Classic Spices Pvt. Ltd. vs State of Kerala

C.N. Ramachandran Nair, J.—The revision petitions are filed by the assessee challenging the order of the Sales Tax Appellate Tribunal, where-under the Tribunal confirmed the validity of suo motu revisional orders issued by the Deputy Commissioner of Commercial Taxes u/s 35 of the Kerala General Sales Tax Act, 1963 directing revision of original assessments completed by the assessing officer for the assessment years 1997-98 and 1998-99. The petitioner was engaged in powdering and selling of red chilly, coriander, turmeric, etc., which does not involve any manufacturing activity. However, in the original assessment for the assessment years 1997-98 and 1998-99 the petitioner claimed exemption which was granted by the assessing officer. Both the assessments were completed on June 27, 2001. However, the assessing officer later noticed that exemption was wrongly granted and therefore he revised the assessments u/s 19(1) of the Act withdrawing the sales tax exemption wrongly granted and bringing to tax escaped turnover. The petitioner filed writ petition challenging the validity of these revised assessments on the ground that the revised orders passed u/s 19(1) were beyond the period of limitation provided under the statute.

Subsequent to the revision of original assessments by the assessing officer u/s 19(1), the Deputy Commissioner of Commercial Taxes initiated suo motu revisional proceedings u/s 35 of the KGST Act because he noticed that the revised assessments completed u/s 19(1), were not tenable as those were issued beyond the period of limitation. Even though the assessee raised objection stating that original assessments do not survive after revised orders are issued by the assessing officer u/s 19(1), the Deputy Commissioner overruled the objections and issued orders u/s 35 setting aside the original assessments with direction to the assessing officer to revise the assessments against which the assessee filed appeals before the Tribunal and Tribunal dismissed the appeals.

The question raised by the assessee is whether the Deputy Commissioner had jurisdiction u/s 35(1) of the KGST Act to revise the original assessments after the assessing officer issued revised orders under, Section 19(1) of the KGST Act. The counsel relied on a Division Bench judgment of this Court in the case of Cardamom Marketing Corporation v. State of Kerala in ST. (Rev) No. 422 of 2004 dated September 24, 2008 : [2008] 26 VST 519 (Ker) and contended that the Deputy Commissioner has no jurisdiction to revise the original assessment which does not survive after revised orders are issued by the assessing officer. We have gone through the judgment of this Court and we notice that in that case the Deputy Commissioner had not gone into the correctness or otherwise of the revised orders issued by the assessing officer u/s 19(1) of the KGST Act which was pending in appeal, at the time the Deputy Commissioner initiated and completed proceedings u/s 35(1) of the KGST Act. In this case also the counsel for the petitioner pointed out that the facts are similar inasmuch as, instead of filing appeal against the revised assessments u/s 19(1) of the KGST Act, the petitioner had challenged the correctness of the revised assessment through writ petition which is still pending in this court. In the above reported case decided by this Court it is seen that, the revised assessment was in fact cancelled by the time the Deputy Commissioner initiated proceedings u/s 35. When a revised assessment completed u/s 19(1) is cancelled in appeal, then the only surviving assessment is the original assessment and we do not know on what basis this Court held that the Deputy Commissioner has no authority to revise the only surviving assessment order in exercise of his statutory powers u/s 35 of the KGST Act. However, in this case we find that in the Deputy Commissioner''s order it is specifically declared that the revised order u/s 19 is invalid. In fact, in the order he clearly holds as follows:

The revised assessment u/s 19 has been completed by the Additional Sales Tax Officer, Ottapalam on August 31, 2004 after due date. Therefore, the revised assessment completed u/s 19 is not valid under law. Hence, ''not sustainable''.

The effect of the above finding of the Deputy Commissioner is that while considering the revision of assessment for the relevant year, the Deputy Commissioner declared the revised order issued by the officer u/s 19(1) as invalid and thereafter he proceeds to consider the correctness of the only surviving assessment order which is the original assessment. We are of the view that, he is fully competent to revise the original assessment which was the only surviving order after the declaration of the invalidity of the revised order of the Deputy Commissioner. It is the settled position that the powers conferred on the assessing officer u/s 19(1) and powers of the Deputy Commissioner u/s 35 are for the very same purpose of preventing escapement of assessment of any turnover or otherwise to prevent evasion of tax. It would be wrong to hold that the higher authority forfeited his right to revise an assessment order in exercise of supervisory jurisdiction vested in him merely because the original authority made an ineffective attempt to correct the mistake. There is no dispute that the Deputy Commissioner has authority u/s 35 to revise even a revised assessment issued u/s 19(1) and so much so, while considering evasion of tax or escapement of assessment of turnover, it will be open to the Deputy Commissioner to consider the validity of the revised order which was issued by the assessing officer for the very same year and if he finds that such order is unsustainable on account of limitation or for other reason, he is free to declare such order as illegal and invalid and then proceed to consider the correctness of the original assessment which is the only surviving order. However, by this time if the limitation is over for revising the original assessment then of course he forfeits his authority to revise the original assessment order. However, in this case there is no dispute that the Deputy Commissioner''s order revising the original assessment after declaring the revised assessment as invalid was passed within time. Therefore, we hold that the Deputy Commissioner is well within his powers to revise the assessment and Tribunal rightly upheld the validity of the orders. It is also to be mentioned that the writ petition filed by the petitioner has become infructuous because after the declaration of the revised assessment issued u/s 19(1) as invalid by the Deputy Commissioner, the order impugned in the writ petition no longer survives. We therefore dismiss the revision petitions with this observation.