Kerala High Court
State Of Kerala vs Renjitha Sathyan on 23 September, 2025
Author: A.Muhamed Mustaque
Bench: A.Muhamed Mustaque
1
ST.Rev.No.31 of 2019 2025:KER:70638
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE
&
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
TUESDAY, THE 23RD DAY OF SEPTEMBER 2025 / 1ST ASWINA, 1947
ST.REV.NO.31 OF 2019
AGAINST THE ORDER DATED 06.02.2019 IN TA NO.88 OF 2017 OF
S.T.A.T.ADDITIONAL BENCH, ERNAKULAM
-------
REVISION PETITIONER/RESPONDENT/REVENUE:
STATE OF KERALA, REP. BY DEPUTY COMMISSIONER (LAW),
KERALA GST DEPARTMENT, ERNAKULAM.
BY SENIOR GOVERNMENT PLEADER, SRI.V.K.SHAMSUDHEEN
RESPONDENT/APPELLANT/ASSESSEE:
RENJITHA SATHYAN,
WORKS CONTRACTOR, 37/407. RAKHI,
TEMPLE ROAD, KADAVANTHRA, KOCHI -682 026.
BY ADVS.
SHRI.K.J.ABRAHAM
SRI.NIKHIL JOHN
THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 18.09.2025, THE
COURT ON 23.09.2025 DELIVERED THE FOLLOWING:
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ST.Rev.No.31 of 2019 2025:KER:70638
"C. R."
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
ST.Rev.No.31 of 2019 2025:KER:70638
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
ST.Rev.No.31 of 2019 2025:KER:70638
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
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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
ST.Rev.No.31 of 2019 2025:KER:70638
that the assessment in the case at hand has not been initiated
or finalised within the above period.
7. In such circumstances, 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
respondent was time barred.
8. However, it is the submission of the learned Senior
Government Pleader that the provisions of the Kerala Finance
Acts of 2009 and 2010 gain significance herein, and the
department is entitled to finalise the assessments. True, by the
Kerala Finance Act, 2009, the fourth proviso to sub-section (6)
was substituted by adding a fresh proviso with an explanation,
which reads as under:
"Provided also that the assessment relating to the years up
to and including the year 2004-05 pending as on 31st
March, 2009 shall be completed on or before the 31 st day
of March, 2010.
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Explanation:- For the purpose of the above proviso, it is
clarified that the extension of time granted for completion
of assessments is applicable in all cases where regular
assessments have not been completed before the date
fixed for completion of assessment in the respective years."
9. By the Finance Act, 2010, the fourth proviso and the
explanation added as above were further substituted by the
insertion of two provisos as under:
"Provided also that the assessment to the years upto and
including the year 2004-05 pending as on 31st March, 2010
shall be completed on or before the 31st day of March,
2011 :
Provided further that in cases where any assessment
completed under this Act has been reopened with the
permission of the Commissioner, the time limit mentioned
in Section 19 shall not apply."
The stand of the revenue is that by the proviso as substituted by
the Kerala Finance Act, 2009, all assessments up to and including
the year 2004-05 pending as on 31.03.2009 could be completed
by 31.03.2010. So, the learned Senior Government Pleader
submits that since the assessment was pending as on
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31.03.2009, revenue got a lease of life till 31.03.2010. He also
relies on the explanation inserted as above to support the afore
submission. On the face of the afore lease of life, it is his further
submission that the extension by the Kerala Finance Act, 2010,
entitles completion of assessment by 31.03.2011. He concludes
his submission by pointing out that, since the assessment had
been initiated and finalised within that time, the findings of the
Tribunal were incorrect. In support of his submission as above,
he also relied on the judgment of the Apex Court in
Ghanshyamdas v. Regional Assistant Commissioner of
Sales Tax, Nagpur and Others [(1963) 14 STC 976] to
contend that once a return is filed, the proceedings before the
assessing authority commence and such proceedings are held to
be pending before the officer till such time an appropriate
assessment order is issued.
10. At the first blush, the afore submission made by the
learned Senior Government Pleader appears to be attractive. This
is because the Apex Court in Ghanshyamdas (supra) has held
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that "the submission of a statutory return would initiate the
proceedings and that the proceedings would be pending till a final
order of assessment was made on the said return".
11. However, we notice that the Apex Court, in the afore
decision, was considering four variations in the matter of
assessment of a registered dealer. The variations have been
noticed by the Apex Court as under:
"(1) He submits a return by the date proscribed and
pays the tax due in terms of the said return; the
Commissioner accepts the correctness of the return and
appropriates the amount paid towards the tax due for the
period covered by the return. (2) The Commissioner is not
satisfied with the correctness of the return: he issues a
notice to him under section 11(2) and makes an enquiry as
provided under the Act, but does not finalize the
assessment. (3) The registered dealer does not submit a
return; the Commissioner issues a notice under section
10(3) and section 11(4) of the Act. And (4) the registered
dealer does not submit any return for any period and the
Commissioner issues notice to him beyond three years."
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The treatment to be effected by the assessing authority on the
above variations and the question arising for consideration has
been laid down by the Apex Court as under:
"If the return was accepted and the amount paid was
appropriated towards the tax due for the relevant period,
it means that there has been a final assessment in regard
to the said period. If any turnover escaped assessment,
clearly it can be reopened only within the period prescribed
in section 11-A. In the case where a return has been made,
but the Commissioner has not accepted it, and has issued
a notice for enquiry, the assessment proceedings will
certainly be pending till the final assessment is made. Even
in a case where no return has been made, but the
Commissioner initiated proceedings by issuing a relevant
notice either under section 10(3) or under section 11(4),
the proceedings will be pending thereafter before the
Commissioner till the final assessment is made. But where
no return has been made and the Commissioner has not
issued any notice under the Act, how can it be held that
some proceedings are pending before the Commissioner
when none existed as a matter of fact? We are concerned
in this case with the last contingency."
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In the case at hand, a perusal of Annexure-A assessment order
shows that the respondent-assessee had not filed any returns
during the year under assessment. Therefore, the case of the
respondent-assessee cannot be stated to be falling under the
first or second variation noticed by the Apex Court, as above.
The case of the assessee herein would fall under variation
numbers 3 and 4, as noticed by the Apex Court.
12. With respect to variation under the fourth situation,
the question as above has been answered as under by the Court:
"It is manifest that in the case of a registered dealer the
proceedings before the Commissioner starts factually when
a return is made or when a notice is issued to him either
under section 10(3) or under section 11(2) of the Act. The
acceptance of the contention that the statutory obligation
to file a return initiates the proceedings is to invoke a fiction
not sanctioned by the Act. The obligation can be enforced
by taking a suitable action under the Act. Taking of such an
action may have the effect of initiating proceedings against
the defaulter. The default may be the occasion for initiating
the proceedings, but the default itself proprio vigore cannot
initiate proceedings. Proceedings in respect of the
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assessment of the turnover for the relevant period cannot,
therefore, be said to be pending before the Commissioner."
In the light of the afore, the interpretation suggested by the
learned Senior Government Pleader, placing reliance on the
judgment of the Apex Court in Ghanshyamdas (supra) and the
Kerala Finance Acts of 2009 and 2010, does not appear to be
correct. Applying the law laid down by the Apex Court in
Ghanshyamdas (supra) in a case where no return is filed by a
dealer, merely because the dealer had a duty to file the return,
it cannot be said that the proceedings were initiated on account
of the default. It is only when a notice is issued in accordance
with the law, it can be said that the proceedings are initiated.
13. Viewed in the light of the above proposition; as on
31.03.2009 and 31.03.2010, the proceedings have not been
initiated against the respondent assessee to contend that they
were "pending". When that be so, we are of the opinion that the
revenue would not be entitled to place reliance on the provisions
ST.Rev.No.31 of 2019 2025:KER:70638
under Section 17(6) of the Act, as amended by Finance Acts,
2009 and 2010.
Resultantly, we are of the opinion that the conclusions
arrived at by the Tribunal cannot be said to be incorrect or
arbitrary, warranting interference from our end. We find no
reason to interfere, and hence, this Sales Tax Revision Petition
stands dismissed, answering the question framed as above,
against the revenue and in favour of the assessee.
Sd/-
A.MUHAMED MUSTAQUE, JUDGE
Sd/-Sd/-Sd/-
HARISANKAR V. MENON, JUDGE
Skk/ln/18.09.2025
ST.Rev.No.31 of 2019 2025:KER:70638
PETITIONER'S ANNEXURES:
ANNEXURE A A TRUE COPY OF ASSESSMENT ORDER UNDER SECTION
17(3) OF K.G.S.T.ACT DATED 18/08/2010 FOR YEAR
2003-04 BY THE ASSISTANT COMMISSIONER, KVAT
WORKS CONTRACT, ERNAKULAM.
ANNEXURE B A TRUE COPY OF THE ORDER DATED 31/08/2017 IN
STA NO.534 OF 2011.
ANNEXURE C CERTIFIED COPY OF THE ORDER OF THE TRIBUNAL IN
T.A.NO.88 OF 2017 DATED 06/02/2019.
