Karnataka High Court
Combined Industries Limited vs State Of Karnataka on 30 January, 1996
Equivalent citations: ILR1996KAR822
Author: H.L. Dattu
Bench: H.L. Dattu
ORDER G.C. Bharuka, J.
1. This revision petition filed under section 23(1) of the Karnataka Sales Tax Act, 1957 (in short "the State Act") is directed against the order dated February 14, 1992, passed by the Appellate Tribunal in S.T.A. No. 150 0f 1990.
2. The petitioner-company is manufacture of automotive chains. For the assessment year 1982-83 it had filed its return of Central Sales tax on April 30, 1983. The assessing authority, after rejecting the book figure, subjected the petitioner to a best judgment assessment order dated January 17, 1989 under section 9(2) of the Central Sales Tax Act, 1956 read with section 12(5) of the State Act.
3. The petitioner challenged the said assessment before the Deputy Commissioner of Commercial Taxes (Appeals) and then went to the Tribunal but having failed at both the stages, the present revision has been preferred.
4. The sole contention raised by Mr. B. P. Gandhi, learned counsel appearing for the petitioner, is that the impugned assessment order is barred by time as envisaged under section 12(5) of the State Act and therefore it cannot be sustained.
5. In the State Act, limitation for completion assessments has been prescribed for the first time by the Karnataka Sales Tax (Amendment) Act, 1985 (Karnataka Act 27 of 1985), the provisions whereof, except those contained in section 7, were brought into force with effect from August 1, 1985 as is evident from section 1(2) of the said amending Act. Section 16 of the amending Act, inter alia, inserted sub-sections (5) and (6) to section 12 of the State Act providing for a limitation for completion of assessments. These sub-sections read as under :
"(5) No assessment under this section for any year shall be made after a period of three years from the date on which return under sub-section (1) for that year is submitted by a dealer.
(6) In computing the period of limitation for assessment under this section, -
(a) the time during which the proceedings for assessment in question have been deferred on account of any stay order granted by any court or any other authority shall be excluded;
(b) the time during which the assessment has been deferred in any case or class of cases by the Commissioner for reasons to be recorded in writing shall be excluded :
Provided that nothing contained in this sub-section limiting the time within which assessment may be made, shall apply to an assessment made on the assessee or any person in consequence of, or to give effect to, any finding, direction or order made under sections 20, 21, 22, or 22-A or any judgment or order made by any court :
Provided further that assessment proceedings relating to any year ending before the date of commencement of the Karnataka Sales Tax (Amendment) Act, 1985 shall be completed within the period of the three years following such commencement."
6. Subsequently, by Karnataka Taxation (Amendment) Act, 1988 (Act No. 8 of 1989), the provisions to section 12(6) were retrospectively omitted and the following provisos were deemed to have been inserted to sub-section (5) of section 12 from the inception of the State Act :
"Provided that assessment proceedings relating to any year ending before the date of commencement of the Karnataka Sales Tax (Amendment) Act, 1985 shall be completed within a period of four such commencement :
Provided further that nothing in this sub-section limiting the time within which assessment may be made shall apply to an assessment made in consequence of or to give effect to any findings, directions or orders made under sections 20, 21, 22 or 22-A or any judgment or order made by any court."
7. In the present case, the assessment proceedings relate to the year 1982-83 which has obviously ended to the commencement of Act No. 27 of 1985. In such a case, according to the first proviso inserted in sub-section (5) of section 12, it was competent for the assessing authority to complete the assessment within four years from the date of commencement of said amending Act of 1985, namely, August 1, 1985. Thus, the assessment could have been completed till up to July 31, 1989. Admittedly, the impugned assessment has been completed on January 17, 1989, i.e., much within the prescribed period of limitation.
8. The submission of Mr. Gandhi is that since in the present case, keeping in view the limitation originally provided by Act No. 27 of 1985, the impugned assessment proceedings had already become time-barred on July 31, 1988, the subsequent enlargement of limitation by Act No. 8 of 1989 cannot infuse life to such a statutorily closed and final assessment.
9. In our opinion, while advancing the said submissions, Mr. Gandhi overlooked the fact that the proviso to section 12(5) has been inserted by Act No. 8 of 1989 retrospectively with an unequivocal legislative declaration that "provisos shall be and shall be deemed always to have been inserted".
10. In the case of Ahmedabad Manufacturing and Calico Printing Company Limited v. S. G. Mehta, Income-tax Officer AIR 1964 SC 1436 at pages 1445-46, it has been held that :
"It must be remembered that if the Income-tax Act prescribes a period during which the tax due in any particular assessment year may be assessed, them on the expiry of that period the department cannot make an assessment. Where no period is prescribed the assessment can be completed at any time, but once completed it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escarpment of assessment of income for one reason or another (section 34). Both these sections which enable reopening of back assessments provide their own periods of time for action but all these periods of time, whether for the first assessment or for rectification, or for reassessment, merely create a bar when that time passed against the machinery set-up by the Income-tax Act for the assessment and levy of the tax. They do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period. The liability is not enforceable but the tax may again become eligible if the bar is removed and the tax-payer is brought within the jurisdiction of the said machinery by reason of a new power. This is, of course, subject to the condition that the law must say that such is the jurisdiction, either expressly or by clear implication. If the language of the law has that clear meaning, it must be given that effect and where the language expressly so declares or clearly implies it, the retrospective operation is not controlled by the commencement clause".
11. In the case of Mahaveer Drug House v. Assistant Commissioner of Commercial Taxes, Assessments-II, Bangalore (1991) 82 STC 388 (paragraph 4) it has been held by this Court that :
"So long there is a possibility of reopening any assessment for any reason and no immunity has accrued to the assessee, the existing period of limitation may be enlarged by legislation. But once there is immunity, unless the Legislature amends the law retrospectively or declares any provisions as applicable to the concluded proceedings also by clear and specific words, it is not possible to read into those provisions a power enabling the assessing authorities to undo what has become final."
12. Again in the recent judgment of this Court in the case of B. M. Shivakumar v. State of Karnataka (W.P. Nos. 6525 to 6527 of 1995 - decided on November 24, 1995) one of us (G. C. Bharuka, J.), on a contention similar to one raised in the present case, has held that :
35. On a conspectus of judicial pronouncements, it is quite clear it that is fallacious to say that on expiration of the period of limitation prescribed under a fiscal statute for completion of assessment or reassessment, the assessee acquires a vested right of not being assessed thereafter and the Legislature cannot take away such a right. As held by the Supreme Court, the periods of time prescribed under such statutes are a part of assessment machinery and it does not create any exemption. It merely creates a fetter on the power of assessing authorities to undertake or complete the process of assessment before the expiry of such period. But such a period can always be extended by Legislature either by express or by clear implication to be culled out from the provisions of the statute. Therefore, as held by the Supreme Court the Legislature is competent enough to lift the time fetter placed on the assessing authority for completion of assessment by enlarging the same even after expiry of the period. Such legislative exercise cannot be said to be bad either on the ground of incompetence or being in any way unreasonable or arbitrary offending any of the constitutional prohibitions."
13. Keeping in view the law as settled by the judicial pronouncements noticed above, in our opinion, plea of limitation raised on behalf of the petitioner is not sustainable. As noticed above, the Legislature in its wisdom has enlarged the period of limitation retrospectively and the impugned assessment has been completed within the said extended period. Therefore, the impugned order of assessment cannot be assailed as barred by limitation. The revision petition accordingly fails.
14. Petition dismissed.