Tax Assessment - Where no time limit is prescribed for finalisation, the authority must exercise its jurisdiction within a reasonable period.
Kerala High Court Directs Petitioner to Appeal Assessment Delay Under KVAT Act. Court Grants Liberty for Appeal on Delayed Assessment Proceedings Amidst GST Transition
In a significant ruling, the Kerala High Court, presided over by Justice Viju Abraham, addressed the issue of delay in assessment proceedings under the Kerala Value Added Tax (KVAT) Act, 2003. The case involved M/s. Karukunnathu Exports, a partnership firm engaged in the manufacture and sale of plywood, which challenged an order of assessment from the Commercial Tax Officer, Second Circle, Perumbavoor.
The crux of the petitioner's argument was the unreasonable delay in finalizing the assessment, despite no specific time limit being prescribed under Section 25(1) of the KVAT Act. The petitioner contended that such delays contravene the settled position of law, advocating for assessments to be completed within a reasonable timeframe. This contention was supported by references to several Supreme Court judgments, including State of Punjab & Others v. Bhatinda District Co-operative Milk Producers Union Ltd. and Sunder System Pvt. Ltd v. Union of India, which emphasize the necessity for statutory authorities to act within a reasonable period even when no explicit limitation period is prescribed.
During the proceedings, it was noted that although the petitioner was issued a notice of personal hearing, the concerns regarding the delay were not raised before the authority. Considering the availability of an alternate remedy in the form of an appeal against the order of assessment, the Court directed the petitioner to approach the appellate authority.
The Court granted the petitioner liberty to file an appeal within two months, ensuring that the appeal would be treated as timely if filed within the stipulated period. The appellate authority was instructed to consider all the petitioner's contentions, including the delay issue, and deliver a decision within four months. Meanwhile, the interim relief granted to the petitioner will continue until the appellate authority reaches a decision.
This judgment highlights the Court's adherence to procedural fairness and underscores the importance of timely resolution in tax assessment matters, especially amidst transitions like the introduction of the Goods and Services Tax (GST). The ruling also reaffirms the judicial emphasis on effective alternate remedies before invoking writ jurisdiction.
Bottom Line:
Assessment proceedings under Section 25(1) of the KVAT Act, 2003 - Though no time limit is prescribed for finalisation, the statutory authority must exercise its jurisdiction within a reasonable period. Delay in finalising the assessment could be a valid ground for challenging the proceedings.
Statutory provision(s): Section 25(1) of the Kerala Value Added Tax Act, 2003, Section 95 of the KVAT Act, 2003.
