The main legal point established is that assessment proceedings must adhere to the prescribed limitation periods under Sections 25(1) and 56(2)(c).

JUDGMENT :

DAMA SESHADRI NAIDU, J.

Introduction:

1. An assessee questions the assessment proceedings on the grounds of limitation. The limitation periods in question relate to Section 25(1) and Section 56(2)(c) of the Kerala Value Added Tax Act. To subject a dealer to best judgment assessment, the limitation fixed is “five years from the last date of the year to which the return relates.” Similarly, under Section 56(2) of the Act, the sua sponte revisional power must be exercised before the four-year period expires from the year in which the order to be revised was passed.

How should we reckon the limitation under Section 25(1) and Section 56(2) of the KVAT Act? What does “commence” connote in Section 25(1) of the Act?

Facts:

Sterling and Wilson (P) Ltd. (“Sterling”) as an assessee under the KVAT Act, suffered the Ext.P1 assessment order for 2010-11. Later, it filed the Ext.P2 rectification application; that resulted in the Ext.P3 order.

2. As much depends upon the chronology, I may note that the Ext.P1 was passed on 30th September 2016; then Sterling submitted the Ext.P2 application, dated 03.11.2016, to have that assessment rectified; thereafter, the Assistant Commissioner (Works Contract) passed the Ext.P3 order, dated 03.07.2017.

3. Sterling does assert that the revisional authority allowed the revision in its favour. The revisional authority, the Company also asserts, has held that Sterling has paid close to Rs. 10 lakh in excess. But Sterling does not seem to have claimed any refund.

4. The record reveals that on 28.09.2017, the Deputy Commissioner issued a notice under Section 56(1) of the KVAT Act. The authority proposed to exercise its sua sponte power and revise the Ext.P3 order. Sterling submitted the Ext.P5 reply, opposing the Deputy Commissioner's proposal to invoke Section 56. At any rate, the Revisional Authority went ahead and rendered the Ext.P6 order. Through the Ext.P6, the Revisional Authority set aside the Ext.P1 order of assessment and remitted the matter back to the Assessing Authority for fresh disposal.

5. In that context, the Assistant Commissioner issued a notice under Section 25(1) of the KVAT Act 2003, inviting Sterling's Ext.P8 objections. Eventually, he rendered the Ext.P9 order of fresh assessment. Assailing the Ext.P6 order in revision and also the Ext.P9 assessment order on remand, Sterling has filed this writ petition.

Submissions:

Petitioners:

6. Smt Latha K. the learned counsel for Sterling, has focussed on one specific plea: the proceedings under the Exts.P6 and P9 have been hit by Section 25(1) and Section 56(2)(c) of the Act, respectively.

7. To elaborate, Smt Latha has drawn my attention to the judgment dated 19th July 2018 in W.A. No. 1016 of 2017, rendered by a learned Division Bench of this Court. According to her, under Section 25(1), the limitation fixed is only five years, but the Ext.P1 was sought to be disturbed beyond five years. Besides, she has contended that the Ext.P9 fresh assessment order cannot be sustained because the Deputy Commissioner invoked his sua sponte power under Section 56, beyond four years from the year of assessment. To support her contentions, she has relied on Ninan vs. State of Kerala, 1965 KLT 1167 and S. Najeem vs. Commercial Tax Officer, (2016) 96 VST 229 (Ker).

Respondents:

8. On the other hand, Dr. Thushara James, the learned Government Pleader, has made strenuous efforts to refute Sterling's contentions. According to her, though the Ext.P1 was rendered on 30th September 2016, the notice proposing the assessment was issued on 01st March 2016. The five years, she maintains, must be reckoned by the date of the notice, rather than the date of the order. In other words, 1st March 2016, the date of the notice, is well within five years. Therefore, the limitation stands saved, she asserts.

9. At any rate, Dr. James also contends that Sterling has never questioned the Ext. P1; instead, it had the assessment order revised through the Ext.P3. Therefore, Sterling, according t