STATE OF ANDHRA PRADESH Vs. DHANALAKSHMI GENERAL STORES

JUDGEMENT

(1.) THE Tribunal was right in our opinion, in holding that the order of penalty in this case is barred by limitation. The relevant dates are the following : The original assessment order was served upon the assessee on 20th July, 1978. Thereafter the assessment was reopened under sub-section (4) of section 14 and order of reassessment was made on 31st July, 1979. Simultaneously penalty proceedings were also initiated, but for one or the other reason, which is not Clear from the record, the order of penalty was made only on 15th February, 1983. It was served on the assessee on 3rd March, 1983. It needs no reiteration that this penalty was levied under sub-section (4) itself. Sub-section (4-A) prescribes the period of limitation for any action under sub-section (4 ). It says : "any assessment or levy under sub-section (4) shall be made within a period of four years from the date on which any order of assessment or levy was served on the dealer. "

(2.) SUB-SECTION (4) provides for reopening of the assessment in certain situations. It says further : "in addition to the tax assessed or fee levied under this sub-section, the assessing authority may also direct the dealer to pay a penalty as specified in sub-section (8 ). "

(3.) IT is thus clear that penalty proceedings are part of, or at any rate ancillary to the reopening proceedings under sub-section (4 ). If so, the period of limitation prescribed by sub-section (4-A) applies equally to an order levying penalty as it applies to reassessment order. Indeed, this is the decision of this Court in State of Andhra Pradesh v. Sri Ganesh Bhavan Hotel [1983] 53 STC 169 which, in turn, refers to, and follows the decision in M. Sayanna and Garikapati Narasimhulu v. State, a decision dated 18th August, 1969 in W. P. No. 338 of 1965 [reported as an Appendix in [1974] 33 STC 144 (AP)]. The said decision directly dealt with sub-section (4) and held that penalty proceedings are not independent proceedings, and though the proceedings for penalty are distinct from reassessment proceedings they cannot be treated as wholly independent assessment proceedings. It was observed that levy of penalty is ancillary to the power to levy the tax. In view of the aforesaid decisions, we agree with the Tribunal that the order of penalty is barred by sub-section (4-A) of section 14.