Assessments under the Kerala General Sales Tax Act must be completed within a reasonable time, even if the law does not specify a time limit.

JUDGMENT :

Harisankar V. Menon, J.

This appeal, at the instance of the respondents in the writ petition, seeks to challenge the judgment of the learned Single Judge, quashing Exts.P8 and P9 assessment orders for the years 2003-04 and 2004-05 completed under the provisions of Section 17D of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as ‘the Act’ for short).

2. The provisions of Section 17D of the Act provide for finalisation of assessment by a “Fast Track Team”. Respondents 1 to 4 in the writ petition forming the team issued Exts.P3 and P4 notices on 13.02.2012 proposing finalisation of assessment in the manner stated thereunder. The petitioner filed objections pointing out that the proposal, as above, was barred by limitation, with reference to the provisions of Section 17(6) of the Act. Section 17(6), inserted with effect from 01.04.1993, for the first time, provided for a time limit within which an assessment under the Act was required to be completed. Originally, the period for such finalisation was “4 years” and with effect from 31.03.2002, the period was substituted as “5 years”. After filing an objection as above, the writ petitioner approached this Court seeking to challenge the notices on the ground of limitation. During the pendency of the writ petition, the proposals in the notices were finalised pursuant to Exts.P8 and P9 assessment orders. The petitioner has incorporated a challenge against those assessment orders also in the writ petition. A learned Single Judge of this Court found that: -

i. The assessments for the years 2003-04 and 2004-05 ought to have been completed by 31.03.2009 and 31.03.2010, respectively.

ii. As on the above dates, notices under Section 17D were not issued.

iii. The amendment to Section 17(6) by the Finance Act, 2011, permitting completion of assessments for the years up to 2005-06 by 31.03.2012 would not apply to the case at hand since it was only when an assessment was pending as on 31.03.2011, the extended time could be made use of. However, it was found that since, on the date of the introduction of the Finance Act, 2011, as above, there was no assessment “pending”; the assessments could not be sustained.

In the light of the afore, Exts.P8 and P9 were quashed by the learned Single Judge.

3. It is seeking to challenge the afore judgment, the respondents in the writ petition have instituted this appeal under Section 5 of the Kerala High Court Act, 1958.

4. Sri.V.K.Shamsudheen, the learned Senior Government Pleader, on behalf of the appellants, would contend that: -

i. There is no period of limitation prescribed for finalisation of proceedings under Section 17D of the Act.

ii. In view of the non obstante clause under Section 17D of the Act, the reference made to the limitation prescribed by Section 17(6) of the Act was incorrect. In support of the afore contentions, he relied on the Division Bench judgments of this Court in Betty Sebastian v. Assistant Commissioner [(2018) 59 GSTR 275] and S.T.Rev.No.11 of 2021 dated 24.10.2024.

iii. The finding that there was no assessment pending as on 31.03.2011 is incorrect, since the assessment is deemed to be pending till such time a formal assessment order is passed on the basis of a return. In support of this contention, he relied on the dictum laid down by the Apex Court in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax , Nagpur and Others [ (1963) 14 STC 976 ]

iv. The period for finalisation of assessments under Section 17(6) of the Act was being periodically extended by the various Finance Acts of 2009, 2010, 2011 & 2012, and hence the finalisation of assessment was justified.

v. In other words, according to him, once a return is filed, the assessment is to be taken as “pending” till such time the assessments are finalised, and hence the extension under the Finance Acts would apply.

vi. No vested right is accruing to an assessee by non-completion of assessment within the time prescribed, as held by the Apex Court in Ahmedab