T.OOMMEN PANICKER vs. THE COMMERCIAL TAX OFFICER,

Issue pertains to correctness of the assessment made against the appellant under the Kerala General Sales Tax Act (for short the 'KGST Act'). Exhibit P13 steps initiated for recovery of the tax assessed with respect to the year 2000-2001 was under challenge in the writ petition. Contention was that, Ext.P10 order of assessment with respect to the year concened was barred by limitation, as per the proviso to Section 17 (6) of the KGST Act, as amended by Finance Act, 2005 (Act 10 of 2005). Exhibit P12 is a consolidated demand notice issued seeking realization of the arrears of tax pertaining to the years 1999-2000 and 2000-2001. With respect to the year 1999-2000, the appellant filed W.P (C) 19542/2005, which was disposed of by this court through Ext.P3 judgment by granting stay against the coercive steps of recovery, till the disposal of a statutory appeal which was pending against the said assessment. According to the appellant, the fate of the said appeal was not communicated to him. When coercive steps for sale of immovable property was issued, the appellant challenged the same in another writ petition filed as W.P (C) 6016/2009. Another Sale Notice issued as per Ext.P6 was also challenged in yet anther writ petition filed as W.P (C) 37300/2010. W.P (C) 6016/2009 was dismissed as infructuous permitting the appellant to pursue his contentions in W.P (C) No.37300/2010, based on the submission made by the appellant that the demand notice which was under challenge in W.P (C) No.37300/2010 was also inclusive of the assessments with respect to the years 1999-2000 and 2000-2001. Subsequently W.P (C) No.37300/2010 was allowed to the extent of setting aside the demand notice, on the basis that the assessment with respect to the years 1994-1995 and 1997-1998 was set aside and remanded for fresh finalization after affording to an opportunity to the petitioner. But this court reserved liberty to the revenue authorities to initiate further proceedings, after completing assessment with respect to the sales tax dues.

The assessment completed with respect to the year 2000-2001 is Ext.P10, which is dated 28-03-2006. It is conceded that the appellant had filed statutory appeal against Ext.P10 before the Deputy Commissioner (Appeals). The Appellate Authority had confirmed the assessment, subject to a direction issued to the Assessing Authority to re-compute the liability, after affording an opportunity to the appellant to object computation of the interest. It is also conceded that, pursuant to the appellate order the Assessing Officer had issued fresh demand after re- computing the interest portion. The appellant has to concede that, in the judgment in W.P (C) No.37300/2010 the assessment finalized as mentioned above with respect to the year 2000-2001 was not set aside. With respect to the year 1999-2000, the respondents have produced evidence regarding communication of the order passed by the Appellate Authority. With respect to the assessment year 2000-2001, as observed above, the appellant had failed in the statutory appeal. Consequential demand after disposal of the appeal was made as early as in the year 2009. It is evident from Ext.P13 that the liability with respect to years 1999-2000 and 2000-2001 were recommended for realization through revenue recovery steps and the appellant had remitted part of the tax amount assessed with respect to the year 1999-2000. Ext.P13 demand notice was issued on 03.06.2017 for collecting the balance amount due, pursuant to the above said orders. The present writ petition was filed challenging Ext.P13. 4. Even though various contentions are raised in the writ petition as well as in the memorandum of appeal, the only ground pressed before the learned Single Judge was that, the assessment with respect to the year 2000 - 2001 was completed beyond the period of limitation stipulated under Section 17(6) of the KGST Act. With respect to the year 1999 - 2000, challenge was on the basis that exempted commodities were also included as taxable items. The contentions raised based on Exts.P7 and P8 judgments were repealed on the finding that the assessments with respect to the period 1999 - 2000 and 2000 -2001 were not set aside and remanded for fresh finalization. The claim for exemption made for the year 1999 - 2000 with respect to the cost of commodity of rubble was also not accepted by the learned Single Judge by finding that the appellant had failed to produce the requisite documents for claiming such exemption and on the basis of the further finding that the appellate order with respect to the said year had attained finality.

The only question seriously considered by the learned Single Judge pertains to the contention that, the assessment with respect to the year 2000 - 2001 remained barred by virtue of the provisions in Section 17(6) of the KGST Act. Section 17(6), as it stood originally, insists that the assessment should be completed within a period of 4 years from the date of expiry of the year to which the assessment relates. It is pointed out that, the order of assessment with respect to the year 2000 - 2001 is dated 28.03.2006 and therefore it is completed beyond the time limit of four years, which ended on 31.03.2005. Further contention raised is that, even though the order of assessment is dated 28.03.2006 it was served on the appellant only on 23.09.2006 and even as per the records of the Department the same was despatched by the Assessing Officer only on 04.09.2006, which date also is beyond the period of limitation prescribed. Hence it is contended that the order of assessment is a nullity in the eye of law and the revenue recovery proceedings initiated is therefore illegal.

Regarding the question as to whether the order of assessment can be challenged at the time of recovery, despite its confirmation in the statutory appeal, the appellant placed reliance on the decisions of the Hon'ble Supreme Court in Swaran Kumar & another v. Madan Lal Aggarwal[(2003) 4 SCC 147] and Hasham Abbas Sayyad v. Usman Abbas Sayyad and others[(2007) 2 SCC 335]. It was contended before the learned Single Judge that, since it is an order passed by a person lacking jurisdiction, the order would be a nullity and therefore the principles of res judicata or estoppel or acquiescence will not apply.

The learned Judge found that, the assessment in question was completed on 28.03.2006 or even as contended by the petitioner on 04.09.2006. Referring to the proviso added to Section 17(6) through Finance Act, 2005, it was found that the statute provide liberty to the assessing authority to complete the assessment with respect to the year 2000-2001 on or before 31.03.2006. Since the assessment was completed on 28.03.2006 it was found to be within the time limit provided by virtue of the Finance Act, 2005, which incorporated the fifth proviso to Section 17(6). Hence the contention that Ext.P10 order of assessment with respect to the year 2000-2001 was issued beyond the time limit, was rejected. It was further found in the impugned judgment that the appellant cannot be permitted to raise the question of limitation for the first time in the writ petition without raising such a question before the assessing authority. Hence the writ petition was dismissed.

With respect to the question of maintainability of the writ petition, Sri. S.A. Razzak learned counsel appearing for the appellant raised a contention that the order of assessment will become a nullity in the eye of law and therefore it has to be construed as an order passed without jurisdiction. Hence, it is contended that the assessment can be challenged even at the stage of recovery, despite the fact that it is confirmed in statutory appeal. He placed reliance on the decision of the Hon'ble Supreme Court in Sushil Kumar Mehta v. Gobind Ram Bohra(dead) through his Lrs.[(1990) 1 SCC 193]. It is held therein that; “A decree passed by a court without jurisdiction over the subject matter or on other grounds which goes to the root of its exercise or jurisdiction, lacks inherent jurisdiction. It is a coram non judice. A decree passed by such a court is a nullity and is non est. Its validity can be set up whenever it is sought to be enforced or is acted upon as a foundation for a right, even at the stage of execution or in collateral proceedings.” In Swaran Kumar(cited supra) it was held that if a court inherently lacks jurisdiction to entertain a suit passes a decree, the decree thereunder is a nullity and does not bind the appellant. Therefore it does not operate as res judicata. Placing reliance on the doctrine as mentioned above, it is contended that despite confirmation of the assessment by the statutory appellate authority, its validity can be questioned at the time of recovery through a writ petition filed under Article 226 of the Constitution of India. But the question remains as to whether the contention of limitation, even if found as correct, will nullify the assessment and whether it will render the assessment as a non-est. In the decision of the Hon'ble Supreme Court in Ittyavira Mathai v. Varkey Varkey & another (AIR 1964 SC 907) it is held that, even assuming that a suit is barred by time, it is difficult to appreciate the contention that the decree can be treated as a nullity and can be ignored in subsequent litigation. Even if the suit is barred by time and yet the court decreed it, the court would be committing an illegality and therefore the aggrieved party would be entitled to have the decree set aside by preferring an appeal against it. But it is well settled that even though a court has decided a case wrongly, it would not be doing something which it had no jurisdiction to do. On the other hand, it had jurisdiction over the subject matter and it had the jurisdiction over the party and therefore, merely because it made an error in deciding a vital issue in the suit, it cannot be said that it has acted beyond its jurisdiction. It is held that the courts have jurisdiction to decide right or to decide wrong and even though they decide wrong, the decrees rendered by them cannot be treated as nullity.

In view of the principle discussed as above, we do not think that based on the contention of limitation raised, the appellant is entitled to challenge the order of assessment which is confirmed in appeal, at the stage of recovery in a writ petition filed as mentioned above. Since the assessment order has attained finality as confirmed by the appellate authority, we are of the opinion that the challenge now raised against the assessment by raising a plea of limitation cannot be held as maintainable. Hence we are inclined to confirm the findings of the learned Judge in that respect.

Dehors the above finding, we are persuaded to consider the contentions raised on the question of limitation with respect to the assessment year 2000 - 2001. Provision contained in Section 17(6) of the KGST Act stipulating a period of five years for completing the assessment, would end only on 31.03.2006. The order of assessment is dated 28.03.2006. By virtue of the Finance Act, 2005 which came into force on 01.04.2005 amendment was brought in to Section 17(6) of the KGST Act, substituting the period of five years as four years. But a proviso is added by virtue of the amendment brought in through the Finance Act, 2005 making it clear that the assessment relating to the year 2000 - 2001 shall be completed on or before 31st March, 2006. Therefore as on the date on which the order was passed, i.e. on 28.03.2006, the assessment was within time, going by the proviso added to Section 17(6) through Finance Act, 2005. Contention raised by the appellant is that, an order of assessment comes into force only when it is communicated. The making or signing of the order is not determinative of its effect. Therefore the order would come into effect only on 04.09.2006, the date on which it was admittedly despatched from the office of the Assessing Authority. In support of the above contention, learned counsel had relied on a decision of the Division Bench of this court in Agricultural Income-Tax Officer & another v. K. Joseph N. Jacob[(1995) 3 KTR 224(Ker) in which the decision rendered by the learned Judge of this court in K. Joseph Jacob v. Agricultural Income- Tax Officer & another [(1991) 190 ITR 464(Ker) was upheld.

While appreciating the above contention it is pertinent to note that Section 17(6) had undergone further amendment through Kerala Finance Act, 2006. The fourth and fifth provisos to sub-section (6) was substituted stating that, “Provided also that the assessment relating to the years upto and including the year 2001-2002 pending as on 31st March, 2006 shall be completed on or before 31st day of March, 2007”.

The substituted proviso came into force with effect from 1st day of July, 2006(01.07.2006). Hence the question to be decided is as to whether the assessment with respect to the year 2000-2001 was pending as on 31st March, 2006. According to the learned counsel for the appellant the assessment cannot be presumed as pending after 28.03.2006. This is because, according to him, the making of the assessment stands completed as on 28.03.2006. In other words, the submission is that the power vested on the Assessing Authority was exercised as on 28.03.2006. Learned Counsel for the appellant contended that, the authority had already exercised its power of assessment as on 28.03.2006 and therefore the assessment cannot be treated as pending, as on 31.3.2006. In support of the above contention he placed reliance on a decision of the Hon’ble Supreme Court in S.S. Gadgil v. Lal and Co., (AIR 1965 SC 171). It is held therein that, if the right to commence proceedings for assessment remains ended by virtue of the limitation prescribed, the amending provision will not assist him to commence a proceedings, even though as on the date when the notice was issued, it is within the period provided by that amending Act. The above dictum, according to the learned counsel for the appellant, stands reaffirmed in a later decision of the Hon’ble Supreme Court in K.M. Sharma v. Income Tax Officer (2002) 4 SCC 339. It is held therein that proceedings which have attained finality under the existing law due to bar of limitation cannot be held to be open for revival, unless the amended provision is clearly given retrospective operation so as to allow upsetting of the proceedings which had already been concluded and attained finality.

While considering the above contention, we take note of the fact that, it is undisputed that the assessing authority had finalized the assessment on 28.03.2006. It is also not in dispute that the order of assessment was dispatched for service to the assessee only on 4.09.2006. Question to be considered is as to whether the assessment stood completed as on 31.03.2006. Contention of the appellant is that the assessment will not become effective as against the assessee unless it is communicated. As already observed, the petitioner placed reliance in support of the above said preposition on a Division Bench decision of this Court in K.Joseph Jacob's case (cited Supra). If the contention of the appellant is that the assessment stood completed and was not pending after 28.03.2006, it is to be considered that the assessment was completed within the time limit as stipulated in the 5th proviso added to Section 17(6) through the Finance Act 2005, which enables the assessing authority to complete the assessment relating to the year 2000- 2001 on or before 31.03.2006. On the contrary, if the case of the appellant is that it has to be presumed that the assessment was completed only on 4.09.2006, which is the date of dispatch of the order, then also the assessment is well within the time limit stipulated under the substituted proviso brought into Section 17(6) through the Finance Act 2006, which permits completion of the assessment upto and including the year 2001- 2002 on or before 31.03.2007. The assessee cannot be permitted to blow hot and cold with respect to one and same situation, in a manner advantages to him, for interpreting the proviso added to Section 17(6) through the amendments brought in under the Finance Acts of 2005 and 2006. A clear distinction has to be drawn between the assessments those stands completed and between assessments which are pending as on the relevant dates mentioned in those amendments. Going by the principle in S.S.Gadgil's case (Supra) which is reiterated in K.M.Sharma’s case (Supra), the prohibition with respect to reassessment is only against the assessments which are already completed. If the appellant takes the stand that the assessment of the relevant year was completed either on 28.03.2006 or on 4.09.2006, it will squarely fall within the period of limitation prescribed under the provisos introduced through the Finance Act 2005 or through the Finance Act 2006. At any rate, there cannot be an intermediary stage in between completion of the assessment and pendency of the assessment.

Under the above mentioned circumstances, we do not find any reason to interfere with the findings arrived by the learned Single Judge, because it is to be held that the assessment finalized with respect to the year 2000-2001 is within time. We take note of the fact that, Ext.P13 is a composite notice with respect to the year 1999-2000 also. There is no challenge raised with respect to the said assessment contending question of limitation. The only contention raised against the demand for the said year is that the amounts already paid was not given credit. The appellant had raised a contention that, the appeal referred to in Ext.P3 judgment has not been disposed of and no order in that respect has been communicated to him. In a statement filed on behalf of the respondent it is specifically mentioned that the appellate authority had disposed of the appeal vide order No.808/2004 dated 20.09.2007. The appeal with respect to the year 1999- 2000 stands dismissed. There is no merit in the contention that the revenue recovery steps cannot be pursued with respect to the said year. However, if due credit has not been given to the interim payments made, it will be left open to the appellant to point out the same before the recovery authorities and to seek set off. With the observation contained in the previous paragraph, the writ appeal is hereby dismissed as devoid of any merit. C.K. ABDUL REHIM, JUDGE. R. NARAYANA PISHARADI, JUDGE AMG/ul/mpm/- //// P.S. to Judge.