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Tirur Medical Stores Vs. State of KeralA. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberT.R.C. No. 28 of 1976
Reported in(1978)6CTR(Ker)254
AppellantTirur Medical Stores
RespondentState of KeralA.
Cases ReferredRegional Asstt. C.S.T. Nagpur and State of Punjab vs. Tara Chand Lajpat Rai
Excerpt:
.....assessing authority may :proceed to determine to the best of its judgment the turnover which has escaped assessment to tax or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or the deduction that has been wrongly made and assess the tax payable on such turnover after issuing a notice on the dealer and after making such enquiry as it may consider necessary :provided that before making an assessment under this sub-section the dealer shall be given a reasonable opportunity of being heard. (2) may at any time within three years next succeeding that to which the tax or licence fee relates determine to the best of his judgment the turnover which has escaped assessment and assess the tax payable or levy the licence fee in such turnover..........on 20-3-1973. rejecting the objections, a revised order of assessment, in respect of the escaped turnover for the year 1968-69, was made by the sales-tax officer on 21-3-1973. this order was challenged by the assessee before the appellate assistant commissioner who by his order dated 29-5-1973 held that the assessee was not accorded a proper opportunity of being heard. the order challenged was accordingly set aside and the sales-tax officer was directed to pass a thereupon issues to the assessee. the assessee replied to the notice on 29-8-1973 raising various objections. one of the principal objections was that the assessee was not given an effective opportunity of being heard as directed by the order of remand. a revised order of assessment was made by the sales-tax officer on.....
Judgment:

T. Kochu Thommen, J. - The petitioner in this Tax Revision Case is an assessee under the Kerala General Sales-tax Act, 1963 (the Act). The tax relates to the year 1968-69. The question raised by the assessee is whether the Appellate Tribunal was right in holding that the revised assessment dated 23-11-1973, made under S. 19 of the Act was not time-barred.

2. The original assessment under S. 17 was made on 30-4-1970. Subsequently notices dated 15-2-1973 and 6-3-1973 were issued to the assessee in terms of S. 19. The assessee filed its objections on 20-3-1973. Rejecting the objections, a revised order of assessment, in respect of the escaped turnover for the year 1968-69, was made by the Sales-tax Officer on 21-3-1973. This order was challenged by the assessee before the Appellate Assistant Commissioner who by his order dated 29-5-1973 held that the assessee was not accorded a proper opportunity of being heard. The order challenged was accordingly set aside and the Sales-tax Officer was directed to pass a thereupon issues to the assessee. The assessee replied to the notice on 29-8-1973 raising various objections. One of the principal objections was that the assessee was not given an effective opportunity of being heard as directed by the order of remand. A revised order of assessment was made by the Sales-tax Officer on 23-11-1973. This order was also challenged by the assessee contending that, notwithstanding the earlier direction in the order of remand, no effective opportunity was given to it and the second revised order was also invalid. The contention regarding lack of proper opportunity was accepted by the Appellate Assistant Commissioner who by his order dated 10-5-1974 once again remanded the case to the Sales-tax Officer for fresh disposal in compliance with his direction regarding natural justice. Assistant Commissioner was however challenged by the assessee in appeal before the Kerala Sales-tax Appellate Tribunal. The principle contention of the assessee before the Tribunal was that the revised order of assessment dated 25-11-1973 was time barred and consequently the order of remand dated 10-5-1974 made by the Appellate Assistant Commissioner was invalid. In the present proceedings we are concerned only with this objection.

3. Relying upon the decision in The Sales Tax Officer, Special Circle, Ernakulam vs. Sudarsanam Iyengar and Sons, the Tribunal held that the reversed order of assessment dated 23-11-1973 was not time-barred and that the order of remand dated 10-5-1974 could not be said to be invalid on that score.

4. As we stated earlier, the assessment order under S. 17 was made on 30-4-1970. As assessment under S. 19 in respect of escaped turnover under S. 19 in respect of escaped turnover has to be made within 4 years from the expiry of the year to which the tax relates. Sub-S. (1) of the section provides that at any time within that period the assessing authority may :

'Proceed to determine to the best of its judgment the turnover which has escaped assessment to tax or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or the deduction that has been wrongly made and assess the tax payable on such turnover after issuing a notice on the dealer and after making such enquiry as it may consider necessary :

Provided that before making an assessment under this sub-section the dealer shall be given a reasonable opportunity of being heard.'

Accordingly the year to which the tax relates being 1968-69, the 4-year period mentioned under S. 19(1) expired on 31-3-1973. According to the assessee the revised order of assessment dated 23-11-1973 is therefore hopelessly out of time. We do not think so for a moment.

5. As stated earlier two notices under S. 19 were issued on 15-2-1973 and 6-3-1973 respectively. With those notice the proceedings under S. 19 commenced. The subsequent orders referred to earlier were a commenced with the notices. Once proceedings have commenced within the time stipulated which in the present case is not disputed the proceedings can validly continue until a final order is made. The fact that the final order was made after the expiry of the period of limitation does not affect the validity of that order id the proceedings which culminated in the final order commenced within the 4-years period. That this is the correct position can no longer be in dispute in view of the observations of the Supreme Court in The Sales-tax Officer, Special Circle, Ernakulam vs. Sudarsanam Iyengar & Sons. That case related to R. 33 of the Travancore-Cochin General Sales-tax Rules, 1950, which was as follows :

'R. 33(1). If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority, as the case may be, subject to the provisions of sub-R. (2) may at any time within three years next succeeding that to which the tax or licence fee relates determine to the best of his judgment the turnover which has escaped assessment and assess the tax payable or levy the licence fee in such turnover after issuing a notice to the dealer or licensee and after making such enquiry as he considers necessary.

(2) ..........................................................'

The Supreme Court in that case rejected the contention of the assessee that State of Punjab vs. Murlidhar Mahabir Prasad Ghanshyamdas vs. Regional Asstt. C.S.T. Nagpur and State of Punjab vs. Tara Chand Lajpat Rai, which were cited for the department, had no application to the interpretation of R. 33(1), as the relevant enactments in those cases used the expression 'proceed to assess' whereas R. 33(!) used the expression 'assess' and not 'proceed to assess'. It was contended by the assessee in (1970) that the expression 'proceed to assess' was not the same as 'assessee' and therefore, unlike in the cases cited for the department, the assessment under R. 33(!) and to be completed within the period of limitation. This contention was totally rejected by the Supreme Court. The Court that the expression 'assessment' was comprehensively enough to denote the entirely of the proceedings taken in respect of it. The ambit of that expression could not be limited to a final order of assessment.

6. S. 19 of the Act says :

'...... Proceed to determine to the best of it judgment the turnover which has escaped assessment to tax ... and assess the tax payable on such turnover after issuing a notice on the dealer ....'

This means that the assessing authority has no proceed to determine, in the sense that proceedings for the determination of the escaped turnover, must commence within the period stipulated, and 'assess' using that expression in the wider sense given to it by the Supreme Court so as to include the proceedings leading to the final order of assessment. It does not matter that the final order itself was passed beyond the stipulated period of four years. In the present case the proceedings commenced well within time, although the revised order was passed out of time. But that by itself does not effect its validity. In the circumstances, we see no merits in the Tax Revision Case, and it is dismissed with costs. Counsels fee Rs. 150/-.


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