State of Kerala v Abhilash T. Mathew Royal Enterprises

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN TUESDAY, THE 14TH DAY OF AUGUST 2012/23RD SRAVANA 1934 ## **S.T.Rev.No.45 of 2012** ----------------------------------------- [AGAINST THE ORDER IN T.A.NO.337 OF 2008 DATED 30.06.2011 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAHAM – ASSESSMENT YEAR 1993-94 (KGST)]. -------------------------- ## **REVISION PETITIONER** /RESPONDENT/REVENUE:- ------------------------------------------------------------------- STATE OF KERALA, REP. BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER SRI.BOBBY JOHN. ## **RESPONDENT** /APPELLANT/ASSESSEE:- --------------------------------------------------- SRI. ABHILASH.T. MATHEW ROYAL ENTERPRISES, ROOM NO. VI/58, CATHOLIC TRUST BUILDING, MUTTAMBALAM P.O., KOTTAYAM, PIN-686004. BY ADV. SMT.S.K.DEVI SRI.M.RAJ MOHAN SRI.SANTHOSH P.ABRAHAM THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 14-08-2012, ALONG WITH S.T.REV.NO. 57/2012, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- Thottathil B.Radhakrishnan & K.Vinod Chandran, JJ. ---------------------------------------------------------------------S.T.Rev.Nos.45 of 2012 & 57 of 2012 ---------------------------------------------------------------------Dated this, the 14[th] day of August, 2012 ## ORDER ## K.Vinod Chandran,J. The issue of limitation, which on the earlier round of litigation was remanded to the Tribunal by this Court, has again come up before us on the Tribunal reiterating its findings; against the Revenue. 2. The subject assessment year is 1993-94 and two revisions, relating to the Kerala General Sales Tax Act, 1963, hereinafter referred to as “the KGST Act”, and the Central Sales Tax Act, 1956, hereinafter referred to as “the CST Act”, are before us. 3. The questions of law raised by the State are re-framed by us as hereunder: - (i) Whether the Tribunal was right in holding, that, the assessments under the KGST and CST Acts for the year 1993-94 completed on 30.7.1999, by two separate orders produced as Annexure-A in the respective revisions, are barred by limitation? - (ii) Whether the Tribunal was right in holding that the permission, granted by the Deputy Commissioner, to keep the assessment pending beyond 30.09.1998 under Section 17(7) of the KGST Act, could not be relied upon by the State to extend the period of limitation? ST.Rev.45 & 57 of 2012 - 2 - 4. We have heard Sri.Bobby John, learned Government Pleader and Sri.Santhosh P.Abraham, learned counsel for the assessee. 5. Shorn of all details, the assessment of the respondent/ assessee for the year 1993-94 was completed on 30.7.1999. Sri.Santhosh P.Abraham has painstakingly taken us through the various amendments that occurred to Section 17(6) of the KGST Act. Section 17(6) provided for the first time, limitation in completing assessments, by its introduction in the year 1993 by Kerala Finance Act, 1993. While before the provision was introduced there was no time limit prescribed for completing the assessments, sub-section (6) provided for a time limit of four years from the expiry of the year to which the assessment relates. To facilitate completion of assessments which were then pending, it was also provided that all assessments pending as on 1.4.1993 shall be completed within a period of four years from the publication of the Kerala Finance Act, 1993. By virtue of the said provision, the Department sought to complete an assessment of the years 1974-75 to 1976-77, which was challenged before this Court in _**M/s.Geo Sea Foods v. Additional Sales Tax Officer**_ . This Court, by judgment dated 10.11.1999 reported in (2000) 119 STC 236, set aside the assessments sought to be completed for the years ST.Rev.45 & 57 of 2012 - 3 - 1974-75 to 1976-77. The State Legislature, by introduction of Section 17A by Kerala Finance Act, 2000 read along with the validation clause in Section 3 of the Finance Act, 2000 sought to validate all assessments so completed by virtue of the provisions of Section 17(6). The proceedings against (2000) 119 STC 236 pending before the Supreme Court was remanded noticing the introduction of Section 17A and vacating the findings of the Division Bench. A Full Bench of this Court then reconsidered the issue and held Section 17A to have overcome any difficulty posed by Section 17(6) as was held by the Division Bench. The Full Bench decision was reported in _**Geo Sea Foods v. Addl. S.T.Officer**_ , 2006 (1) KLT 72 (F.B.). 6. Section 17A speaks specifically of any assessment or reassessment for any year prior to 1[st] of April, 1993 being deemed to have been pending completion if return has been filed or was due to be filed subsequent to 1.4.1993. Any action taken by the Assessing Officer notwithstanding anything contained in Section 17 or Section 18 or the findings of any Court; was, by the above provision, held to be valid. The Full Bench has also affirmed the action of the State. By Section 3 of the Kerala Finance Act, 2000 such action for assessment or reassessment made or purported to have been made under the second proviso to sub-section (6) or the proviso to sub-section (8) of ST.Rev.45 & 57 of 2012 - 4 - Section 17 of the KGST Act was deemed to be effective as valid assessments read with Section 17A of the Act. 7. The assessment year, which is the subject matter in the instant case, is 1993-94. Section 17A and the validation clause does not apply to the said assessment year; because Section 17A related to assessment year prior to 1993-1994. Now we look at the various amendments made to Section 17(6). We noticed above that on introduction of sub-section (6) prescribing the period of limitation as four years, a proviso was added wherein all assessments pending as on 1.4.1993 was to be completed within four years from the date of publication of the Kerala Finance Act, 1993. Since in 1993 the limitation of four years was introduced, it goes without saying that the assessment of 1993-94 ought to have been completed on or before 31.3.1998. By Kerala Finance Act, 1997, the proviso providing for completion of assessments pending on 1.4.1993 within four years from the date of publication of Finance Act, 1993, was amended substituting the words “within a period of four years from the date of publication of Kerala Finance Act, 1993”, with the words and figures “on or before 31[st] day of March, 1998”. Hence, all assessments which could not be completed within four years of 1993 was given a fresh lease of life for one more year. The assessment of 1993-94 in any case need to be ST.Rev.45 & 57 of 2012 - 5 - completed only by 31.3.1998. In the next year, by the Kerala Finance Act, 1998, the words and figures “pending as on the 1[st] day of April, 1993 shall be completed on or before 31.3.1998” was substituted with the words and figures “relating to the years upto and including the year 1993-94, shall be completed on or before 30[th] September, 1998”. Again the Legislature thought it fit to extend the life or rather the limitation period till 30.09.1998. This was again, by Kerala Sales Tax Amendment Ordinance, 1998, extended further to “the 31[st] day of March, 1999”. So far so good. In the next year, the Legislature thought it fit to amend the second proviso to sub-section (6), the history of which is provided above, by substituting the same with: _“Provided further that the assessment relating to the year 1994-95 shall be completed on or before 31[st] March, 2000”._ The year 1993-94 thus was pushed, by the Legislature, to oblivion. Consciously or accidentally is not to be examined by us. Going by the clear provisions and the successive amendments noticed above, any assessment for the year 1993-94 ought to have been completed before 31.3.1999. In the instant case, assessment for the year 1993-94 was completed both under the KGST Act and CST Act on ST.Rev.45 & 57 of 2012 - 6 - 30.7.1999. Without much ado; this is beyond the period of limitation. We, hence, answer the 1[st] question of law against the Revenue and in favour of the assessee. 8. The learned Government Pleader would point out the amendments to the proviso of Section 17(6) made in the year 2006, 2007 and 2009. By Finance Act 2006, the following proviso was inserted to Section 17(6): “Provided also that the assessments relating to the years up to and including the year 2001-2002 pending as on 31[st] March 2006 shall be completed on or before 31[st] March 2007”. This was again amended, providing for assessments upto and including the year 2001-2002 pending as on 31[st] March 2007 to be completed by 31[st] March, 2008. Further by substitution of the proviso in 2009, it was provided that - “Provided also that the assessments relating to the years up to and including the year 2004-05 pending as on 31[st] March, 2009 shall be completed on or before the 31[st] day of March, 2010”. We are at a loss to understand how this could be applicable. True, these amendments take care of assessments up to and including the year 2001-02 (Finance Acts 2006 and 2007) and up to and including the year 2004-05 (Finance Act, 2009). But such assessments, as is ST.Rev.45 & 57 of 2012 - 7 - evident from the substituted provisos, should be pending respectively on 31.3.2006, 31.03.2007 and 31.03.2009. The time for completing the assessments of the year 1993-94 expired on 31.3.1999. There cannot be any assessment pending on the dates referred above. 9. The next question would be the alleged extension granted by the Deputy Commissioner under Section 17(7). Admittedly such exercise was done without notice to the assessee. 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 any event, looking at Section 17(7), there is nothing on record to show that any enquiry or investigation under the Act was pending against the assessee. This is necessary for the Deputy Commissioner to be clothed with the power of extension. The Legislature has carefully provided such authority with a rider; and that does not amount to extending the period of limitation at the sweet will of the Department. The Legislature definitely has the power to extend the period of limitation of assessments by granting successive leases of life as is demonstrated earlier or even to resurrect such assessments barred by limitation. But, this power and authority is conferred exclusively on the Legislature and Section 17(7) cannot be deemed to be a delegation; which, in any event, is not possible. In the ST.Rev.45 & 57 of 2012 - 8 - circumstances, the 2[nd] question of law framed by us is also answered against the Revenue and in favour of the assessee. 9. In the circumstances, these revisions are only to be rejected, answering both the questions of law in favour of the assessee. We do so. 10. Before we leave the case, we cannot but notice a very disturbing factor. The issue was agitated by the State before this Court at an earlier point of time in S.T.Rev.No.271 of 2009. The State had challenged the order of the Tribunal holding the assessment to be barred by limitation. A Division Bench of this Court, noticing the re-validations made in successive years, directed the Tribunal to reconsider the matter with reference to the amendments by judgment dated 13.10.2010. This Court also specifically directed the Tribunal “to decide all questions raised, so that further remand could be avoided by this Court in another round of revision” ( _sic_ ). This direction was issued only because, if the question of law with respect to limitation alone is decided and this Court, on revision, again finds the same to be erroneous; necessarily for considering the other issues, a further remand to the Tribunal would have been necessary. True, we have upheld the order of the Tribunal on the ground of limitation here and such a situation does not arise. But, we cannot lose sight of the fact ST.Rev.45 & 57 of 2012 - 9 - that in the event of this Court having found the issue of limitation against the assessee, then definitely the matter would have suffered another remand; which was specifically sought to be avoided by the direction of the earlier Division Bench. We are distressed that the Tribunals do not follow specific directions of this Court. There can be no misinterpretation or misreading of the direction issued in the earlier judgment. We record our deep anguish and foreboding distress in what such callous indifference to the directions of hierarchical judicial forums would do to the system. The order shall be communicated to the concerned Tribunal. Sd/Thottathil B.Radhakrishnan, Judge vku/- Sd/K.Vinod Chandran, Judge. - true copy -