Limited retrospective reopening under KVAT upheld for 2017 expiries, but later amendment after repeal was invalid.

A proviso to Section 25(1) of the Kerala Value Added Tax Act was treated as creating a limited retrospective reopening window for assessments whose limitation expired on 31.03.2017, allowing reopening up to 31.03.2018. The later 2018 amendment, however, was held ineffective because the KVAT Act had already been repealed and the State no longer retained competence to amend the repealed law. A savings clause under the GST regime could preserve accrued rights and pending actions, but it could not revive legislative power to enact a fresh amendment. The impugned notices and orders based on the 2018 amendment were therefore unsustainable.

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Issues: (i) Whether the amended third proviso to Section 25(1) of the Kerala Value Added Tax Act could extend the time for reopening assessments that had already become time-barred by 31.03.2017, and whether the later amendment through the Kerala Finance Act, 2018 could reopen assessments beyond 31.03.2018. (ii) Whether the Kerala Legislature retained competence after the Constitution (One Hundred and First Amendment) Act, 2016 and repeal of the KVAT Act to amend Section 25(1), and whether the impugned notices and orders could be sustained under the savings clause in the SGST regime.

Issue (i): Whether the amended third proviso to Section 25(1) of the Kerala Value Added Tax Act could extend the time for reopening assessments that had already become time-barred by 31.03.2017, and whether the later amendment through the Kerala Finance Act, 2018 could reopen assessments beyond 31.03.2018.

Analysis: The limitation for reopening under the unamended provision was five years, but the 2017 amendment enlarged it to six years only from 01.04.2017. The Court held that the main amendment operated prospectively, but the third proviso was enacted to give effect to a distinct legislative intention: assessments whose reopening period expired on 31.03.2017 could still be reopened up to 31.03.2018. The proviso was treated as qualifying the main enactment and giving effect to the intended limited retrospective operation. The later 2018 amendment, however, stood on a different footing because by then the KVAT Act had already been repealed and the State had ceased to possess residual power to further amend that repealed enactment.

Conclusion: The 2017 proviso validly permitted reopening up to 31.03.2018 in respect of assessments otherwise expiring on 31.03.2017, but the 2018 amendment could not authorise reopening beyond that date.

Issue (ii): Whether the Kerala Legislature retained competence after the Constitution (One Hundred and First Amendment) Act, 2016 and repeal of the KVAT Act to amend Section 25(1), and whether the impugned notices and orders could be sustained under the savings clause in the SGST regime.

Analysis: After the constitutional change and the repeal of the KVAT Act, the State's power to legislate on sales tax under the repealed regime came to an end, except to the limited extent preserved by the constitutional scheme. The Court held that a savings clause under the new GST legislation could preserve accrued rights and pending actions under the repealed law as it stood on repeal, but it could not revive or create a fresh legislative power to amend the repealed KVAT Act. The 2018 amendment was therefore beyond legislative competence and unconstitutional.

Conclusion: The State Legislature lacked competence to enact the 2018 amendment, and the impugned notices and orders relying on that amendment could not be sustained.

Final Conclusion: The declarations preserve the 2017 reopening window for time-barred assessments expiring on 31.03.2017, but invalidate any reopening based on the 2018 amendment for assessments expiring on 31.03.2018 or later.

Ratio Decidendi: A proviso may validly give limited retrospective effect where the legislative intention is clear, but once the parent taxing statute stands repealed and the legislature no longer retains competence over that subject, a later amendment to the repealed law cannot be sustained, even by reference to a savings clause in the new regime.

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