SEEMAS WEDDING COLLECTIONS Vs. INTELLIGENCE OFFICER

JUDGEMENT

(1.) The petitioner, who was a registered dealer under the Kerala Value Added Tax Act (hereinafter referred to as "the KVAT Act") had filed returns for the assessment years 2009-2010 to 2011 to 2012 under the said Act, and had duly discharged his tax liability in accordance with the said returns. The said returns were accepted and, at any rate, there were no proceedings initiated against him under Section 25(1) or Section 42 of the KVAT Act, within the statutory period of 5/6 years prescribed for the same under the Act as it then stood. It would appear, however, that based on an order passed by the Income Tax Settlement Commission, Chennai, for the assessment years 2010-2011 to 2012-2013 under the Income Tax Act , for which the relevant financial years were 2009-2010 to 2011-2012, the respondents initiated penal proceedings under Section 67(1) of the KVAT Act, proposing to impose a penalty on the petitioner for the assessment years 2009-2010 to 2011-2012. Although the petitioner preferred detailed replies to the show cause notices issued to him in that regard, the 1st respondent proceeded to confirm the demand of penalty on the petitioner for the assessment years in question under Section 67 (1) (b) (d) and (j) of the Act. In the Writ Petition, the petitioner impugns the said penalty orders, inter alia, on the contention that the penalty proceedings were initiated against him beyond the period of 5/6 years that was stipulated for reopening assessment under the KVAT Act. It is his contention that, although the provisions of Section 67 of the KVAT Act do not contain any express provision requiring penal proceedings to be initiated within any particular time frame, it is well settled that in the absence of a period of limitation under the statute, a reasonable period of limitation has to govern the initiation of proceedings under the Act. He places reliance on the judgment of this Court in MCP Enterprises (M/S.) & Others V. State of Kerala & Others [2020(1) KHC 127] and Philips India V. Assistant Commissioner [(2016) 96 VST 229].

(2.) The learned Government Pleader Smt.Dr.Thushara James, would oppose the prayer of the petitioner for quashing the impugned order on the contention that assessment proceedings and penal proceedings are independent proceedings under the KVAT Act and, inasmuch as Section 67 of the KVAT Act does not prescribe any particular period of limitation for initiation of penal proceedings, even if a reasonable period of limitation is read in, the commencement of the said period of limitation must run from the date of arising of the cause of action under S. 67 (1) (a) to (l) of the Act. The contention, in other words, is that although it could be argued that a reasonable period of limitation has to inform the initiation of proceedings under Section 67 of the Act, the said period of limitation would commence only from the respective dates of detection of the offences enumerated in Section 67 (1) of the Act. In the instant case, it is pointed out that the information from the Income Tax Settlement Commissioner, as regards the untrue or incorrect nature of the returns filed by the petitioner for the assessment years in question, came to be known to the respondents only on 28.02.2017, and hence, the notices issued to the petitioner for the assessment years from 2009-2010 to 2011-2012 in the instant case cannot be said to be beyond the reasonable period of limitation under Section 67 of the Act.

(3.) I have heard Sri.K.N.Sreekumaran, the learned counsel for the petitioner and Smt.Dr.Thushara James, the learned Government Pleader for the respondents.