While holding that a subsequent amendment cannot be used to revive an assessment that was already time-barred, the Kerala High Court (Ernakulam Bench) has quashed the assessment orders passed beyond the period of limitation prescribed under Section 17(3) read with Section 17(6) of the CGST Act. However, since the matter was decided on the question of limitation, the Court did not consider the other issues raised by the petitioners concerning garnishee payments and concessional tax rates.
The Court’s reasoning was centred on the interpretation of the limitation periods prescribed under the CGST Act. Originally, Section 17(3) did not specify a limitation period for initiating or finalizing assessments, and a limitation period was first introduced by the Finance Act, 1993, which added sub-section (6) to Section 17, providing for a four-year period, later amended to five years with effect from March 31, 2002.
Applying this five-year period to the assessment year 2007-08, a Single Judge Bench of Justice Harisankar V. Menon found that the assessment could not be sustained as the pre-assessment notice was issued only on August 25, 2017, well after the limitation period had expired. The Court, therefore, rejected the reliance placed by the Department on the 2009 and 2010 Finance Act amendments, citing that the amendments could not revive time-barred assessments.
The Single Judge found that the contention of the Department that the amendments to Section 17(6) of the Act by the Finance Acts of 2009 and 2010 would save the assessments from being time-barred, had already been considered and rejected by a Division Bench of the same court in a previous case.
Briefly, the petitioners, including Bharat Petroleum Corporation Ltd. and Kochi Refineries Ltd., filed petitions challenging various assessment orders issued against them under the Kerala General Sales Tax Act, 1963, primarily on the grounds that (a) the assessments were barred by limitation; (b) the petitioners were entitled to credit for amounts paid to civil courts against Garnishee orders; and (c) the denial of a concessional rate of tax on sales made to institutions like NTPC.
Appearances:
Senior Advocate K.I. Mayankutty Mather and Advocate R. Jaikrishna, for the Petitioner/ Taxpayer
Advocates Alan Priyadarshi Dev and T.C. Krishna, for the Respondent/ Revenue
