Assessments U/S 17D Kerala General Sales Tax Act Must Be Finalised Within Reasonable Time Despite Absence Of Limitation Period: High Court

Justices A. Muhamed Mustaque and Harisankar V. Menon stated that even when the statute does not provide for an outer time limit, the authority has to exercise jurisdiction within a reasonable time. The reasonable period of time for such assessment has to be fixed with reference to the other provisions of the statute.

The provisions of Section 17D of the Kerala General Sales Tax Act, 1963, provide for finalisation of assessment by a “Fast Track Team”.

The department/respondents in the writ petition forming the team issued notices on 13.02.2012 proposing finalisation of the assessment.

The petitioner/assessee filed objections pointing out that the proposal 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 the Kerala High 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 assessment orders.

The assessee had incorporated a challenge against those assessment orders also in the writ petition.

The Single Judge opined that 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.

The appellants/department submitted that there is no period of limitation prescribed for finalisation of proceedings under Section 17D of the Act. 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.

The respondents/assessee submitted that the assessing authority had a duty to follow the mandate under Section 17(6) of the Act and finalise/complete the assessments within the period of five years from the expiry of the assessment year. When that be so, even on the face of the non obstante clause under Section 17D of the Act, the limitation under Section 17(6) of the Act would apply.

The issue before the bench was whether an assessment under Section 17D of the Act is required to be completed within the period prescribed under Section 17(6) of the Act.

The bench, after examining Section 17D of the Kerala General Sales Tax Act, 1963, observed that the provisions of Section 17D start with a non obstante clause. The provisions do not speak about the initiation of assessment proceedings within a particular time or finalisation thereof.

By virtue of the non obstante clause, there cannot be any reference made to the provisions of Section 17(6) of the Act also. When that be so, the respondents could not contend that the finalisation of assessments by orders was beyond the period prescribed under Section 17(6) of the Act, added the bench.

The bench opined that the assessment has to be initiated at least with reference to 5 years as prescribed under Section 17(6) of the Act. In such circumstances, the initiation and finalisation of the assessment were barred by limitation.

The bench stated that the provisions under Section 17D do not visualise a limitation period, with reference to the other provisions of the Act.

In view of the above, the bench dismissed the appeal.

Case Title: Deputy Commissioner v. Hakeem K.

Case Number: WA NO. 1543 OF 2016

Counsel for Appeal/Assessee: V.K. Shamsudheen

Counsel for Respondent/Department: V.V. Asokan, K.I. Mayankutty Mather, S. Parvathi, Abraham K.J.

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