Full Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 16TH DAY OF NOVEMBER 2021 / 25TH KARTHIKA, 1943 ST.REV. NO. 156 OF 2009 AGAINST THE ORDER IN TA 234/2008 OF STAT ADDITIONAL BENCH, KOTTAYAM
PETITIONER/S: STATE OF KERALA REP. BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM BY SR. GOVERNMENT PLEADER V K SHAMSUDHEEN RESPONDENT/S: THE MALAYALA MANORAMA COMPANY LTD, KOTTAYAM BY ADVS. SRI.P.BENNY THOMAS SRI.KURYAN THOMAS SRI.K.JOHN MATHAI SRI.E.K.NANDAKUMAR OTHER PRESENT: SR GP V.K. SHAMSUDHEEN FOR THE PETITIONER., ADV KURYAN THOMAS FOR THE THE RESPONDENT THIS SALES TAX REVISION HAVING COME UP FOR HEARING ON 16.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -2-
ORDER
S.V.Bhatti, J.
Heard learned Senior Government Pleader Mr Shamsudheen V K for petitioner and Mr Kuryan Thomas, learned counsel for the respondent.
2. The revision under Section 41 of Kerala General Sales
Tax Act, 1963 (for short ‘the Act’) is at the instance of the Revenue. The Revenue being aggrieved by the order dated 30.01.2009 in T.A.No.234/2008 of Kerala Sales Tax Appellate Tribunal, Kottayam (for short ‘the Tribunal’) has filed the instant Revision before this Court. The circumstances relevant for disposing of the revision are stated thus: 2.1 The Malayala Manorama Company Limited/a dealer -3- registered under the Act is the respondent. In the subject revision, the Court is examining the disputes concerning the return filed by the assessee in Form No.9 for the Assessment Year 2000-01. The Assessing Officer/Assistant Commissioner (KGST), Kottayam, through the order dated 05.01.2007 in Annexure-A, completed the assessment of the assessee and determined the balance tax payable as Rs.59 lakhs under the Act. The dealer filed appeal before the Deputy Commissioner (Appeals), Kottayam and the Appellate Authority, through
Order dated 25.06.2008, modified the assessment order in
Annexure-A and the operative portion of the modified order
reads thus: “There is no other point for consideration in this appeal. In the result, the appeal is modified to the limited extent with regard to levy of interest and levy of tax on coconut sales only and dismissed in all other respects as found supra. Ordered accordingly. Result:- 2000-01 - Modified” -4- 2.2 The dealer filed second appeal before the Tribunal in
Tribunal Appeal No.234/2008. The Tribunal through the order
impugned in the Revision held that the assessment order dated 05.01.2007 is time-barred for the year 2000-01. The consideration of the Tribunal is contested with force by the Senior Government Pleader and we find it suitable and convenient to excerpt the operative portion of the order at this stage of our consideration.:
“The assessment year in this case is 2000-2001. Since the proviso states that assessment relating to the years upto and including the year 2001-2002 pending as on 31 March, 2006 shall be completed on or before the 31" day of March, 2007, if the proviso is strictly applied it will apply for the assessment year 2000-2001 also. If the proviso is strictly applied for the assessment year 2000-2001 also it has the effect of extending the period of limitation from five years to six years. As per Finance Act of 2005 the period of limitation under Section 17(6) of the KGST Act was fixed as five years. Since the period of limitation under Section 17(6) of the KGST Act was five years, the proviso subsequently inserted as per Finance Act of 2006 -5-
cannot extend the period of limitation prescribed by Section 17
(6) of the Act from five years to six years. The 5th proviso
added by Finance Act of 2005 to Section 17(6) siates that the assessment relating to the year 2000 2001 shall be completed on or before 31st day of March 2006. It is clear from this proviso that the assessment for the year 2000-2001 became barred after 31..3..2006. This proviso added by Finance Act of 2005 was in tune with the amendment made to Section 17 (6) extending the period of limitation from four years to five years. But the proviso added by the Finance Act of 2006 to Section 17(6) is not in consonance with Section 17(6) of the Act. A proviso cannot control the main Section of an Act. It is therefore clear that after 31..3..2006 assessments under the KGST Act for the year 2000-2001 became barred. The question of limitation was argued before the first appellate authority by the Authorised Representative. Regarding limitation the first appellate authority held as follows: "It is for the first time at the stage of appeal that the assessee is contending that the assessment is barred by limitation. Such an argument was never made before the assessing authority even though it is presently argued that the pre-assessment notice was served after the period of limitation. On the contrary, the appellant has fully participated in the assessment proceedings. So after long participation and acquiescence in the case, the appellant is precluded from contending that the -6-
proceedings were without jurisdiction for limitation. The principle is that a party shall not be allowed to blow hot and cold simultaneously. The law on the point is guided by the decision of the Hon'ble Apex Court in Prasu Roy Vs. Calcutta Metropolitan Development authority reported in (1987) (4) SCC
217. The contention of limitation of time does not therefore
hold good." The above reasoning of the first appellate authority does not hold good. A question of law or a question of limitation can be raised at any stage of a proceeding before any judicial or quasi judicial authority. There cannot be estoppel against the provisions of a statule and hence participation in the assessment proceedings by the appellant is not a bar in considering the question whether the assessment was barred by limitation or not. The question of acquiescence or estoppel applies only in civil cases and that too concerning questions of fact. In the instant case limitation is pleaded by the assessee based on a taxing statute. In the case of Commissioner of Income Tax, Madras Vs. MR.P. Firm, Muar reported in (1965) 56 ITR 67 the Hon'ble Supreme Court held as follows: "The doctrine of "approbate and reprobate" is only a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income Tax Act, it cannot be taxed on -7-
the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the Income Tax Officer has no power to impose tax on the said income."
5. The above principle applies in the instant case also. The
assessment order in the present case was passed on 5..1..2007. The assessment for the year 2000-2001 became barred by 31..3..2006 and hence the assessment in this case is illegal. We therefore find that the assessment in this case which is barred by limitation is illegal. Point No.1 is found in favour of the appellant.”
Hence the revision.
3. Mr V K Shamsudheen objects to the approach and
consideration of the Tribunal for holding that the order dated 05.01.2007 in Annexure-A is barred by limitation. The Tribunal committed serious error in law by commenting on the structure and position of the proviso to Sections 17 sub-section (6) of the Act. According to him, the Tribunal being a creature under the Statute does not have jurisdiction much less competence to, in -8- any manner, observe that the proviso is controlling Section 17(6) and the substantive stipulation in the main section cannot be controlled by the proviso. Adverting to the interpretation of proviso as well, he argues that the Supreme Court in the
judgment reported in Union of India v. VKC Footsteps India Pvt.
Ltd1. has considered the scope, ambit and purpose of proviso and how the proviso is understood through interpretative tools. According to the principles laid down in the said judgment, the proviso certainly saves limitation for the subject year of assessment, namely 2000-01. Assailing the observations made by the Tribunal as illegal and impermissible and in support thereof relies on the judgment reported in Alpha Chem v. State of U.P.2, which reads as follows:
“4. We are of the view that there is force in this contention. The High Court was not right in its contemplation that the vires of the impugned provisions could be examined in the revision 1 2021 SCC Online SC 706 2 1991 Supp (1) SCC 518 -9-
proceedings. The jurisdiction of the High Court in revision is under the same limitation insofar as the contention as to constitutionality is concerned as was indicated by this Court in K.S. Venkataraman & Co. (P) Ltd. v. State of Madras (1966) 2 SCR 229, 247-48 : AIR 1966 SC 1089 : 17 STC 418 in the context of the reference jurisdiction of the High Court under the Income Tax Act. It was held: (SCR pp. 247-48) "Up to this stage all the three authorities are the creatures of the Act and they function thereunder. They cannot ignore any sources of income on the ground that the relevant provisions offend the fundamental rights or are bad for want of legislative competence. The Act does not confer any such right on them.... Whether the provisions are good or bad is not their concern .... Can it be said that a question whether a provision of the Act is ultra vires of the legislature arises out of the Tribunal's order? As the Tribunal is a creature of the statute, it can only decide the dispute between the assessee and the Commissioner in terms of the provisions of the Act. The question of ultra vires is foreign to the scope of its jurisdiction. If an assessee raises such a question, the Tribunal can only reject it on the ground that it has no jurisdiction to entertain the said objection or decide on it. As no such question can be raised or can arise on the Tribunal's order, -10-
the High Court cannot possibly give any decision on the question of the ultra vires of a provision ....' (emphasis supplied) Even as the authorities under the Act cannot go into the vires of the very statutes under which they are constituted and draw their power and juris diction therefrom so is the High Court in matters arising before it from proceedings under the Act and examine the constitutionality of the statute and its provisions. The High Court can, of course, deal with the question of constitutionality in judicial review of legislation under Article
226. That is what the appellants sought to do before the court
in the writ petition. The High Court was not justified in requiring the appellants to have recourse to proceedings of revision taken under the 'Act' to have the contention as to constitutionality resolved.”
4. It is further argued by Mr Shamsudheen, particularly
by referring to all parts in the case reported in Alpha Chem, that the Tribunal is a creature under the Kerala General Sales Tax Act. The Tribunal cannot and could not decide the legitimacy, or the context in which the proviso etc., could be inserted by the State Legislature. The primary function of the Tribunal is to -11- appreciate the circumstances and apply the law as it stands. Further, the very interpretation placed on proviso is equally erroneous. The two reasons which weighed with the Tribunal are completely erroneous and illegal. The limitation issue, according to him, is a misconstruction of fact and law. He prays for setting aside the order of the Tribunal as illegal and exceeding the jurisdiction.
5. After taking note of the findings and the ground of
challenge the learned counsel Mr Kuryan Thomas, appearing for dealer, attempted to explain the underlying reasoning of the Tribunal viz. the reasoning shall not be understood as anything being stated by the Tribunal on the vires or legality of the proviso etc., According to him, the Tribunal meant that, by the time the proviso is brought into operation the period of limitation expired and now the proviso regulates what has already elapsed by the operation of the main Section. -12- Alternatively, it is argued that the conclusion recorded by the Tribunal is held as beyond the jurisdiction of the Tribunal, then the dealer has a few points on the merits of the matter, and the
issues could be relegated to the Tribunal for comprehensive
adjudication afresh. 5.1 The findings recorded by the Tribunal tested on the touchstone of what has been held by the Supreme Court in VKC Footsteps India Pvt. Ltd., we are of the view that the reasoning and the consequent findings of the Tribunal are not within the frame or the jurisdiction of Tribunal, a creature of the Act, under the Act. The observation that proviso controls the main
section is not tenable. The proviso, as per the latest judgment
of the Supreme Court in VKC Footsteps India Pvt. Ltd., discharges various functions and is used in different backgrounds. The jurisdiction of the Tribunal is to construe proviso, through applicable tool of interpretation, and decide the dispute stated -13- before it. We are convinced by the alternative argument put forward for the dealer that the matter could be remitted to Tribunal for decision afresh.
6. The reasoning of the Tribunal is unsustainable in law and warrants interference of this Court and accordingly, the
order under revision is set aside. T.A. No. 234/2008 is remitted
to the Tribunal for fresh consideration and disposal in accordance with law, including the period of limitation both in fact and law. The consideration of other merits of the dealer’s case would arise subject to the outcome of the questions of limitation by the Tribunal. S.T.Rev. No.156/2009 is allowed and remanded. Sd/- S.V.BHATTI JUDGE Sd/- BASANT BALAJI JUDGE jjj -14- APPENDIX OF ST.REV. 156/2009 PETITIONER ANNEXURE ANNEXURE-A TRUE COPY OF THE ASSESSMENT ORDER DATED 05.01.2007. ANNEXURE-B THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS) DATED 25.06.2008. ANNEXURE-C A TRUE COPY OF THE ORDER OF THE STAT DATED 30.01.2009