Kerala High Court
Geo Sea Foods vs Addl. Sales Tax Officer on 15 December, 2005
Equivalent citations: 2006(1)KLT72, [2006]144STC553(KER)
Author: Kurian Joseph
Bench: Kurian Joseph, P.R. Raman, K. Balakrishnan Nair
JUDGMENT Kurian Joseph, J.
1. Attempts made by the legislature to initially prescribe a time limit for completing assessment under the provisions of the Kerala General Sales Tax Act, 1963, thereafter to limit the outer time limit in respect of assessments prior to 1.4.1993 and then to take away the outer time limit as far as assessments upto 1.4.1993, have given rise to quite a few litigations. Originally there was no prescribed time limit for completing an assessment. The assessments were to be completed within a reasonable time. For the first time, the Kerala Finance Act, 1993 introduced an amendment to Section 17 prescribing a period of 4 years. In the case of assessments pending as on 1.4.1993, the second proviso to Sub-section (6) thereof stipulated that such assessments should be completed within a period of four years from the date of publication of the Kerala Finance Act, 1993.
The scope and ambit of the expression "assessment pending" occurring in the aforesaid proviso came up for consideration in Geo Sea Foods v. The Additional Sales Tax Officer and Ors. reported in 2000 (8) KTR 21. The contention raised was that the expression "assessment pending" cannot be given a wider meaning even to take in cases where no final orders are passed for an unreasonably long period and by long lapse of time the matter had become stale. In the alternative it was prayed for a declaration that the second proviso to Section 17(6) of the Act was unconstitutional and void. In the above decision, the Division Bench upheld the first contention.
2. The Revenue took up the matter before the Supreme Court. While the matter was pending before the Supreme Court, the State introduced a further amendment to the Kerala Finance Act, 2000 inserting a new provision as Section 17A. The provision reads as follows :
17A. Assessment or reassessment of certain cases treated as pending. Notwithstanding anything contained in Section 17 or Section 18, or in any judgment, decree or order of any Court, Tribunal or other authority any assessment or reassessment for any year shall be deemed to have been pending completion if, in the case of original assessment, return or turnover for the year or any period of the year relating to any period prior to 1st April, 1993, has been filed or due to be filed subsequent to the 1st day of April, 1993 and/or a notice in the prescribed form had been served upon the dealer and the assessment in respect of which had not been completed and in the case of a reassessment, the order of the appellate or revisional authority giving rise to such reassessment had been received and such reassessment has not been completed.
Thus by the introduction of Section 17A, all assessments/reassessment for any period prior to 1.4.1993 are to be deemed pending. The above provision has been deleted by the Kerala General Sales Tax (Amendment) Act, 2005 since the provision became obsolete and the object sought to be achieved by the amendment served its purpose. The effect of the said provision during its period of operation is the issue to be considered in these cases. Section 17A was introduced after the judgment of this Court in Geo Sea Foods' case and hence the scope of Section 17A did not arise for consideration while the said case was decided by this Court. Hence the apex court disposed of Civil Appeal No. 3540/2001 (S.L.P.Nos. 7518, 8738 and 7519 of 2000) filed against Geo Seafoods's case (supra) setting aside the judgment and remitting the matter to the High Court for a fresh decision, granting liberty to the parties for filing necessary affidavits. The order reads as follows:
Leave granted.
Heard learned Counsel for the parties. Considering the addition of Section 17A in the Kerala General Sales Tax Act, 1963 by the Kerala Finance Act, 2000 and the facts stated in the rejoinder affidavit the impugned orders passed by the High Court are required to be set aside and the matters are required to be remitted to High Court for fresh decision in accordance with law.
In the result, the appeals are allowed. The impugned orders are set aside and the matters are remitted to the High Court for fresh decision in accordance with law after giving an opportunity to the parties of filing the necessary affidavits if required. There shall be no order as to costs.
3. Petitioners before us in these cases have not so far amended the pleadings. So much so, the scope of their Writ Petitions is limited only to the impact of second proviso to Section 17(6) - "Provided further that all assessments pending as on the 1st day of April, 1993 shall be completed within a period of four years from the date of publication of the Kerala Finance Act, 1993". Now Section 17(6) read with Section 17A leaves no room to interpret the provision contained in the second proviso to Section 17(6) and the expression 'assessment pending' as limiting its application only to cases which were pending well within a reasonable time and excluding cases which were pending for an unreasonably long period. The relevance of four years in the proviso is that Sub-section 6 has provided that "Any assessment under this section shall be completed within a period of four years from the expiry of the year to which the assessment relates."
4. Section 17 of the Act did not originally stipulate any period within which the assessments should be completed, as already noted above. The only reference to the time for completion of the assessments at that time was the concept of reasonable time as held by this Court in Iswara Bhat v. Commissioner of Agricultural Income Tax (1992 (1) KLT 568), wherein it was held that initiation of assessment proceedings and conclusion of the same should be within a reasonable time. It was in that background, the Finance Act, 1993 introduced amendments to Section 17 providing that the assessments should be completed within a period of 4 years and as far as the assessments pending as on 1.4.1993, within a period of four years from the date of publication of the Act. Thus the legislature clearly intended to provide for a period for completing the assessments, viz., four years from the expiry of the year to which the assessment relates. As there was no such time limit for completing the assessments and since such a provision was introduced for the first time, it was also clearly provided that all assessments pending as on 1.4.1993 should be completed within four years from the date of publication of the Act. True, going by Iswara Bhat's case (supra), the assessments had to be completed within a reasonable time and if not, no assessment under the Act could be made at the relevant time. But by the introduction of the Kerala Finance Act, 1993, the legislature clearly intended to destroy such finality, by the second proviso to Section 17(6),... "all assessments pending as on first day of April, 1993 shall be completed within a period of four years ....". The Division Bench in Geo Sea Foods' case (supra) however took the view that in view of Iswara Bhat's case (supra), the assessments having not been completed within a reasonable time, it cannot be said that such assessments not completed for unreasonably long period can be said to be pending and thus it became unnecessary for the said Bench to go into the challenge on the vires of second proviso to Section 17(6). Since Section 17A has been introduced making it clear that the assessments as on 1.4.1993 shall be deemed to be pending notwithstanding anything contained in the statute or in any judgment or decree or order of any court, Tribunal or other authority, it has become unnecessary for us also to consider the challenge to the second proviso to Section 17(6), since the pleadings have not been amended.
5. In the meanwhile, a Division Bench of this Court was called upon to consider a case of assessment being completed after 18 years from the year of assessment. None of the developments referred to above was brought to the notice of the Bench. It is seen from the judgment dated 6.3.2003 in State of Kerala v. C.M. Meerannan reported in 137 STC 304 = 2003 (3) KLT SN 81 P.60 that the only decision canvassed by the assessee was that of Evergreen Fragrances v. State of Kerala reported in 90 STC 39. Though the learned Government Pleader seems to have invited reference to the amendment introduced as per Section 17A, it appears, in view of the unusually long delay in completing the assessment, that contention is not seen considered. The Bench made a sweeping observation that Section 17A also will not save the situation, obviously without considering the scope of the section. Even at the risk of repetition we may state that neither side had brought to the notice of the Bench, the order of the Supreme Court setting aside the judgment in Geo Sea Foods' case (supra) and the consequential pendency of those matters before this Court. To examine the position that such a decision rendered without reference to the factual and legal position does not have any precedential value, it is necessary and advantageous to extract the relevant portion. Paragraphs 5 and 6 read as follows:
5. The learned Government Pleader appearing for the petitioner relied on the provisions of Section 17(6) of the Kerala General Sales Tax Act, 1963 as amended from time to time which enlarges the period of limitation for completion of the assessment in cases where the assessments were pending as on April 1, 1993, and also the provisions of Section 17A which further extends the period of limitation.
6. We have perused the aforesaid provisions, we do not find any application of those provisions to the facts of the present case. This is for the reason that even as on July 29, 1993, more than 12 years have elapsed since the assessment years under consideration. When assessments are thus barred as beyond the reasonable time, there is no scope for application of the provisions of Ss. 17(6), 17A and 17(8) of the Act, as relied on by the Government Pleader.
In the above circumstances, we do not find any reason to interfere with the conclusion reached by the Tribunal. These two tax revision cases are accordingly dismissed.
6. When the Writ Petitions came up for final hearing before a Division Bench, Meerannan's case (supra) was noted, more particularly the observation that despite Section 17A, the assessment made beyond a reasonable period is impermissible. Hence the matter is placed before us pursuant to reference order dated 14.2.2005. To the extent relevant, the order reads as follows:
Section 17A has employed a notwithstanding clause and has also employed a deeming provision and has also used the expression "any period of the year relating to any period prior to 1st April, 1993". Therefore the question to be examined is as to whether any assessment or reassessment for any year shall be deemed to have been pending completion if, in the case of original assessment, return or turnover for the year or any period of the year relating to any period prior to 1st April, 1993 is hit by limitation. In other words, Section 17A has taken away the period of limitation for completing the assessment or reassessment and all those matters pending relating to any period prior to 1st April, 1993 is still open for reassessment. Considering the fact that Section 17A has got far reaching effect in the matter of various assessments pending as on 1.4.1993 and considering the fact that contrary view has been taken by the Division Bench in (2004) 137 STC 304 we feel it would be appropriate that the matter be heard by a larger Bench.
7. Despite liberty granted and opportunity available to the parties to amend the pleadings incorporating a challenge on Section 17A of the Act, as already noted by us, there is no challenge to the amended provision. So much so, what we need to consider is only the effect of Section 17A and the impact of observations of the Division Bench in Meerannan's case (supra). The language used in Section 17A clearly means that notwithstanding anything contained in Section 17 or Section 18 or in any judgment, decree or order of any court or Tribunal or other authority, assessments for any period prior to 1.4.1993 shall be deemed to be pending and the same could be completed within the permitted time. The scope of Section 17A was not considered by the Bench in Meerannan's case (supra). As a matter of fact, Section 17A was not under challenge and it was not also the subject matter of the case. The Tax Revision Cases considered by the Bench were of the year 1999 (T.R.C.Nos. 174 and 179 of 1999). Section 17A was inserted only by the Kerala Finance Act of 2000. Any decision of the Court is based on the questions involved in the case. As stated above, the impact of Section 17A of the Act was not a question raised or arising for consideration in Meerannan's case (supra). That apart, the effect of Section 17A was not perceived by the Court, nor was it present in its mind while rendering the decision. The judgment, as far as the effect of Section 17A is concerned, is thus one rendered without any argument on the issue, without reference to the words in the section and without any citation of authority as far as the point is concerned. As stated in the twelfth edition of Salmond on Jurisprudence authored by Prof. P.J. Fitzgerald, "A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind.... Precedents sub silentio and without argument are of no moment." Meerannan's case being one rendered without reference to the relevant provisions and without examining the scope of the amended Section 17A, cannot be taken and treated as an authority on the interpretation of Section 17A. It is a decision rendered sub silentio. Meerannan's case (supra) hence does not have any binding force as far as the effect of Section 17A is concerned. In view of Section 17A of the Act, the concept of reasonable period for completing assessments for the period prior to 1.4.1993 is no more of any relevance or significance. The period is as prescribed in the Act.
8. We hold that under Section 17A all assessments prior to 1.4.1993 and not completed as on that date shall be deemed to be pending as on 1.4.1993 and it is open to the Revenue to complete such assessments in accordance with law.
The Reference is answered as above and the Writ Petitions are accordingly disposed of.