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The Sales Tax Officer Vs. Sankaran - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case Number W.A. No. 701 of 1983
Judge
Reported in[1986]61STC370(Ker)
AppellantThe Sales Tax Officer
RespondentSankaran
Appellant AdvocateThe Government Pleader
Respondent Advocate M. Unnikrishna Menon and; N.S. Sundararaman, Advs.
DispositionAppeal allowed
Cases ReferredP.K. Sankaran v. Sales Tax Officer
Excerpt:
.....either by the assessee or by the revenue so as to say that the proceedings are still pending, the assessing authority has not taken effective proceedings for the purpose of effecting revised assessments as in this case, and there is no valid explanation for the delay, i am of the view that the proceedings so initiated or continued after an unreasonable period will be vitiated and bad in law. it is good that an assessment after remand is completed within a reasonable time. but the question is simply because some considerable delay is caused in completing the assessment will the assessment become bad in law for that reason alone. if no proceedings were pending, and after the lapse of a good number of years the assessment comes as a bolt from the blue, no doubt, the assessee will be..........in paul pandian's case : [1981]128itr809(ker) and krishna bhatta's case establish that the assessing authority should act 'reasonably' and should avoid hardship and prejudice to the assessee, in the matter of assessment. if it is not so done, it is a case of 'improper' or unreasonable exercise of power. that may, even said to be, an 'abuse of power'. it is for the authority concerned to afford proper and valid explanation for the delay in the matter. it is trite law that statutory powers must be exercised, bona fide, reasonably, without negligence, and for the purpose for which they were conferred.... it is fairly evident from the above, that this court can interfere if the action of the public authority is 'unreasonable' or if the statutory powers are not exercised in a.....
Judgment:

K.K. Narendran, J.

1. The short point that arises for consideration in this writ appeal is whether the inordinate delay, in making an assessment to sales tax in a case remanded by the Appellate Assistant Commissioner, by itself will vitiate the assessment. In this writ appeal, the Sales Tax Officer, the respondent in the original petition filed by the assessee, challenges the judgment of the learned single Judge allowing the original petition and quashing the assessments.

2. The appellant assessed the respondent to sales tax for the assessment years 1964-65 and 1965-66 by orders dated 16th February, 1967, and 15th February, 1967, respectively. The respondent filed appeals against the assessments. The Appellate Assistant Commissioner set aside the assessments and remanded the cases to the appellant for fresh disposal as per order dated 6th March, 1968. Thereafter, only by orders, exhibits P4 and P6, dated 28th July, 1981, assessment was made. The respondent challenged the above orders before this Court in an original petition contending that there was inordinate delay in making the assessment and this has vitiated the revised assessments. The original petition was allowed. It is that judgment that is challenged in the writ appeal.

According to the learned Judge, the question that arose for consideration in the case was :

The core of the matter is, whether proceedings for passing a revised assessment order, after the remit by an appellate or revisional authority, can be initiated or continued after any length of time or is there a time-limit to act Can the exercise of the power to pass revised assessment order be trammelled in any way

The learned Judge has given the following reasons for interfering with the assessments :

The principles laid down by this Court in the decisions reported in Paul Pandian's case : [1981]128ITR809(Ker) and Krishna Bhatta's case establish that the assessing authority should act 'reasonably' and should avoid hardship and prejudice to the assessee, in the matter of assessment. If it is not so done, it is a case of 'improper' or unreasonable exercise of power. That may, even said to be, an 'abuse of power'. It is for the authority concerned to afford proper and valid explanation for the delay in the matter. It is trite law that statutory powers must be exercised, bona fide, reasonably, without negligence, and for the purpose for which they were conferred.... It is fairly evident from the above, that this Court can interfere if the action of the public authority is 'unreasonable' or if the statutory powers are not exercised in a 'reasonable manner'. Viewed in the above background, it has to be said that in this case no explanation at all has been offered for the delay in the matter. The delay, prima Jade, is unreasonable, and , the assessee has himself said in his objections that it is not possible for him to produce the documents and accounts at this distance of time 'after a lapse of nearly 13 years. That certainly voices the prejudice and hardship that have resulted to him. So I am of opinion that there is inordinate and unreasonable delay on the part of the assessing authority to complete the assessments, exhibits PI and P2. In this case, it cannot be said that the assessing authority has acted bona fide either.... Taking a broad and practical view of the matter, it could be said that it is at the motion of the assessee's appeals are taken and the order of remit is made for his benefit by the appellate authority, than he should preserve the accounts and other documents for a reasonable time after the order of remit. But since Rule 32(21) mandates the preservation of the documents and the accounts only for a period of four years after the accounting year, can it be assumed in all cases of remit irrespective of the time specified in Rule 32(21) that the assessee is bound to preserve the accounts and the documents for ever or for all times Rule 32(21) should be construed reasonably and in a business sense. In my opinion the assessee is bound, ordinarily, to preserve the accounts and documents even in cases of remit, only for a reasonable period of time. We get an indication about the resonable period in Rule 32(21). Bearing in mind that provision, it can be said that in cases of remit by the appellate authority, the assessee will be ordinarily bound to preserve accounts and other documents for a period of four years from such order of the appellate authority to enable a proper and valid assessment being made. Preservation of such accounts and documents are for the benefit of the assessee himself and so he should do so for a reasonable period. If, on the other hand, even after a period of four years from the order of remit and in cases where there is no appeal either by the assessee or by the revenue so as to say that the proceedings are still pending, the assessing authority has not taken effective proceedings for the purpose of effecting revised assessments as in this case, and there is no valid explanation for the delay, I am of the view that the proceedings so initiated or continued after an unreasonable period will be vitiated and bad in law. If proceedings are initiated beyond four years after the order rendered in the appeal or revision, the exercise of power in such cases is prima facie 'unreasonable' and improper and it is for the assessing authority to show or demonstrate that there are valid and proper grounds for the delay so caused and in the absence of cogent and acceptable reasons explaining the delay, the exercise of power will be held to be unreasonable and improper. Long lapse of time has brought about a situation whereby the assessee is not obliged nor will he be in a position to preserve the accounts and other documents mentioned in Rule 32(21).

3. The New Webster's Dictionary of the English Language has given the following meaning for the word 'remand' :

Law, to return, as a case, to a lower court with instructions as to further disposition.

It is good that an assessment after remand is completed within a reasonable time. But the question is simply because some considerable delay is caused in completing the assessment will the assessment become bad in law for that reason alone. If no proceedings were pending, and after the lapse of a good number of years the assessment comes as a bolt from the blue, no doubt, the assessee will be prejudiced. In that case, it can be said that the assessment will be vitiated and will be bad in law, if the assessing authority has no valid explanation for the long delay caused in making the assessment. In this case, the assessments in question were made after remand by the Appellate Assistant Commissioner. It goes without saying that a remand is for reconsideration and for nothing else. So, even if the assessing authority sleeps over the matter after remand, the assessee cannot afford to do so. If the assessee will be prejudiced in any way by the delay caused in making the reassessment, the assessee can very well move the assessing authority and insist that the assessment be completed without delay. If, for example, the assessee has to wind up the business and leave the station or for any reason he cannot preserve the accounts and other records he can inform the assessing authority. If, thereafter also, the assessing authority without any valid reason causes inordinate delay then it goes without saying that the assessee will be seriously prejudiced and the assessment will be vitiated by the inordinate delay caused in making the same. In this case, this has not happened. The direction in Rule 32(21) of the Kerala General Sales Tax Rules, 1963, for the preservation of the accounts for a period of four years after the close of the year to which they relate cannot come to the rescue of an assessee whose case was remanded to the assessing authority. He is duty bound to preserve his accounts till his assessment is finalised; otherwise he will have to pay the penalty for not preserving the same.

4. There is another aspect of the matter. Going by the averments in the original petition the assessee was seriously ill when the remand order was made on 6th March, 1968. He continued to be in that serious condition even when the notice for the revised assessment was received by him on 20th July, 1981. So, this is not a case where the assessee was always willing and ready for a hearing before the assessing authority but the assessing authority was indifferent in the matter and the assessment was delayed inordinately.

5. The learned Judge has relied on two decisions of this Court where this Court interfered with orders passed by the assessing authority on the ground of inordinate delay. In Deputy Commissioner of Agricultural Income-tax and Sales Tax v. P.S.B. Paul Pandian : [1981]128ITR809(Ker) it was an order passed in a suo motu revision under Section 34 of the Agricultural Income-tax Act, 1950, that was set aside on the ground that there was great delay in invoking Section 34. As the case in hand is one of an assessment after remand it goes without saying that the above decision is distinguished on the facts. In Krishna Bhatta v. Agricultural Income-tax Officer where Pandian's case : [1981]128ITR809(Ker) was followed, it was an order levying penalty after a period of 16 years that was set aside. On the facts, this decision is also distinguishable.

6. In the result, the writ appeal is allowed and the judgment in O.P. No. 4389 of 1981 (reported as P.K. Sankaran v. Sales Tax Officer [1983] 64 STC 312) is set aside. No costs.


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