Kerala High Court
Bpl Limited vs State Of Kerala on 7 February, 2019
Bench: K.Vinod Chandran, Ashok Menon
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
THURSDAY, THE 07TH DAY OF FEBRUARY 2019 / 18TH MAGHA, 1940
WP(C).No.7269 of 2012-G
PETITIONER:
BPL LIMITED,
BPL WORKS, KOOTTUPATHA, PALAKKAD-678007.
BY ADVS.
SRI.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.KURYAN THOMAS
SRI.P.BENNY THOMAS
SRI.P.GOPINATH (SR.)
RESPONDENTS:
1 STATE OF KERALA,
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
TAXES DEPARTMENT, SECRETARIAT,
THIRUVANANTHAPURAM-695001.
2 THE ASSISTANT COMMISSIONER (ASSESSMENT),
SPECIAL CIRCLE, COMMERCIAL TAXES, PALAKKAD-678001.
BY SENIOR GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
07.02.2019, ALONG WITH WP(C).12126/2012-M, THE COURT ON THE
SAME DAY DELIVERED THE FOLLOWING:
WP(C) Nos.7269 of 2012 - 2 -
23236 of 2012
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
THURSDAY, THE 07TH DAY OF FEBRUARY 2019 / 18TH MAGHA, 1940
WP(C).No.12126 of 2012-M
PETITIONER:
M/S. BPL TELECOM (P) LTD.,
SYSTEM HOUSE, KOOTUPATHA, PALAKKAD,
REPRESENTED BY ITS COMPANY SECRETARY MR.D.KRISHNAN.
BY ADVS.
SRI.M.GOPIKRISHNAN NAMBIAR
SRI.K.JOHN MATHAI
SRI.P.BENNY THOMAS
SRI.P.GOPINATH (SR.)
RESPONDENTS:
1 STATE OF KERALA,
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
TAXES DEPARTMENT, SECRETARIAT,
THIRUVANANTHAPURAM-695001.
2 THE ASSISTANT COMMISSIONER (ASSESSMENT),
SPECIAL CIRCLE, COMMERCIAL TAXES, PALAKKAD-678001.
3 THE INSPECTING ASSISTANT COMMISSIONER,
COMMERCIAL TAXES, PALAKKAD-678001.
BY SENIOR GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 07.02.2019, ALONG WITH WP(C).7269/2012-G, THE COURT ON THE
SAME DAY DELIVERED THE FOLLOWING:
WP(C) Nos.7269 of 2012 - 3 -
23236 of 2012
JUDGMENT
[ WP(C).7269/2012, WP(C).12126/2012 ] Vinod Chandran, J:
The writ petitions are filed against the assessments completed and notices issued for assessment under the Central Sales Tax Act, 1956 [for brevity "CST Act"] read with the provisions of the Central Sales Tax (Kerala) Rules, 1957 [for brevity "CST (K) Rules"].
2. The sparse details required for consideration of the writ petitions are the specific dates on which notices for assessments were issued for the specific assessment years. Both the writ petitions deal with assessment years 2005-06 and 2006-07. In W.P(C) No.12126 of 2012, a notice was issued on 26.12.2011 for the assessment year 2005-06 and on 05.01.2012 for the assessment year 2006-07. In W.P. (C) No.7269 of 2012, notice was issued on 29.02.2012 for the assessment year 2005-06 and for the next assessment year the notice was dated 07.03.2012. The question raised is on limitation, which, according to the learned Counsel for the assessee, has to be applied as available under Rule 6(7) of the CST(K) Rules, being four years from the expiry of the year to which the tax relates.
WP(C) Nos.7269 of 2012 - 4 -
23236 of 2012
3. It is contended that Section 9(2) empowers the authorities under the general tax enactment to assess, re-assess, collect and enforce payment of any tax under the CST Act, exercising the powers available to them under the general sales tax law of the appropriate State and so carry out the provisions of the CST Act on behalf of the Government of India. In so carrying out the functions under the CST Act, the provisions under the general sales tax laws of the State, including provisions relating to returns, provisional assessment and so on and so forth, shall apply accordingly. It is the contention of the learned Counsel for the petitioner that the provisions of the general sales tax laws applicable, underwent a drastic change, on the introduction of the Kerala Value Added Tax Act, 2003 [for brevity "KVAT Act"]. This is insofar as The KVAT Act providing for a self assessment under Section 21, on the return being filed in the proper form with the prescribed documents. Hence, under the KVAT Act, there is only provision for a re-assessment under Section 25(1). There is no question of an assessment as such.
4. After the KVAT Act came into force, re-assessment alone is contemplated by the Department and it has to be carried out inter-alia under Section 25 of the WP(C) Nos.7269 of 2012 - 5 - 23236 of 2012 KVAT Act. The period provided for initiating such proceedings under section 25 is five years under the KVAT Act. However, sub-section (2) of Section 9 of the CST Act makes application of the provisions under the general sales tax law, to be subject to the provisions of the CST Act and the Rules framed thereunder. Hence, if there is any provision in the CST Act or prescription in the rules made thereunder; that would prevail for the purposes of proceedings under the CST Act. For re-opening of assessments under the CST Act, the CST (K) Rules, by Rule 6(7), specifically provides a four year period for re-opening of assessment, which would apply insofar as the CST assessments are concerned, even after the KVAT Act came into force. It is also submitted that if the five year period under Section 25 of the KVAT Act is applied, it will result in an anomalous situation of an assessment being permissible to be proceeded with within five years, while a re-assessment can be initiated only within four years of the expiry of the year to which the tax relates.
5. Sri. V.K. Shamsudheen, the learned Senior Government Pleader relies on Parisons Food (P) Ltd. v. State of Kerala [R.P.No.559 of 2017 in W.A.No.1076 of 2013 & connected case, decided on 29.11.2017] and the decision WP(C) Nos.7269 of 2012 - 6 - 23236 of 2012 in C.T.O. v. Fijo Joseph [W.A.No.1270 of 2017 & connected cases, decided on 17.09.2018]. It is pointed out that both the aforesaid decisions specifically imported the limitation period as available under the KVAT Act for the purpose of completion of assessments under the CST Act; which is five years. There cannot be a separate finding now entered is the contention. Further it is pointed out, that the anomaly insofar as the assessment being permitted within five years while re-assessment is restricted to four years cannot vitiate either of these provisions. In the respective proceedings the limitation as provided for in the applicable provision will have to be computed. The Hon'ble Supreme Court has answered the aforesaid contentions in Madhya Pradesh Industries v. State of Maharashtra [1968 JLJ 1019 (SC)] and Regional Assistant Commissioner of Sales Tax, Indore v. Malwa Vanaspati & Chemical Company Ltd. [AIR 1968 SC 894].
6. Parisons Food (P) Ltd. considered the issue both under the KGST Act Act and KVAT Act. Even after the KVAT Act came into force, it was found that the assessment under the CST Act has to be completed under Rule 6(5) and there being no specific limitation provided, there is no restriction insofar as the initiation of proceedings for WP(C) Nos.7269 of 2012 - 7 - 23236 of 2012 completion of assessments as per the Rules. However, Fijo Joseph took a different view insofar as the period of limitation for initiation; which in any event had to be within a reasonable time. On the question of reasonableness, the Division Bench relied on State of Punjab v. Bhatinda District Co- operative Milk Producers India Ltd. [(2007) 11 SCC 363]. When limitation is not specifically provided, it has to be understood from the general scheme of the statute and in such circumstance it was found reasonable if the proceedings were initiated within a period of five years; which is the time limit for re-assessment as provided under the KVAT Act.
7. However, the question now argued by the learned Counsel for the petitioner was never answered by either of the Division Benches. In such circumstance, we proceed to answer the same. We find that applying the very same principles under Section 9 of the CST Act, there is a prescription for a regular assessment under the CST (K) Rules as distinguished from a self-assessment under Section 21 of the KVAT Act. When there is a prescription under Rule 6 for proceeding to determine the tax payable, on either the returns not being filed or the returns being found to be incorrect and incomplete and even in the context of the WP(C) Nos.7269 of 2012 - 8 - 23236 of 2012 Assessing Officer accepting the returns filed as correct and complete, necessarily that procedure would have to be adopted insofar as the assessments under the CST Act and the Rules. As rightly pointed out by the learned Counsel, Section 9 of the CST Act applies the provisions of the general sales tax law to the proceedings under the CST Act, subject to the provisions of the CST Act and the Rules made thereunder. Hence, a conflict would have to be addressed by adopting the provisions of the CST Act and the Rules made thereunder. Though a single return is filed disclosing both inter-State and intra-State turnover, by the dealers registered both under the KVAT Act and the CST Act, for the component of inter-State turnover there could be no completion of assessment under Section 21 of the KVAT Act. It has to necessarily concede to Rule 6(5), of the CST (K) Rules; which speaks of a regular assessment being necessitated. When such regular assessment is necessitated, and there is no limitation provided, necessarily one has to look at the scheme of the general sales tax law which provides for a period of five years for initiating the proceedings.
8. The argument is that this would create an anomaly insofar as permitting assessments to be initiated WP(C) Nos.7269 of 2012 - 9 - 23236 of 2012 within five years while re-assessment can only be within four years. As pointed out by Sri.Shamsudheen, the rigour of a lesser period has to apply insofar as the re-assessments are concerned. This would not vitiate either of the provisions since it is not difficult to operate the separate limitation periods for the different proceedings. If the Department carries out an assessment after 4 years, but within 5 years, the assessment would be perfectly in time but the Department would be disabled in taking a re- assessment proceeding under Rule 6(7); even if an escapement is noticed. We garner support from the decisions of the Supreme Court as relied on by the Sri.Shamsudheen.
9. Madhya Pradesh Industries considered two provisions in a sales tax enactment, one of which dealt with determination of tax from dealers who filed the returns and the other from those who failed to file such returns. There was a limitation provided for issuing notice in the latter and none in the former. The argument was that the provisions treated the dealers who committed breach of the provisions favourably and were given a benefit by providing for limitation in cases of failure to file returns. However proceedings against those who properly filed returns could be initiated after any length of time. WP(C) Nos.7269 of 2012 - 10 -
23236 of 2012 It was held that the provisions operated on different fields, one where there is a return filed and thus pending proceedings, while in the other there is no return and hence no proceeding pending. There was found a reasonable basis for the differential treatment; negativing the claim of invidious and irrational discrimination. In Malwa Vanaspati & Chemical Company Ltd. also the sales-tax enactment provided for a limitation with respect to assessment of escaped turnover while the regular assessments were permissible to be completed without limitation; which provisions were held to be not vitiating either. Regular assessment is a proceeding which commences with the filing of a return and any notice issued is also a continuation of the proceeding was the finding.
10. Here the provisions are slightly different in so far as they provide for assessment and re-assessment; the later of which could be carried out even in the case of a completed assessment, if it resulted in the whole or any part of the turnover of a dealer having escaped assessment to tax. Normally an assessment is expected to be completed at the close of the year and then, there could be a re-assessment proceeded with, on allegation of escapement of turnover from levy of tax within a period of four years. WP(C) Nos.7269 of 2012 - 11 -
23236 of 2012 The limitation so provided for re-assessment again is a measure to ensure finality to proceedings already concluded. In the case of a regular assessment as has been found, the proceedings commence with the filing of return and this return is the basis on which the assessment is completed. There is hence no limitation provided for commencement of proceedings and the mandate could only be of a completion within a reasonable period. However the general sales tax law as also the Rules under the CST Act does not contemplate a period of limitation for conclusion of proceedings. All the same both contemplate a period of limitation for initiation of proceedings for re-assessment. It is only proper that in determining the reasonable time for initiation of proceedings for assessment, for which there is no specific time provided, the longer period prescribed for re-assessment is adopted.
11. With the above principle in mind, we have to look at the assessments and the notices issued herein. In both the writ petitions, notice for assessment for the year 2005-06 has been initiated respectively on 29.12.2012 and 26.12.2011, both beyond the five year period. Hence, necessarily the same has to be set aside. Exhibit P5 assessment order for the year 2005-06 produced in W.P(C) WP(C) Nos.7269 of 2012 - 12 - 23236 of 2012 No.12126 of 2012 and Exhibit P1 notice for assessment dated 29.02.2012 produced in W.P.(C) No.7269 of 2012 are set aside. Exhibit P6 assessment in W.P(C) No.12126 of 2012 and Exhibit P2 notice dated 07.03.2012 in W.P.(C) No.7269 of 2012 does not suffer from the defect of limitation. Hence, the Assessing Officer can proceed to determine the tax due in W.P.(C) No.7269 of 2012 and the assessee can file a statutory appeal from Exhibit P6 in W.P(C) No.12126 of 2012. The appeal shall be taken on record if the same is filed within a period of one month from the date of receipt of a certified copy of this judgment, condoning the delay which has occasioned merely because of the pendency of the writ petition before this Court.
The writ petitions are partly allowed. Parties are left to suffer their respective costs.
Sd/-
K.VINOD CHANDRAN JUDGE Sd/-
ASHOK MENON JUDGE Vku/-
WP(C) Nos.7269 of 2012 - 13 -
23236 of 2012 APPENDIX OF WP(C) 7269/2012-G PETITIONER'S EXHIBITS:
EXHIBIT P1 A TRUE COPY OF THE PRE-ASSESSMENT NOTICE DATED 29/02/2012 FOR THE ASSESSMENT YEAR 2005-06.
EXHIBIT P2 TRUE COPY OF THE NOTICE DATED 07/03/2012 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT FOR THE YEAR 2006-07. EXHIBIT P3 TRUE COPY OF THE INTERIM ORDER DATED 10/03/2010 IN WPC NO.4832/2010. WP(C) Nos.7269 of 2012 - 14 - 23236 of 2012 APPENDIX OF WP(C) 12126/2012 PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE NOTICE BEARING NO.32090261264/2005-06 CST DATED 26/12/2011 FOR THE ASSESSMENT YEAR 2005-06 ISSUED BY THE 2ND RESPONDENT.
EXHIBIT P2 A TRUE COPY OF THE NOTICE ISSUED UNDER S.6(2) OF THE CST RULES BEARING NO.32090261264/2006-07 (CST) DATED 05/02/2012 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT FOR THE YEAR 2006-07.
EXHIBIT P3 TRUE COPY OF THE REPLY FOR EXT.P1 NOTICE, FILED BY THE PETITIONER, DATED 03/02/2012 FOR THE YEAR 2005-06.
EXHIBIT P4 TRUE COPY OF THE REPLY FOR P2 NOTICE FILED BY THE PETITIONER, DATED 03/02/2012 FOR THE YEAR 2006-07.
EXHIBIT P5 TRUE COPY OF THE ASSESSMENT ORDER FOR THE PERIOD 2005-06 DATED 15/02/2012.
EXHIBIT P6 TRUE COPY OF THE ASSESSMENT ORDER FOR THE PERIOD 2006-07 BOTH DATED 15/02/2012.
EXHIBIT P7 TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 2ND RESPONDENT, DATED 15/02/2012 FOR THE PERIODS 2005-06.
EXHIBIT P8 TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 2ND RESPONDENT, DATED 15/02/2012 FOR THE PERIODS 2006-07.
EXHIBIT P9 TRUE COPY OF THE RECTIFICATION APPLICATION FILED BY THE PETITIONER, DATED 05/03/2012 FOR THE PERIODS 2005-06.
EXHIBIT P10 TRUE COPY OF THE RECTIFICATION APPLICATION FILED BY THE PETITIONER DATED 05/03/2012 FOR THE PERIODS 2006-07.
EXHIBIT P11 TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2005-06 DATED 19/03/2012.WP(C) Nos.7269 of 2012 - 15 -
23236 of 2012 EXHIBIT P12 TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT FOR THE ASSESSMENT YEARS 2006-07 DATED 19/03/2012.
EXHIBIT P13 TRUE COPY OF THE REPLY FILED BY THE PETITIONER FOR THE YEARS 2005-06 DATED 24/03/2012.
EXHIBIT P14 TRUE COPY OF THE REPLY FILED BY THE PETITIONER FOR THE YEAR 2006-07 DATED 24/03/2012.
EXHIBIT P15 A TRUE COPY OF THE COMMON ORDER BEARING NO.32090261264/2005-06 AND 2006-07 CST DATED 08/05/2012.
EXHIBIT P16 TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER FOR THE YEAR 2005-06 DATED 16/05/2012.
EXHIBIT P17 TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER FOR THE YEAR 2006-07 DATED 16/05/2012.
EXHIBIT P18 TRUE COPY OF THE INTERIM ORDER DATED 10/03/2010 IN WPC NO.4832/2010 PASSED BY THIS HON'BLE COURT.
EXHIBIT P19 TRUE COPY OF THE INTERIM ORDER DATED 09/04/2012 IN THE WPC NO.7269/2012 PASSED BY THIS HON'BLE COURT.
[ true copy ]