The Kerala High Court has quashed the 14-year-delayed tax notice and ruled against unreasonable delay in fast-track assessments.
The bench of Justice A.K.Jayasankaran Nambiar and Justice Easwaran S. has observed that to condone a delay of 14 years in issuing a notice under Section 17D of the Kerala General Sales Tax Act (KGST Act), on the specious plea that Section 17D does not prescribe for a period of limitation, would tantamount to doing violence to the language used in the statutory provision, which deals with “fast track assessments”, and also run contrary to its inherent scheme.
The petitioner has challenged the proceedings initiated by the appellants herein under Section 17D of the Kerala General Sales Tax Act (KGST Act) in relation to the assessment year 2004-2005. The notice under Section 17D of the KGST Act issued to the writ petitioner was dated 20.11.2019.
In other words, the notice was issued more than 14 years after the end of the assessment year in question.
The Single Judge, who considered the Writ Petition found that although Section 17D of the KGST Act did not prescribe any period of limitation, and the aspect was clarified by a Division Bench of this Court in Betty Sebastian v. Assistant Commissioner, Department of Commercial Taxes and Others [(2018) 59 GSTR 275], the delay in the instant case was of 14 years, which could not be seen as reasonable under any circumstances when viewed against the statutory framework under the KGST Act.
The court noted that if there was an unreasonable delay in issuing the notice, the protection granted for the proceedings under Section 17D would not be available. In our view, to condone a delay of 14 years in issuing a notice under Section 17D, on the specious plea that Section 17D does not prescribe for a period of limitation, would tantamount to doing violence to the language used in the statutory provision, which deals with “fast track assessments”, and also run contrary to its inherent scheme.
The court stated that under the KGST Act, the maximum period for reopening assessments was 4 years, which could probably be stretched to 5 or 6 years on the justification that Section 17D did not specifically provide for a period of limitation. A delay of 14 years for the issuance of notice under Section 17D, more so when the statute in question itself has been repealed in relation to the commodity in question, and the Kerala Value Added Tax Act was introduced, cannot be justified under any circumstances.
Case Details
Case Title: Fast Track Assessment Team Versus K. Sasilal
Case No.: WA NO. 1700 OF 2021
Date: 26/03/2025
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