The Kerala High Court (Ernakulam Bench) has clarified that although Section 17D of the Kerala General Sales Tax Act, 1963, does not specify a period of limitation, the assessments must still be initiated and finalized within a “reasonable period” as judicially recognized from comparable provisions like Section 17(6) of the 1963 Act. Since, in the present case, the initiation was beyond five years from the relevant assessment years, the orders were barred by limitation and could not be sustained.
The Division Bench comprising Justice A. Muhamed Mustaque and Justice Harisankar V. Menon observed that Section 17D contains a non obstante clause but does not specify a limitation period for finalization of assessments by the Fast Track Team. However, even though no fixed limitation applies to Section 17D assessments, the lack of a specific limit does not confer power to delay finalization indefinitely.
The Bench asserted that in the absence of a statutory limitation, action must be taken within a reasonable period, interpreted by courts in similar statutes to mean not more than five years as indicated in Section 17(6). Hence, excessive delay, as in the present case, violates both the statutory scheme and principles underpinning fast-track assessment. The Bench therefore affirmed the single judge’s order to quash the assessments.
Briefly, in this case, the assessment orders were issued by a Fast Track Team following notices proposing to finalize assessments. This was objected to by the respondent on the grounds of being barred by limitation according to Section 17(6) of the Kerala General Sales Tax Act, 1963, which prescribed specific timeframes for completion. The Revenue authorities, however, argued that Section 17D of the 1963 Act, due to its non obstante clause, did not require adherence to the limitation period set out in Section 17(6) of the 1963 Act.
Cases Relied On:
Parisons Foods (P) Ltd. v. State of Kerala [2017 (3) KLT 1]
State of Kerala v. M/s.Periyar Plywoods [2020 KHC OnLine 781]
State of Punjab and Others v. Bhatinda District Cooperative Milk Producers Union Ltd. [007 INSC 1042]
Union of India v. City Bank [CA 9337 of 2010]
Appearances:
Senior Advocate V.K. Shamsudheen, for the Appellant/ Revenue
Senior Advocates V.V. Asokan and K.I. Mayankutty Mather, along with Advocates S. Parvathi and Abraham K.J., for the Respondents/ Taxpayer
