The assessment of sales tax must adhere to statutory time limits, and completed assessments initiated without proper notice are deemed invalid.

ORDER :

Harisankar V. Menon, J.

This Sales Tax Revision Petition, at the instance of the revenue, seeks to challenge the order dated 06.02.2019 in T.A. No. 88 of 2017, of the Kerala Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, setting aside the assessment of the respondent-assessee for the year 2003-04 as barred by limitation.

2. The assessment of the respondent-assessee, was initiated pursuant to a pre-assessment notice dated 10.06.2010 and completed ex-parte on 18.08.2010. The first appeal was unsuccessful. In the second appeal, the Tribunal, by the impugned order, found that the assessment ought to have been finalised within the period prescribed under Section 17(6) of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the ‘KGST Act’ for short), and insofar as it is not so done, the appeal was allowed. The Tribunal also relied on the principles laid down by a learned Single Judge of this Court in the judgment dated 27.11.2015 in W.P.(C) No.11049 of 2012. It is in such circumstances that this Sales Tax Revision Petition is filed by the revenue.

3. Heard Sri.V.K.Shamsudeen, the learned Senior Government Pleader for the petitioner-revenue, and Sri.K.J.Abraham, the learned counsel for the respondent- assessee.

4. The main contention raised by the learned Senior Government Pleader is to the effect that the extension carried out by the Kerala Finance Acts, 2009 and 2010, are applicable to the case at hand. He would contend that the assessment proceeding, having been initiated as well as finalised within the extended period of time as above, the findings of the Tribunal were incorrect. Per contra, the counsel for the respondent- assessee would contend that the extension as above was not applicable. He would also add that even the assessment completed was without any justification, insofar as there was no proper service of pre-assessment notice prior to finalisation of the assessment.

5. We have considered the rival submissions. The question of law as reframed by us, arising for consideration in this Sales Tax Revision Petition, is:

Whether on the facts and in the circumstances of the case, Annexure A assessment order for the year 2003-04 is passed within the period prescribed under Section 17(6) of the Act, as amended by the Kerala Finance Act, 2009, and the Finance Act, 2010?

6. The issue, as noticed earlier, is as to whether the assessment completed for the year 2003-04 is within the period prescribed under Section 17(6) of the Act. The provisions of the Act provide for finalisation of assessment under Section 17(3), which reads as under:

Sec.17 (3) “If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment:”

Therefore, an assessment requires to be taken up when:

i. No return is submitted by a dealer; or

ii. If the return appears to be incorrect/ incomplete,

Originally, there was no time limit prescribed under the Statute for either initiation of the assessment or finalisation, as above. For the first time, limitation was introduced in the Statute by insertion of sub – section (6) by the Kerala Finance Act, 1993, with effect from 01.04.1993. The period for such finalisation was “4 years” originally, and later enhanced to “5 years” with effect from 31.03.2002. Applying the above, as regards the assessment year 2003-04, the assessment ought to have been completed at least by 31.03.2009. It is not in dispute that the assessment in the case at hand has not been initiated or finalised within the above period.

7. In such circum stances, with reference to the provisions of Section 17(6) of the Act, as it stood till 31.03.2009, there is no dispute that the assessment completed against the res