Kerala High Court
Nihmath Marketing vs The Asst. Commissioner (Special ... on 3 October, 2024
2024:KER:73420
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
THURSDAY, THE 3RD DAY OF OCTOBER 2024 / 11TH ASWINA, 1946
WP(C) NO. 11645 OF 2019
PETITIONER:
NIHMATH MARKETING
PALLIPPURAM ROAD, KOOTTILANGADI,
MALAPPURAM DISTRICT, PIN 676506,
(REPRESENTED BY ITS SOLE PROPRIETOR MR.PALEN PADIYEN ABDUL
MUNEER).
BY ADVS.
M.P.SHAMEEM AHAMED
SRI.CYRIAC TOM
RESPONDENTS:
1 THE ASST. COMMISSIONER (SPECIAL CIRCLE)
MALAPPURAM, THE STATE GOODS AND SERVICE TAX DEPARTMENT,
GOVERNMENT OF KERALA, PIN-676505.
2 THE COMMISSIONER OF STATE GOODS AND SERVICE TAX,
STATE GST DEPARTMENT,TAX TOWERS,
THIRUVANANTHAPURAM-695001.
3 THE STATE OF KERALA,
REPRESENTED BY ITS CHIEF SECRETARY, SECRETARIAT,
THIRUVANANTHAPURAM-695001.
OTHER PRESENT:
SRI.SAYED M THANGAL,SR.GP
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
03.10.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C)No.11645 of 2019 2 2024:KER:73420
JUDGMENT
The petitioner, an assessee under provisions of Kerala Value Added Tax Act, 2003, (hereinafter referred to "KVAT Act") has filed this writ petition challenging the assessment order at Ext.P3 issued by the 1st respondent as barred by limitation.
2. The assessment year concerned is 2011-12. Ext.P1 was a notice issued under the provisions of section 25(1) of the Act dated 22.05.2018. The petitioner submitted a detailed reply at Ext.P2 essentially contending that, the proposal in Ext.P1 is barred by limitation. However, by the impugned order at Ext.P3 dated 13.02.2019, the 1st respondent referred to:
(i) the amendment to the Act by the Finance Act, 2017, by which, the period of 5 years prescribed under Section 25 (1) stood enhanced to 6 years.
(ii) the amendment by the Finance Act, 2018, by which, the period for completion has been substituted as 31.03.2019, with respect to the third proviso to Section 25(1).
WP(C)No.11645 of 2019 3 2024:KER:73420
(iii) the provisions of Section 42(3) of the Act. and completed the assessment as if, the assessment is within time, by Ext.P3 order.
3. It is challenging Ext.P3 issued as above, the captioned writ petition is filed by the petitioner.
4. I have heard Sri.Shameem Ahamed M.P., the learned counsel for the petitioner and Sri.Sayed Murthala Thangal, the learned Government Pleader.
5. The completion of assessment by Ext.P3 order, with reference to the three amendments/provisions referred to in the preceding paragraph, is under challenge in this writ petition.
6. With reference to the amendment by which, the period of 5 years stood enhanced to 6 years, I notice that, the pre- assessment notice at Ext.P1 is issued on 22.05.2018, even beyond the period of 6 years as substituted. Therefore, the provisions of the Finance Act, 2017, by which, the period of 5 years stood substituted as 6 years would not apply to the case at hand.
7. As regards, the amendment by the Finance Act, 2018, by which, the period for completion of assessment stood fixed as 31.03.2019, with reference to the third proviso of Section 25(1), it WP(C)No.11645 of 2019 4 2024:KER:73420 is to be noticed that, this Court in Baiju A.A. v. State Tax Officer and others [2020 (1) KHC 39/ 2020 (1) KLT 233], held that there cannot be any amendment to the KVAT Act, after the introduction of GST, consequent to the Constitutional Amendment Act, 2016. The said judgment has since been approved by a division bench of this Court also.
8. With reference to the provisions of Section 42(3) of the Act, straight away it is to be noticed that, Ext.P1 is issued only with reference to the provisions of Section 25(1). There is no reference to the provisions of Section 42(3) of the KVAT Act, while issuing Ext.P1. Thus, even, the assessing authority initiating the assessment never had a case that the petitioners assessment fell within the four corners of Section 42(3).
9. Further more, the provisions under Section 42(3) reads as under:
"Notwithstanding anything to the contrary contained in this Act, if a dealer,
(i) fails to file audited accounts referred to in sub-section (1), or
(ii) fails to file revised annual return rectifying the mistake or omission, along with the audited statement of accounts and certificate or if the WP(C)No.11645 of 2019 5 2024:KER:73420 variance in the audited statement of accounts with the returns is not satisfactorily explained in the reconciliation statement prescribed, or
(iii) fails to file the annexures, statements, certificates, declarations, including the statutory declarations to be filed under the Central Sales Tax Act, 1956 which are required to be filed along with the returns to prove the correctness of the concessional rate of tax, exemptions and exports claimed in the returns, or
(iv) fails to declare any sale, purchase or interstate stock transfer as evidenced from the documents prescribed under section 46 available with the assessing authority in the sales and purchase lists filed along with the returns, the assessment of such dealer for the relevant year for the purpose of section 25 shall be treated as pending and the time limit mentioned there under shall not be applicable in such cases."
10. It is only in a situation where the case of the particular assessee falls within the four Sub-clauses of Section 42(3), the question of applying the above provision arises. Yet, the assessing authority has referred to the 4th clause, to contend that the assessment can be saved under the above provisions. However, the 4th clause applies only in a situation were an assessee fails to declare sales/purchase/Interstate purchase/Inter-state stock transfer from the documents prescribed under the Section 46 of the Act WP(C)No.11645 of 2019 6 2024:KER:73420 available with the department with respect to sales/purchases carried out by an assessee. A reading of the pre-assesment notice at Ext.P1 or the assessment order at Ext.P3 does not disclose that the assessing authority had any such case against the petitioner with reference to the failure to declare sales/purchases/Interstate stock transfer etc. on the basis of documents prescribed under Section 46. The allegation in Ext.P3 was only with reference to the alleged loss suffered by the assesssee while effecting sales for the year under assessment. Here, it is to be noticed that, the petitioner was statutorily bound to carry out audit of its books of account under the provisions of Section 42 and Ext.P7 is the audit report issued by the Chartered Accountant. A reference to Ext.P7 also shows that, the chartered Accountant has audited the books of accounts of the petitioner and has also certified the loss to the extent of Rs.45,29,036.75. When that be so, there is no reason for the assessing authority to have referred to Section 42(3)(iv) of the KVAT Act, 2003 for completing the assessment.
11. When Section 42(3) (iv) is not attracted, then this assessment ought to have been initiated within the period prescribed under Section 25(1). Here as found earlier, it is not so. There, I find that Ext.P3 issued pursuant to Ext.P1 notice is only to be WP(C)No.11645 of 2019 7 2024:KER:73420 set aside and I do so.
Resultantly, this writ petition would stand allowed as above.
Sd/-
HARISANKAR V. MENON
JUDGE
ANA
WP(C)No.11645 of 2019 8 2024:KER:73420
APPENDIX OF WP(C) 11645/201
PETITIONER EXHIBITS
EXHIBIT P1
TYPED COPY OF THE NOTICE DATED 22.05.2018 FOR THE YEAR 2011-12.
EXHIBIT P2 COPY OF THE REPLY DATED 01.03.2019 FILED BEFORE THE 1ST RESPONDENT.
EXHIBIT P3 COPY OF THE ASSESSMENT ORDER DATED 13.03.2019 PASSED FOR THE YEAR 2011-12.
EXHIBIT P4 COPY OF THE RELEVANT PAGES OF KERALA FINANCE ACT 2017 EXHIBIT P5 COPY OF RELEVANT PAGES OF KERALA FINANCE ACT 2018. EXHIBIT P6 COPY OF INTERIM ORDER DATED 14.03.2019. EXHIBIT P7 COPY OF FORM 13 AND FORM 13A FILED FOR THE YEAR 2011-12.