M.S. Jasmin v. Commissioner of Commercial Taxes and Intelligence Officer

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **THURSDAY, THE 17[TH] DAY OF AUGUST 2023 / 26TH SRAVANA, 1945 WP(C) NO. 31718 OF 2014** ## **PETITIONER/S:** M.S.JASMIN, AGED 38 YEARS, PROPRIETRESS, M/S. KAROTHUKUZHI POLYMERS, EDATHALA, ALUVA, ERNAKULAM DISTRICT. BY ADV SRI.C.K.THANU PILLAI ## **RESPONDENT/S:** 1 THE COMMISSIONER OF COMMERCIAL TAXES, TAX TOWERS, KILLIPPALAM, THIRUVANANTHAPURAM-695002. 2 THE INTELLIGENCE OFFICER, SQUAD NO.1, MATTANCHERY, ERNAKULAM-682013. ## **OTHER PRESENT:** SPL. GP (TAXES), SRI. SYED M THANGAL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WP(C) NO. 31718 OF 2014** 2 ## J U D G M E N T 1. Petitioner is proprietress of M/s.Karothukuzhi Polymers, manufacturing plastic granules from waste plastic at Edathala, Aluva, and was a registered dealer under the Kerala General Sales Tax Act, 1963 ('KGST Act', for short) till 31.3.2005. 2. On 22.1.2002, the business premises of the petitioner was inspected by the intelligence officer and in that process one book containing 67 slips, stock summary up to 22.1.2002, two books containing estimate slips and other books containing certain sheets were taken into custody and it was found that petitioner had indulged into evasion of tax, which resulted into imposition of penalty of Rs.7,29,280/- and demand notice dated 31.7.2006, Ext.P1, was raised. The controversy is with respect to the assessment year 2001-02. The aforementioned order of penalty was assailed before **WP(C) NO. 31718 OF 2014** 3 the Deputy Commissioner, Mattancherry and vide order dated 18.11.2006, Ext.P2, order of penalty, Ext.P1, noticing variation in stock for Rs.3,580/was set aside. 3. Learned counsel appearing on behalf of the petitioner submitted that petitioner was flabbergasted to receive notice dated 30.9.2013, Ext.P3, under Section 45A(5) of the KGST Act proposing to revise the return already set aside by the Deputy Commissioner with an opportunity to the petitioner for hearing and filing objections. Objections before the first respondent as per Ext.P4 were filed, but without any advertence or question of limitation, order dated 14.11.2014, Ext.P5, was passed setting aside Ext.P2 order and restoring Ext.P1. 4. The period of limitation prescribed under the KGST Act is five years and the matter is covered by the decision of the Hon'ble Supreme Court in State of Punjab and Others v. Bhatinda District Coop. Milk P. Union Ltd. [(2007) 10 VST **WP(C) NO. 31718 OF 2014** 4 180 (SC)] . Thus it was in that background, instead of availing alternate remedy, has approached this Court under Article 226 challenging Ext.P5. The order could not have been passed under the erstwhile Act as with effect from 1.4.2005 Kerala Value Added Tax Act came into force. Petitioner also relied upon the decision of the Gujarat High Court in Ravi Electronics v. Assistant Commercial Tax Commissioner (2), Enforcement and Others [(2013) 63 VST 414 (Guj)] . 5. On the other hand, learned counsel appearing on behalf of the Revenue supported the order Ext.P5 and submitted that the power of revision under the old Act was never taken away and the period of assessment was 2001-02, therefore, KGST Act would be applicable and there was no provision of any limitation. 6. I have heard the learned counsel appearing for the parties and appraised the paper book. 7. It is settled law that under the KGST Act, there is no limitation in exercising power of **WP(C) NO. 31718 OF 2014** 5 revision. The power of revision vested with the Deputy Commissioner under Section 35 of the KGST Act was four years, whereas there is no limitation for revision by the Commissioner. It is settled law that when there is no limitation prescribed, the maximum period under which the power of revision can be exercised is six years. The assessment year is 2001-02, whereas the notice of revision was issued in 2013, particularly when the Deputy Commissioner had already set aside the penalty order, Ext.P2. 8. For adjudication of the present writ petition paragraph Nos.40 and 41 of the decision of the Gujarat High Court in Ravi Electronics (supra) are extracted hereunder: “40. From the above, it can be seen that a mere right to take advantage of the provisions of a Act is not an "accrued right". In the present case, it may be that when the Sales Tax Act was in operation, it was open for the authorities to reopen an assessment previously framed within eight years from the end of the period to which the escaped turnover related, if the commissioner had reason to believe that **WP(C) NO. 31718 OF 2014** 6 the dealer had concealed such sales, etc. However, mere right to issue such a notice to reopen the assessment cannot be equated with any accrued or acquired right. Correspondingly, it cannot be said that in absence of any notice having been issued, the assessees had any obligation or liability which they acquired, accrued or incurred for being subjected to reopening of the assessment as per the old provisions. Their cases therefore were, necessarily in absence of any notices having been issued when the Sales Tax was in operation to be governed by the provisions made for such purpose in the successor Act, i.e., the VAT Act. We are fortified in our view by the decision of with this view in case of Kumagai Skanska HCC Itochu Group v. Commissioner of Value Added Tax [2012] 52 VST 171 (Delhi) decided on May 22, 2012, wherein the Division Bench of Delhi High Court was considering the effect of enactment of Delhi Value Added Tax Act, 2004 replacing the Delhi Sales Tax Act, 1975. In such successor-Act also, similar provisions of repeal and savings were made. The court was confronted directly with the issue of effect of shorter period of limitation prescribed in the successor-Act for taking orders of assessment in revision. It was held and observed as under (pages 184 and 185 in 52 VST): "33. First of all, once the provisions of section 46 of the Delhi Sales Tax Act, **WP(C) NO. 31718 OF 2014** 7 1975 were repealed and replaced by the provisions of section 74A of the DVAT Act qua revision, it would be the latter provision which would apply on and from April 1, 2005. Secondly, the power of revision under section 46 of the Delhi Sales Tax Act, 1975 and that under section 74A of the DVAT Act do not coexist. Because, the two cannot have simultaneous existence. The death of one (section 46 of the Delhi Sales Tax Act, 1975) has ushered in the birth of the other (section 74A of the DVAT Act). Thirdly, in view of section 106(2) and (3) of the DVAT Act as interpreted by the Full Bench, an order of assessment passed under the Delhi Sales Tax Act, 1975 shall be deemed to be an order under the DVAT Act. Thus, after the repeal of the Delhi Sales Tax Act, 1975 and introduction of the DVAT Act, it is the power of revision encapsulated in section 74A thereof which holds the field. If the power of revisions invoked, it has to be under section 74A of the DVAT Act and in terms thereof. The provisions of section 46 cannot be applied to post April 1, 2005 revisions... Sixthly, the Legislature consciously altered the limitation clause insofar as the power of revision is concerned. Having expressly provided for a different scheme in section 74A(2) (b), **WP(C) NO. 31718 OF 2014** 8 it could not have been the intention of the Legislature to continue the operation of the proviso to section 46 of the Delhi Sales Tax Act, 1975." Considering the discussion above, we hold that in the present group of cases for reopening the assessment, provisions contained in the VAT Act and in particular section 35 thereof, would apply. Admittedly, when such provisions do not permit reopening beyond the period of five years from the end of the period to which the sales relate, and admittedly when no notices much less final orders were passed, the action of the authorities must be held to be lacking jurisdiction. All the cases of reassessment are, therefore, declared invalid.” In this view of the matter, order of the first respondent dated 14.11.2014, Ext.P5, is quashed and the writ petition stands allowed. Pending interlocutory applications, if any, in the writ petition would stand dismissed. Sd/AMIT RAWAL JUDGE jg **WP(C) NO. 31718 OF 2014** 9 ## **APPENDIX OF WP(C) 31718/2014** PETITIONER EXHIBITS EXHIBIT P1- TRUE COPY OF ORDER NO. ISM 92/2001-02 DATED 30-05-2002 AND DEMAND NOTICE DATED 31-07-2006 ISSUED BY THE 2ND RESPONDENT EXHIBIT P2- TRUE COPY OF ORDER NO. STRP 60/06 DATED 18-11-2006 ISSUED BY THE DEPUTY COMMISSIONER, MATTANCHERY. EXHIBIT P3- TRUE COPY OF NOTICE NO. R1-49510/09/CT DATED 30-09-2013 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P4- TRUE COPY OF THE OBJECTION DATED 23-102013 PRESENTED BY THE PETITIONER TO THE 1ST RESPONDENT. EXHIBIT P5- TRUE COPY OF ORDER NO. R1-49510/09/CT DATED 14-11-2014 ISSUED BY THE 1ST RESPONDENT.