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:
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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).
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(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
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.
