Kerala High Court
Hindustan Petroleum Corporation ... vs Assistant Commissioner (Assessment) on 12 August, 2014
Author: K. Vinod Chandran
Bench: K.Vinod Chandran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
MONDAY, THE 3RD DAY OF OCTOBER 2016/11TH ASWINA, 1938
WP(C).No. 21314 of 2016 (L)
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PETITIONER(S) :
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HINDUSTAN PETROLEUM CORPORATION LIMITED,
COCHIN REGIONAL OFFICE, KARSHAKA ROAD, ERNAKULAM,
REPRESENTED BY ITS CHIEF REGIONAL MANAGER,
VINOD KUMAR D.S.
BY ADVS. SRI.K.I.MAYANKUTTY MATHER
SRI.R.JAIKRISHNA
RESPONDENT(S) :
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1. ASSISTANT COMMISSIONER (ASSESSMENT),
COMMERCIAL TAXES, SPECIAL CIRCLE-II,
ERNAKULAM 682 015.
2. DEPUTY COMMISSIONER,
DEPARTMENT OF COMMERCIAL TAXES,
ERNAKULAM 682 015.
3. INSPECTING ASSISTANT COMMISSIONER(RECOVERY),
COMMERCIAL TAXES, KAKKANAD 682 030.
4. STATE OF KERALA,
REPRESENTED BY SECRETARY(TAXES),
SECRETARIAT,THIRUVANANTHAPURAM-695 001.
BY SPL. GOVERNMENT PLEADER SRI. C.UNNIKRISHNAN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 03-10-2016, ALONG WITH W.P(C).NO. 24609 OF 2016, THE COURT
ON THE SAME DAY DELIVERED THE FOLLOWING:
Msd.
WP(C).No. 21314 of 2016 (L)
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APPENDIX
PETITIONER(S)' EXHIBITS :
P1 TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 25 OF
THE KERALA VALUE ADDED TAX ACT (AY-2005-2006)
DATED 12/08/2014.
P2 TRUE COPY OF THE REPLYGIVEN BY THE PETITIONER TO
THE 1ST RESPONDENT (AY-2005-2006) DATED 26/09/2014.
P3 TRUE COPY OF THE ASSESSMENT ORDER PASSED BY
THE 1ST RESPONDENT (AY-2005-2006) DATED 10.10.2014.
P4 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN
W.P(C).NO. 28111/2014 AND CONNECTED CASES
DATED 20/01/2016.
P5 TRUE COPY OF THE PRE-ASSESSMENT NOTICE ISSUED BY
THE 1ST RESPONDENT (AY-2005-2006) DATED 02/04/2016.
5(A) TRUE COPY OF THE REVISED PRE-ASSESSMENT NOTICE
ISSUED BY THE 1ST RESPONDENT (AY-2005-2006)
DATED 05.04.2016.
P6 TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN
W.P(C).NO. 14739/2016 DATED 08/04/2016.
P7 TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 18/04/2016.
P7(A) TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 22/04/2016.
P7(B) TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 03/05/2016.
P7(C) TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 13/05/2016.
P7(D) TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 26/05/2016.
P7(E) TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 26/05/2016.
P7(F) TRUE COPY OF THE REPLYFILED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 31/05/2016.
P8 TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY
THE 1ST RESPONDENT UNDER SECTION 25 OF THE KVAT ACT
DATED 31/05/2016.
WP(C).No. 21314 of 2016 (L)
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P9 TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT
DATED 27/09/2014.
P10 TRUE COPY OF THE ORDER ISSUED BY THE 4TH RESPONDENT
DATED 19/03/2016.
P11 TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER FOR
THE YEAR ENDING 31/03/2006 DATED 31.03.2006.
P12 TRUE COPY OF THE INSTRUCTION ISSUED BY PETROLEUM
PLANNING AND ANALYSIS CELL TO OIL MARKETING COMPANIES
DATED 18.07.2005.
P12(A) TRUE COPY OF THE INSTRUCTION ISSUED BY PETROLEUM
PLANNING AND ANALYSIS CELL TO OIL MARKETING COMPANIES
DATED 10.10.2005.
P12(B) TRUE COPY OF THE INSTRUCTION ISSUED BY PETROLEUM
PLANNING AND ANALYSIS CELL TO OIL MARKETING COMPANIES
DATED 10.01.2006.
P12(C) TRUE COPY OF THE INSTRUCTION ISSUED BY PETROLEUM
PLANNING AND ANALYSIS CELL TO OIL MARKETING COMPANIES
DATED 17.04.2006.
RESPONDENT(S)' EXHIBITS :
NIL
//TRUE COPY//
P.S.TOJUDGE.
Msd.
K. VINOD CHANDRAN, J.
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W.P.(C) Nos. 21314 & 24609 of 2016
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Dated: 3rd October, 2016
J U D G M E N T
The petitioner in W.P.(C) No.21314/2016 challenge an assessment order in proceedings under Article 226 of the Constitution of India, on the plea raised of limitation; against the proceedings for reassessment made under Section 25(1) of the Kerala Value Added Tax Act, 2003 ('K.V.A.T. Act' for short), for assessment of escaped turnover. The Assessment Year is 2005-2006 and notices issued for reassessment under Section 25 (1) is Ext.P1 dated 12.08.2014.
2. The petitioner filed returns in accordance with Section 21 of the K.V.A.T. Act and the notice of reassessment was issued alleging escaped turnover on the basis of the subsidy and discount received, which W.P.(C) No. 21314 & 24609/2016 -2- the assessee claimed was not liable to be included in the total turnover. The appellate remedy was not invoked since the assessee had a contention that the proceedings are hit by limitation and the same had to be taken prior to 31.03.2011, as is permitted under Section 25(1) of the K.V.A.T. Act.
3. Section 25(1) of the K.V.A.T. Act speaks of an assessment of escaped turnover to be taken up by the assessing authority, in various circumstances detailed there-under, leading to a presumption of turnover having escaped assessment, within a time of five years from the last date of the year to which the return relates. The specific words employed is that the assessing officer shall 'proceed to determine, to the best of its judgment, the turnover which has escaped assessment' within the aforesaid period. The words 'proceed to determine' has been explained by a Full W.P.(C) No. 21314 & 24609/2016 -3- Bench of this Court in Cholayil Private Limited v. Assistant Commissioner (Assessment) - 2015 (4) KLT 516 (F.B.), when a reference was made doubting a Division Bench judgment in Tirur Medical Stores v. State of Kerala - 1978 KLT 415, wherein Section 19 of the Kerala General Sales Tax Act, 1963 (K.G.S.T. Act), which employed the very same words, was considered and interpreted. Section 25(1) of the K.V.A.T. Act was in pari materia and the Full Bench found that Section 19 of the K.G.S.T. Act and Section 25 (1) of the K.V.A.T. Act only required the Assessing Authority to proceed to determine and commence such activity of decision making by issuance of notice within the period fixed in the said provisions.
4. Therein the question raised was whether the completion of assessment has to be made within the time stipulated and it was found that there is no W.P.(C) No. 21314 & 24609/2016 -4- warrant for such an interpretation especially since the words employed was 'proceed to determine' which indicated only a proceeding to be initiated and not the assessment itself completed. Though the said declaration would have been against the assessee in that case, herein it enures to the benefit of the assessee.
5. The learned Special Government Pleader (Taxes), relying on Section 25B, introduced on 01.04.2013, contends an extension of the period having been made by virtue of the provision. The assessment order produced at Ext.P8 is specifically referred to, to urge that orders were issued by the Deputy Commissioner extending the period of limitation under Section 25B of the K.V.A.T. Act, by orders dated 17.03.2014 and 27.09.2014. A further finding is arrived at in Ext.P8 that the limitation was further extended by W.P.(C) No. 21314 & 24609/2016 -5- the third proviso of Section 25(1) of the K.V.A.T. Act. In this context it is to be noted that Section 25B and the referred proviso speaks of completion of assessment and not the initiation of the proceedings as such.
6. Section 25B of the K.V.A.T. Act is extracted hereunder:
"25B. Extension of period of limitation for assessments in certain cases.- Notwithstanding anything contained in section 24 or in section 25, in cases where any investigation or inquiry is pending under this Act or any other law or where any assessment cannot be completed within the period specified under the said sections, the Deputy Commissioner may, for good and sufficient reasons, extend the period of completion of the assessment beyond the period specified in those sections."
W.P.(C) No. 21314 & 24609/2016 -6- The third proviso to Sub section (1) of Section 25 of the K.V.A.T. Act is also extracted hereunder:
"Provided also that the time limit for the completion of assessments for the years up to 2007-08 under this section shall be extended up to 31st March, 2013."
7. Both the above provisions speak of extension of period of completion of assessment beyond the period specified. What is pertinent is that Section 25(1) of the K.V.A.T. Act does not provide for any period for completion of assessment and speaks of only initiation of proceedings to determine the escaped turnover to be commenced within the five year period. Hence, within the limitation period, if a notice is issued, the provisions under the K.V.A.T. Act does not provide for any period for completion of such assessment. In fact, the Full Bench noticed the Reference Order of the W.P.(C) No. 21314 & 24609/2016 -7- Division Bench which also emphasised the absence of a time frame to complete the assessment as provided under Section 25B of the K.V.A.T. Act. The Full Bench refused to answer the question; finding that it is not for the Courts to bring in a time frame and opined that suffice would be an observation that the completion should be within a reasonable period.
8. At the risk of repetition it has to be noticed that Section 25(1) of the K.V.A.T. Act does not speak of any period for completion of assessment and if a proceeding was initiated prior to the limitation period, then going by the Full Bench decision, there would only be a mandate on the department to complete the assessment within a reasonable period, which, again is not a statutory mandate. Without having initiated the proceedings within the limitation period, the consequence of the limitation cannot be averted by W.P.(C) No. 21314 & 24609/2016 -8- extending the period of completion, for which no limitation is provided for in the statute. In such circumstance, it has to be held that the proceedings initiated herein, by Ext.P1 dated 12.08.2014, is far beyond the limitation period and the same cannot be sustained.
9. In this context the decision in State of Punjab and others v. Shreyans Indus Ltd. - (2016) 91 VST 23 (SC) has also to be noticed. There the question was whether the period of limitation could be extended on the strength of an enabling provision, after the limitation itself has expired. Under the Punjab General Sales Tax Act, 1948, the Commissioner was conferred with the power to extend the three year period prescribed for completion of assessment. There was also no upper limit prescribed for which the period could be extended. It was held that the extension of W.P.(C) No. 21314 & 24609/2016 -9- time for assessment has the affect of enlarging the period of limitation and therefore once the period of limitation expires the immunity, against being subject to assessment, sets in and the right to make assessment gets extinguished. In that case the extension itself was after three years from the last date prescribed for furnishing the reports and in that context the assessment was found to be beyond the period of limitation.
10. In the present case, the statute provides for self assessment and the provision for assessment of escaped turnover specifically provides a limitation of five years within which the proceedings to determine the escaped turnover had to be initiated. The power of extension conferred on the Deputy Commissioner was with respect to the completion of assessment, which has no relevance to the initiation of the proceedings as W.P.(C) No. 21314 & 24609/2016 -10- such. In such circumstance, Section 25B of the K.V.A.T. Act has to be held to be redundant insofar as the period provided under Section 25(1). Obviously, it is a mistake occurred in drafting which, however, being explicit and clear and not being in any manner ambiguous, would not be open for any purposive interpretation by this Court. The Government would be advised to look into the said provision and make suitable amendments. The amendments, if so made, definitely would not revive the cause of action in the present case; where a right has accrued and the liability to reassessment having been extinguished.
11. W.P.(C) No. 24609/2016 also deals with the same issue of limitation, but in a different perspective. The assessment years with which the assessee is concerned are 2009-2010 and 2010-2011. Ext.P1 dated 10.11.2014 is the notice issued under Section 25(1) of W.P.(C) No. 21314 & 24609/2016 -11- the K.V.A.T. Act for the year 2009-2010 and for the assessment year 2010-2011, Ext.P2 dated 02.06.2015 was issued again under Section 25(1) of the K.V.A.T. Act. Both the said notices were within the five year period as provided under Section 25(1). The assessment was completed for both the years and the petitioner was before this Court challenging the said assessment orders on grounds as in the earlier case, with respect to the discounts and subsidies, not being liable to be included in the turnover. This Court by Ext.P7 judgment set aside the assessment and directed reconsideration. The issue of inclusion of subsidy in the turnover, was held in favour of the assessee. However, in remanding the matter all questions were left open. The assessments were directed to be completed within a period of three months from the date of receipt of the copy of the judgment.
W.P.(C) No. 21314 & 24609/2016 -12-
12. The Assessing Officer could have completed the assessment without issuance of a fresh notice since the proceedings were initiated prior to the limitation period. The Assessing Officer however thought it fit to issue a fresh notice for both the assessment years, respectively produced as Exts.P8 and P9 dated 25.04.2016 and 27.04.2016. The issuance of a fresh notice also would not have created any impediment in the assessment proposed as per the original notice within the limitation period. But, however, there were other aspects raised, including other instances and an enhanced quantum of escaped turnover in Exts.P8 and P9 notices, which were not put to the petitioner within the limitation period.
13. In this context, it is to be noticed that on the completed assessment as per the original notices issued W.P.(C) No. 21314 & 24609/2016 -13- within the limitation period, it was the petitioner who challenged the same before this Court and obtained an order with respect to one of the aspects in their favour. A re-determination was directed keeping all issues open and on such remand made there can be no fresh proceedings taken, on other issues, especially since the limitation period was over by then. Hence, what could be proceeded with by the department on the remand made is only those aspects which have been raised in Exts.P1 and P2. No further aspects with respect to escaped turnover could have been raised in the second notices issued after remand, which remand was made possible only by reason of the challenge made by the petitioner before this Court on the contention that the objections were not considered fully by the assessing officer . The second notice being beyond the period of limitation; the fresh issues raised would be hit by the W.P.(C) No. 21314 & 24609/2016 -14- limitation provided.
14. In such circumstance, Exts.P12 and P13, to the extent it considers issues other than that noticed in Exts.P1 and P2 are bad by reason of the ground raised of limitation. Exts.P12 and P13 only to the extend it takes in issues which were not intimated in Exts.P1 and P2 would stand set aside. The Assessing Officer would issue fresh orders of assessment within a period of one month from the date of receipt of the certified copy of the judgment only dealing with the specific instances of escaped turnover taken up in Exts.P1 and P2. Only if the assessment officer requires any clarity on the objections need a further hearing be afforded to the petitioner, but; not intended at keeping any of the questions which were raised in Exts.P1 and P2 and answered in Exts.P12 and P13 to be re-agitated. W.P.(C) No. 21314 & 24609/2016 -15- W.P.(C) No.21314/2016 is allowed setting aside Ext.P8 for reason of the notice having been issued beyond the limitation period and W.P.(C) No.24609/2016 is disposed of with the above observations. It is made clear that this Court has looked at only the question of limitation and has not dealt with any of the issues with respect to the discount or subsidy as argued by the learned Counsel for the petitioner before this Court, which has to be ideally agitated before the appellate forum. No Costs.
Sd/-
K.VINOD CHANDRAN, JUDGE jjj 3/10/16