount of freight in the taxable turnover could not be said to be mala fide or unreasonable. What ....
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....the date of initiation of penalty proceedings, the amended sub section (4) of section 14 had come into force, it is the law regarding penalty contained in the amended provision that is applicable. In the facts of the said case, the power to assess the dealer for escaped assessment had to be exercised within six years of expiry of the relevant assessment year. The Full Bench was interpreting the two periods of limitation prescribed for escapement of assessment and it was held that sub sections (4) and (4)(a) of section 14 has been provided to take care of instances where there is escapement of turnover from tax on account of the dealer to disclose the turnover or any of the particulars correctly. While answering the reference, it was held that penalty proceedings do not stand by themselves but are dependant upon a finding by the assessing authority that the whole or any of the turnover of the business of a dealer has escaped assessment. It is only the finding that turnover has escaped assessment as a deterrent for the dealer, the penalty proceedings are taken. While these proceedings were distinct from the assessment proceedings themselves, they are not wholly independent from the a....
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....ted as an Appendix in [1974] 33 STC 144 (AP)]. The said decision directly dealt with subsection (4) and held that penalty proceedings are not independent proceedings, and though the proceedings for penalty are distinct from reassessment proceedings they cannot be treated as wholly independent assessment proceedings. It was observed that levy of penalty is ancillary to the power to levy the tax. In view of the aforesaid decisions, we agree with the Tribunal that the order of penalty is barred by sub-section (4-A) of section 14. Tax Revision Case, accordingly, fails and is dismissed. No costs." (vii) St.Mary's Hotels (P) Ltd. v. Intelligence Officer (LAWS (KER) 2010-2-75) This case was decided by learned Single Judge of this Court. In this case, the dictum laid down is that limitation for taking action for penalty starts from the date of detection of offence and not from the date of inspection by the authorities concerned. It is only after verification of the books of accounts and in the light of the incriminating circumstances brought out in the course of inspection that the offence can be detected. (viii) State of Kerala v. Jayan Medical Store (1979 KLT 738) ....
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.... school), which was lying vacant for more than one year. So, there is no post of Peon with effect from 28.07.07, it is submitted. In view of Annexures I and II, the appellants would submit that the direction of the learned Single Judge given in the judgment under appeal is unsustainable. 4. We notice that creation of posts, abolition and retrenchment of staff etc. in aided schools are governed by the provisions of Chap.XXIII and XXIVA KER. Of course, R.9 of Chap.XXIVA enables the Government to extend any ban in the creation of posts, retrenchment of staff etc. concerning government schools to aided schools also. The said Rule reads as follows: "9. Notwithstanding anything contained in these rules, if it is found necessary, Government may by orders extend any ban on the creation of posts, retrenchment of staff etc. affected by them in Government schools to aided schools." 5. The appellants relied on the said rule and Annexures I & II to support their contentions. A close reading of Annexure II would show that it is a general order applicable to all Government departments and therefore the same would apply to Government Schools also. Since the creation of p....
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....ot get himself registered; or (b) has failed to keep true and complete accounts; or (c) has failed to submit any return as required by the provisions of this Act or the rules made there under; or (d) has submitted an untrue or incorrect return; or (e) has failed to comply with all or any of the terms of any notice or summons issued to him by or under the provisions of this Act or the rules made thereunder; or (f) after purchasing any goods in respect of which he has made a declaration under proviso to subsection (3) of section 5 , has failed to make use of the goods for the declared purpose; or (g) has acted in contravention of any of the provisions of this Act or any rule made there under, for the contravention of which no express provision for payment of penalty or for punishment is made by this Act; (h) or has abetted the commission of any of the above offences. Such authority or officer may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of Sales Tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case. ....
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.... of the KVAT Act (as on 31/3/2005) reads as under: "67. Imposition of penalty by authorities (1) Notwithstanding anything contained in section 71 if any authority empowered under this Act is satisfied that any person,- (a) being a person required to register himself as a dealer under this Act, did not get himself registered; or (b) has failed to keep true and complete accounts; or (c) has failed to submit any return as required by the provisions of this Act or the rules made thereunder; or (d) has submitted an untrue or incorrect return; or (e) has made any bogus claim of input tax credit or refund; or (f) has continued the business during the period of suspension of registration; or (g) has failed to return the un used statutory Forms and Declarations under this Act after the cancellation or suspension of the registration; or (h) has not stopped any vehicle or vessel when required to do so; or (i) has failed to comply with all or any of the terms of any notice or summons issued to him by or under the provisions of this Act or the rules made thereunder; or (j) has acted in contravention of any of the provisions of this Act or any rule made thereunde....
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....be assumed that the department was aware of the alleged offence as early as on 25/4/2008. In that event, the penalty orders under section 67 (1) ought to have been completed within three years even taking the outer limit. The penalty orders had been issued only on 5/12/2014 which is clearly beyond the time specified under the statute. In regard to section 45A, no specific period of limitation has been specified. However, as held by the Full Bench of Andhra Pradesh High Court, penalty proceedings have to be completed within a reasonable time from the date of detection. In Eastern Ore Corporation (supra), it was held that penalty proceedings do not stand by themselves but are dependent upon a finding by the assessing authority that the whole or any of the turnover of the business of a dealer has escaped assessment. While these proceedings were distinct from the assessment proceedings themselves, they are not wholly independent from the assessment proceedings. Similarly, in Dhanalakshmi General Stores (supra), it is held that penalty proceedings being ancillary to the assessment proceedings, the period of limitation prescribed for assessment equally applies to the order levying penalt....
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....ssued, necessarily, time limit has to be specified which is lacking in the case. Hence this writ petition is liable to be allowed. In the light of the above discussion and findings, the cases are disposed in the following manner:- (1) Group-A cases:- {WP(C) Nos.10979, 27736/2014, 1489, 20497, 21123, 24864, 31360, 32836/2015, 1617, 11463, 13959, 14350, 14355, 14426, 14600, 16716, 17660, 18048, 19366, 20995, 21184, 21378 & 22479/16}. It is declared that the proceedings under Section 25(1) of the KVAT Act have to be taken within the period of limitation of five years by issuing notice under the first proviso to Section 25(1), failing which further proceedings will be barred by limitation. The 3rd proviso by which time has been extended for completing the assessment will not save the period of limitation unless notice under the proviso to Section 25 (1) has been issued within the period of limitation. Hence, the impugned orders in all these cases are quashed. (2) Group-B cases:- {WP(C) No.28422/14, 17769, 21230, 21285, 22481/2015, 20442, 20521, 22181, 23377 & 26723/2016}. It is declared that the Deputy Commissioner while exercising power under Section 25B can only extend time ....