Karnataka High Court
M/S Pushkar Dress Manufacturers, vs The State Of Karnataka, on 7 December, 2017
Equivalent citations: 2018 (1) AKR 523, 2018 (2) KCCR SN 125 (KAR)
Bench: S.Sujatha, H.B.Prabhakara Sastry
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH R
DATED THIS THE 7TH DAY OF DECEMBER, 2017
PRESENT
THE HON'BLE MRS. JUSTICE S.SUJATHA
AND
THE HON'BLE Dr. JUSTICE H. B. PRABHAKARA SASTRY
STA No.100018/2014
C/w. S.T.A. Nos. 100014/2014,
100015/2014, 100016/2014, 100017/2014,
100020/2014, 100021/2014,
100022/2014 & 100019/2014
IN STA No.100018/2014 :
BETWEEN:
M/S. PUSHKAR DRESS MANUFACTURERS,
NO.19, WARD NO.3, JAIN CLOTH MARKET,
BELLARY. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA
REP BY THE ADDL. COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-3, VTK.1
BANGALORE 560 009. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 17.06.2014 PASSED IN
ZAC O3/DVG/SMR.44/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 19, 20
& 21/13-14 DATED 9.10.2013 PASSED BY FAA AND RESTORING
2
THE ASSESSMENT ORDER DATED 22.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100014/2014
BETWEEN:
M/S. ZEE LINE CREATIONS,
32/2, 5TH WARD, GOWLER HATTI,
BELLARY-583101
REP. BY ITS PROPRIETOR M.RAMESH
S/O M. SHATRUGNA RAO, BELLARY. ... APPELLANT
(BY SRI.NARAYAN G.RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA
REP BY THE PRINCIPAL SECRETARY,
DEPARTMENT OF FINANCE
VIDHANA SOUDHA,
BENGALURU-560 009. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 18.06.2014 PASSED IN
ZAC O3/DVG/SMR.48/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 13, 14
& 15/13-14 DATED 10.10.2013 PASSED BY FAA AND RESTORING
THE ASSESSMENT ORDER DATED 22.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100015/2014
BETWEEN:
M/S. P.L. WEAR,
104, KALLAMMA STREET,
REP. BY ITS PROPRIETOR,
MORIDEVI W/O LALITKUMAR,
AGE:40 YEARS,
BELLARY-583101. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
3
AND:
THE STATE OF KARNATAKA
REP BY THE ADDL. COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-3,
VTK.1, GANDHINAGAR,
BANGALORE 560 009. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 19.06.2014 PASSED IN
ZAC O3/DVG/SMR.43/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE,
APPEAL IS HEREBY ALLOWED.
IN STA No.100016/2014
BETWEEN:
M/S. RAJKURPA GARMENTS,
POPPULA BAZAR,
BELLARY-583101,
REP. BY ITS PROPRIETOR,
BHAWRARAM S/O JAYAROOPRAM,
AGE:38 YEARS, DIST:BELLARY. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA
REP BY THE ADDL. COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-3, VTK.1
GANDHINAGAR,
BANGALORE 560 009. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 18.06.2014 PASSED IN
ZAC O3/DVG/SMR.50/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 43, 44
& 45/13-14 DATED 06.09.2013 PASSED BY FAA AND RESTORING
4
THE ASSESSMENT ORDER DATED 22.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100017/2014
BETWEEN:
M/S. PAVAN ENTERPRISES,
NO.90/1, 2ND FLOOR,
UTTARKAR COMPLEX, BRAHMIN STREET,
BELLARY.
REP. BY ITS AUTHORISED SIGNATORY
AMBARAM S/O UMARAMJI CHOWDHARY,
BELLARY. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA
REP ITS PRINCIPAL SECRETARY,
DEPARTMENT OF FINANCE,
VIDHANA SOUDHA,
BENGALURU-560001. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 17.06.2014 PASSED IN
ZAC O3/DVG/SMR.45/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 37, 38
& 39/13-14 DATED 10.10.2013 PASSED BY FAA AND RESTORING
THE ASSESSMENT ORDER DATED 20.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100020/2014
BETWEEN:
M/S. POOJA INTERNATIONAL,
NO.1, WARD NO.2, FIRST FLOOR,
CHOUDHARY MARKET,
GOWLERAHATTI, BELLARY.
REP. BY ITS PROPRIETOR,
CHAMPARAM S/O RATNARAMAJI.
5
BELLARY. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA
REP BY THE ADDL. COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-3, VTK.1
GANDHINAGAR,
BANGALORE 560 009. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 17.06.2014 PASSED IN
ZAC O3/DVG/SMR.46/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 40, 41
& 42/13-14 DATED 10.10.2013 PASSED BY FAA AND RESTORING
THE ASSESSMENT ORDER DATED 22.01.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100021/2014
BETWEEN:
M/S. SUNDER CREATIONS,
29 B/5, TANK BUND ROAD,
MANIYAR LANE,
BELLARY.
REP. BY PROPRIETOR
S. SUNITHA BAI
W/O S. SATISH KUMAR. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA,
REP BY PRINCIPAL SECRETARY,
TO DEPT. OF FINANCE,
VIDHANA SOUDHA,
BANGALORE 560 009. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
6
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 19.06.2014 PASSED IN
ZAC O3/DVG/SMR.47/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 31, 32
& 33/13-14 DATED 9.10.2013 PASSED BY FAA AND RESTORING
THE ASSESSMENT ORDER DATED 22.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100022/2014
BETWEEN:
M/S. MASCO GARMENTS,
NO.6, WARD NO.8,
GOPI CHANNAPPA STREET,
BELLARY-583101.
REP. BY ITS PROPRIETOR BHOMARAM
S/O KOLARARAOJI CHOWDHARY. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
AND:
THE STATE OF KARNATAKA
REP BY THE ADDL. COMMISSIONER OF
COMMERCIAL TAXES (ZONE)-3, VTK.1
BANGALORE 560 009. ...RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 18.06.2014 PASSED IN
ZAC O3/DVG/SMR.49/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 47/13-
14 DATED 10.10.2013 PASSED BY FAA AND RESTORING THE
ASSESSMENT ORDER DATED 24.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
IN STA No.100019/2014
BETWEEN:
M/S. MAHAVEER COTTON JEANS,
D.NO.35, KASAI STREET,
BEHIND HRG BUILDING, NEAR JAIN MARKET,
BELLARY-583101. ... APPELLANT
(BY SRI. NARAYAN G. RASALKAR, ADV.)
7
AND:
THE STATE OF KARNATAKA
REP BY THE SECRETARY TO GOVERNMENT,
FINANCE DEPARTMENT,
VIDHANA SOUDHA,
BANGALORE 560 001. ... RESPONDENT
(BY SRI. M. KUMAR, AGA)
THIS APPEAL IS FILED UNDER SECTION 66(1) OF THE KVAT
ACT, 2003 AGAINST THE ORDER DATED 20.06.2014 PASSED IN
ZAC O3/DVG/SMR.51/13-14 ON THE FILE OF THE ADDL.
COMMISSIONER OF COMMERCIAL TAXES, ZONE-3, BANGALORE
SETTING ASIDE THE APPEAL ORDER BEARING NO.CST AP 23, 24
& 25/13-14 DATED 9.10.2013 PASSED BY FAA AND RESTORING
THE ASSESSMENT ORDER DATED 22.04.2013, PASSED UNDER
SECTION 9(2) OF THE CST ACT, 1956.
THESE APPEALS COMING ON FOR ADMISSION, THE SAME
HAVING BEEN HEARD AND RESERVED ON 22.11.2017, THIS DAY,
S.SUJATHA J., DELIVERED THE FOLLOWING:
JUDGMENT
Since common issues are involved in these matters, the same are heard together and disposed of by this common judgment.
2. These appeals arise against the order passed by the Addl. Commissioner for Commercial Taxes, Zone-III, Bengaluru, whereby the orders of the First Appellate Authority is set aside restoring the re-assessment order 8 passed by the prescribed Authority for the assessment period 2005-2006.
3. In all these cases, re-assessment orders were passed under Section 9 (2) of the CST Act, read with Section 36(1) and 72(2) of the Karnataka Value Added Tax Act, 2003 (for short 'the KVAT Act') for the tax periods April, 2005 to March, 2006, levying Central Sales Tax at 10%, penalty and interest, in the absence of statutory forms furnished by the assessees. Being aggrieved, the assessees preferred appeal before the Joint Commissioner of Commercial Taxes (Appeals), Davanagere Division, Davanagere, (First Appellate Authority - for short 'FAA') who allowed the appeals on the issue of limitation.
4. The Addl. Commissioner of Commercial Taxes exercising the powers under Section 64 (1) of the KVAT Act, initiated revision proceedings to revise the order of the FAA as it was erroneous and prejudicial to the interest of 9 the Revenue. After issuance of notice and hearing the assessees, revisional order was passed setting aside the order of the FAA and restoring the re-assessment order of the Assessing Authority. Being aggrieved, the assessees are in appeal.
5. The learned counsel Shri Narayan G.Rasalkar, appearing for the appellant would contend that the order of the FAA was neither erroneous nor prejudicial to the interest of the Revenue, since the order of re-assessment was passed beyond the period of limitation under Section 40 of the KVAT Act, as it stood prior to 31.03.2011 relating to the assessment period 2005-2006. Inviting the attention of this Court to Section 32 of the KVAT Act, the learned counsel submitted that the assessees are liable to maintain the books of accounts only for five years. Any order passed subsequent to the period mentioned in Section 32 of the Act to keep the books of accounts, is arbitrary and illegal. The revisional authority overlooking 10 these aspects exercised the power under Section 64 of the KVAT Act to revise the order of FAA who had verified the provisions of Sections 40 and 32 of the KVAT Act, in the right perspective while allowing the appeal. The order of the FAA being justifiable, there was no occasion for the Addl. Commissioner to revise the said order, the same being not erroneous nor prejudicial to the interest of the Revenue, the FAA has followed the provisions of the Act as it stood during the relevant period. The impugned reassessment proceedings were initiated by the prescribed authority by issuing notice in VAT 275, without jurisdiction. The assessment period 2005-2006 being the first year of the KVAT coming into force, there was confusion in the minds of the assessees as well as the authorities. Filing of returns manually, was the cause for the initiation of re-assessment proceedings. Reassessment proceedings cannot be initiated casually, the reasons for reassessment and additional information not showing the correct tax liability in particular month by 11 way of evidence has to be disclosed with tax proposition. No such reasons or material was disclosed in the reassessment notices. The reason being incomplete and summoning the accounts cannot be the basis for the initiation of reassessment proceedings. The authority ought to have called for the original assessment records/returns/C-forms filed from Local VAT Officer who has concluded the deemed assessments.
6. The learned counsel further submitted that during the pendency of the proceedings, the constitutional validity of the amendments made to Section 40 of the KVAT Act extending the time limit to pass the reassessment for the assessment year prior to 2006-2007 to eight years was challenged before this Court in series of writ petitions. This Court in case of CIFTECH SOLUTIONS PRIVATE LIMITED, VS. STATE OF KARNATAKA [2015 (83) KLJ 270 (HC)], upheld the constitutional validity of the amendment and permitted 12 the petitioners to file appeals in regard to their contentions afresh. It is before the amendment was brought into existence, their right in the form of preventing the authorities to take up reassessment, expired as per the provisions of Section 40. Section 40 as existed during relevant period if considered, despite upholding the validity of amendment made to the provisions of Section 40, the 'right' of the appellant seeking 'right of limitation' does not get extinguished by the amendment. Notwithstanding the bar of limitation, a base for upholding the impugned reassessment for 2005- 2006 by the authorities, still barred by the provisions of Section 32 of the KVAT Act, would preclude the authorities to proceed with the reassessment demanding the production of books of accounts whose retention period as prescribed has already expired. Section 32 of the KVAT Act is not amended in co-extensive with amendment to Section 40.
13
7. In support of his contentions, learned counsel placed reliance on the following judgments:
i) COMMERCIAL TAXES OFFICER VS.
ZORASTER & CO., (1993 (89) STC 462),
ii) MAHAVEER DRUG HOUSE VS. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, ASSESSMENTS-II, (1991 (82) STC 388).
8. Learned Additional Government Advocate supporting the impugned order submitted that notice under Section 9 of CST Act read with Section 38(2) of the KVAT Act was issued to reassess the assessees for the tax periods in question to which the assessee did not respond. On receipt of the original file from the office of the Assessing Authority, LVO, it was noticed that dealer had filed original C-Forms only to certain extent and rest of the turnover effected towards the interstate sales were not covered by C-Forms. Accordingly, the said transaction was subjected to tax at 10% against which the assessees 14 preferred appeals before the FAA primarily, on the ground of limitation. The FAA holding that re-assessment made was barred by limitation, allowed the appeals. In view of amendment brought to Section 40 (1) of the KVAT Act by Act No.54/2013 with effect from 01.04.2005 and the constitutional validity of the said amendment being upheld by this Court in the case of Ciftech Solutions supra, the order of the Appellate Court is erroneous and prejudicial to the interest of the Revenue. Thus, the Addl. Commissioner was justified in invoking the revisional powers under Section 64 (1) of the Act.
9. Heard the leaned counsel appearing for the parties and perused the material on record.
10. The points that arise for consideration in these appeals are:
i) Whether the Additional Commissioner of Commercial Taxes was justified in invoking the powers under Section 64 (1) of the KVAT Act to 15 revise the order of the Appellate Authority passed under Section 62 of the Act?
ii) Whether the re-assessment proceedings initiated by the prescribed authority under the Act are barred by limitation as provided under Section 40 of the Act?
iii) Whether the reassessment proceedings initiated by the prescribed authority are barred by Section 32 of the Act?
11. Section 64(1) of the Act reads thus:
"(1) The Additional Commissioner may on his own motion call for and examine the record of any order passed or proceeding recorded under this Act and if he considers that any order passed therein by any officer, who is not above the rank of a Joint Commissioner, is erroneous in so far as it is prejudicial to the interest of the revenue, he may, if necessary, stay the operation of such order for such period as he deems fit and after giving the person concerned an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order 16 enhancing or modifying the assessment, or canceling the assessment or directing a fresh assessment.
12. This provision contemplates that the Addl. Commissioner is empowered to call for and to examine the record of any order passed or proceeding recorded under this Act and on such examination if it is found that any order passed by any Officer who is not above the rank of a Joint Commissioner, revision powers can be exercised provided such order is erroneous in so far as it is prejudicial to the interest of the Revenue. That means, the essential factors viz., 'erroneous' and 'prejudicial to the interest of Revenue' should co-exist in an order/proceeding to take up for revision. It is apparent that the Appellate Authority was of the view that reassessment proceedings initiated by the prescribed authority is barred by limitation.
13. Section 40 of the KVAT Act has undergone several changes by way of amendments as under:
17
"Sec.40. Period of limitation for assessment.-
(1) An assessment under Section 38 or re-
assessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after the following time limits.-
(a) Four years after the end of the prescribed tax period; or
(b) three years after evidence of facts, sufficient in the opinion of the prescribed authority to justify making of the reassessment, comes to its knowledge.
whichever is later:
Provided that an assessment or reassessment relating to any tax period ending 31st day of March, 2007 shall be made within a period of five years after the end of the prescribed tax period.
(2) If any tax is, not paid by a dealer who has failed to get registered though liable to do so or fraudulently evaded attracting punishment under Section 79, an assessment or re-assessment may be made as if in sub-section(1) reference to four years was a reference to eight years.
(3) xxxx xxxx xxxx"
In the parent Act, the period of limitation for finalization of original assessment, both deemed and 18 scrutiny was five years from the end of the tax period, as per the provisions of Sec.40(1)(a) of the KVAT Act, 2003. By Act No.12 of 2011, the words "four years" was substituted w.e.f. 01.04.2011. At the same time, the proviso to Sub Sec. 1 of Sec. 40 of the KVAT Act, 2003, was inserted by Act No.12 of 2011 w.e.f., 01.04.2011 which read as under :
"Provided that an assessment or reassessment relating to any tax period ending 31st day of March, 2007 shall be made within a period of five years after the end of the prescribed tax period."
From the above insertion of the proviso w.e.f. 01.04.2011, it is obvious that any assessment or re- assessment relating to any tax period ending 31.03.2007 shall be made within a period of five years. By virtue of insertion of this proviso, it is obvious that the period of limitation for concluding assessment or reassessment for 19 any tax period prior to 31.03.2007 gets extended by the time prescribed therein.
14. This provision is further amended by Karnataka Act, No.17/2012 as under:
"(1) An assessment under Section 38 or re-
assessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after five years after the end of the prescribed tax period.
Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of Mrach, 2007 shall be made within a period of eight years after the end of the prescribed tax period:
Provided further that an assessment or reassessment relating to any tax period commencing from the 1st day of April, 2007 upto the period ending 31st day of March, 2012 shall be made within a period of seven years after the end of the prescribed tax period. (2) Notwithstanding anything contained in sub-section (1), if any tax is, not paid by a dealer who has failed to get registered though liable to do so or fraudulently evaded attracting punishment under Section 79, an assessment or reassessment may be made within eight years from the end of the prescribed tax period:
Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of March, 2007 shall be made under this sub-20
section within a period of ten years after the end of the prescribed tax period."
By virtue of this amendment, an assessment or reassessment relating to any tax period upto the period ending 31.03.2007 shall be made within a period of ten years, after the end of the prescribed tax period. By Karnataka Act No.54/2013, this Section is further amended retrospectively with effect from the first day of April, 2005, and the same reads thus:.
"(1) An assessment under Section 38 or reassessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after five years after the end of the prescribed tax period:
Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of March, 2007 shall be made within a period of eight years after the end of the prescribed tax period:
Provided further than an assessment or reassessment relating to any tax period commencing from the 1st day of April, 2007 upto the period ending 31st day of March, 2012 shall be made within a period of seven years after the end of the prescribed tax period.21
(2) Notwithstanding anything contained in sub-
section (1), if any tax is, not paid by a dealer who has failed to get registered though liable to do so or fraudulently evaded attracting punishment under Section 79, an assessment or reassessment may be made within eight years from the end of the prescribed tax period:
Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of March, 2007 shall be made under this sub- section within a period of ten years after the end of the prescribed tax period."
15. The constitutional validity of this provision was challenged before this Court and the same has been upheld in the case of Ciftech Solutions supra. Hence, without any hesitation, it can be held that amendment to Section 40 has retrospective effect with effect from 01.04.2005 enhancing the period of limitation provided under Section 40 of the Act.
16. The contention of the assessee that a completed assessment cannot be reopened after the prescribed period by virtue of the said period having been enlarged by 22 amending the law requires to be negated in the light of the judgment of the Hon'ble Apex Court in the case of ADDITIONAL COMMISSIONER (LEGAL) AND ANOTHER VS. JYOTI TRADERS AND ANOTHER (1997 (47) KLJ 107 (SC) wherein the Hon'ble Apex Court has held, when the provision of law is explicit, it has to operate fully and there could not be any limits to its operation and if the language expressly so states or clearly implies, retrospectively must be given to the provision. It is apt to refer to the factual context of the case. Under sub-section (1) of Section 21 of the Uttar Pradesh Trade Tax, 1948 before its amendment, the Assessing Authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, had the power to assess or reassess the dealer according to law. Sub-section (2) provided that except as otherwise provided in the said 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 23 sub-section (2) under which Commissioner of Sales Tax authorizes 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 the change of opinion. The proviso came into force with effect from 19.02.1991. In that context it was held that, it was immaterial if a period for assessment or reassessment under sub-section (2) of Section 21 before the addition of the said proviso had expired. It was the completion of assessment or reassessment under Section 21 which was to be done before the expiration of eight years of that particular assessment year. It was held that 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. Earlier the assessment/reassessment could have been completed within four years of that particular assessment year and 24 now by the amendment adding proviso to Section 21(2) of the Act it is eight years. The only safeguard being that it is after satisfaction of the Commissioner of Sales Tax. The proviso is operative from 19-2-1991 and a bare reading of the proviso shows that the operation of this proviso relates and encompasses back to previous eight assessment years.
17. In the present set of facts, the proviso to Section 40 have been amended with effect from 01.04.2012 by Act No.17/2012 and subsequently by Act No.54/2013 retrospective effect was given with effect from 01.04.2005 and the constitutional validity of the same having been upheld, the arguments of the learned counsel that the reassessment proceedings are barred by limitation is wholly untenable.
18. As regards the contentions of the learned counsel with reference to Section 32 of the Act, it is apt to refer to the said provision which reads thus:
25
"32. Period of retention of accounts.-
(1) Every dealer required under this Act to keep and maintain books of account or other records including tax invoices relating to his purchases and sales shall retain them until the expiration of five years after the end of the year to which they relate or for such other period as may be prescribed or until the assessment reaches finality, whichever is later.
(2) Where such dealer is a party to an appeal or revision under this Act, he shall retain, until the appeal or revision and any appeal therefrom is finally disposed of, every record and accounting document that pertains to the subject matter of the appeal or revision."
(emphasis supplied)
19. The said provision directs every dealer to keep and maintain books of accounts or other records including tax invoices relating to his purchases and sales until the expiration of five years after the end of the year to which they relate or for such other period as may be prescribed and the most relevant herein is, until the assessment reaches finality, whichever is later. Thus, it is not only until the expiration of 5 years the books of accounts are required to be kept and maintained but also for such other period as may be prescribed or until the assessment 26 reaches finality whichever is later. The phrase "until the assessment reaches finality" has to be read in conjunction with Sections 39 and 40 of the Act. The word "assessment" is defined under Section 2 (5) of the Act which reads thus:
"(5) 'Assessment' means an assessment made or deemed to have been made under this Act and includes a re-assessment."
20. Thus, it is clear that assessment also includes reassessment. The prescribed limitation for assessment/reassessment is in terms of Section 40. The limitation period being enlarged by the amendment carried out under Section 40 of the Act, the same shall have a bearing on Section 32.
21. In the present case, the period of limitation as per the Amendment Act No.54/2013 is eight years with effect from 01.04.2005 i.e., 30.04.2013, the date of finality of the assessment, which would be the date of expiry of limitation to reassess the deemed assessments made under Section 38 of the Act for the assessment year 2005- 27 2006. Reassessment proceedings were initiated by issuing notice dated 16.02.2013 and the reassessment order was passed on 22.04.2013 well within the period of limitation even as per Section 32 of the Act.
22. The Scheme of the Act is that the assessee/dealer has to file the monthly returns as per Section 35 (1) of the Act accompanied by the payment of tax and as per Section 38 (1) of the Act, every dealer shall be deemed to have been assessed to tax based on the return filed by the assessee under Section 35 except in cases where the Commissioner may notify the dealer of any requirement of production of accounts before the prescribed authority in support of a return filed for any period and such authority shall proceed to assess such dealer. Section 39 of the Act provides for reassessment of tax where the prescribed authority has grounds to believe that any return furnished which is deemed as assessed or any assessment issued under Section 38 understates the correct tax liability of the dealer, it may, based on any information available, 28 reassess to the best of its judgment, the additional tax payable and also impose penalty under sub section (2) or sub section (5) of Section 72 and demand of payment of any interest and shall make the demand under the provisions of the Act applicable for the assessment under the Central Sales Tax Act in terms of Section 9 (2) of the CST Act.
23. It is the contention of the learned counsel for the appellants that the notice issued under the KVAT Act with Section 9(2) of the CST Act does not disclose the information, is misconceived. The notice specifies that the assessees had effected interstate transaction and submitted C-Forms only to certain extent and for the remaining transaction to which no C-forms were submitted, reassessment proceedings were initiated to levy tax at 10% as per the CST Act. This information was collected after securing the files from the original Assessing Authority. All along the appellants challenged the reassessment order only on the ground of limitation. 29 The possibility of filing of C-Forms before the appellate authority was not availed. Now, the attack made by the learned counsel for the appellants on the re-assessment order, being contrary to the provisions of the KVAT Act cannot be accepted.
24. In the case of Mahaveer Drug House supra, on which the relevance was placed by the learned counsel for the appellants, it was a case where limitation under old law expired before commencement of amended provision. But, in the present case, the period of limitation is enlarged with retrospective effect i.e., 01.04.2005. Hence, the said judgment is not applicable to the facts of the present case.
25. In the case of Zoraster & Co., supra, Rajasthan High Court has held that retrospective amendment extending period of limitation for reopening assessments from four to eight years will not apply where limitation expired before amendment. But, in the light of the judgment of the Hon'ble Apex Court in Jyoti Traders 30 supra, this judgment would not be of any assistance to the appellants. Moreover, the constitutional validity of the retrospective amendment has been upheld w.e.f. 01.04.2005, which has reached finality.
26. Viewed from any angle, the revisional order passed by the Addl. Commissioner of Commercial Taxes is justifiable and does not call for any interference by this Court.
Appeals stand dismissed.
Sd/-
JUDGE Sd/-
JUDGE Jm/-