Waves Electronics (P) LTD. vs. The Assistant Commissioner (Assmt)

Facts

The petitioner, Waves Electronics (P) Ltd., along with its Managing Director, filed a writ petition challenging a notice (Exhibit P9) and an assessment order (Exhibit P11) issued by the Assistant Commissioner (Assessment), SGST Department, for the assessment year 2011-12. The petitioner contended that the notice dated March 15, 2019, and the assessment order dated March 30, 2019, were issued beyond the period of limitation prescribed under Section 25(1) of the Kerala Value Added Tax (KVAT) Act, 2003. The petitioner sought to quash these notices and orders and to declare that they are not liable for sales tax on goods manufactured at the Cochin Special Economic Zone and sold to permissible DTA (Domestic Tariff Area) customers for the year 2011-12, citing a policy (Exhibit P5).

Held

The Court allowed the first prayer, quashing the notice (Exhibit P9) and the order (Exhibit P11) on the grounds of limitation. The Court followed its decision in W.A. No. 48/2019, which held in favour of the dealer regarding the period of limitation under Section 25(1) of the KVAT Act. Consequently, the assessment proceedings for the year 2011-12 were set aside. However, the Court dismissed the second prayer, which sought a declaration that the petitioner is not liable for sales tax on goods manufactured at the Cochin Special Economic Zone and sold to permissible DTA customers. This decision was based on the Court's finding in W.A. No. 1476/2019, where the issue was decided in favour of the Department. The ratio decidendi for the first issue is that reassessment proceedings initiated beyond the statutory limitation period are invalid. The ratio for the second issue is that sales tax liability for goods manufactured in SEZs and sold to DTA customers is to be determined based on existing legal pronouncements, which in this case favoured the Department.

Key Issues

1. Whether the notice dated March 15, 2019, and the assessment order dated March 30, 2019, for the assessment year 2011-12 are barred by limitation under Section 25(1) of the KVAT Act, 2003? 2. Whether the petitioner is liable to pay sales tax under the KVAT Act, 2003, with respect to the sale of goods manufactured by it at the Cochin Special Economic Zone to permissible DTA area/customers for the year 2011-12, in view of Exhibit P5 Policy? Contentions of the Petitioner: The petitioner argued that the reassessment proceedings initiated vide notice dated March 15, 2019, and culminating in the order dated March 30, 2019, were beyond the period of limitation stipulated in Section 25(1) of the KVAT Act. They relied on a decision of this Court in W.A. No. 48/2019 concerning the period of limitation under Section 25(1) of the KVAT Act. Contentions of the Revenue: The Revenue did not explicitly record arguments on the limitation issue. However, regarding the second prayer, the Court noted that the issue was considered in W.A. No. 1476/2019, and the decision was in favour of the Department.