Retrospective reassessment cannot reopen completed assessments beyond limitation or cure absence of natural justice.

A retrospective deeming provision under the Kerala Value Added Tax Act, 2003 cannot be used to revive or reopen completed assessments beyond the statutory time framework in a manner that prejudices the assessee. The assessment scheme under Section 25, read with the relevant rules and the safeguard in Rule 58(20), was treated as requiring exercise of reassessment power within a reasonable limitation period, especially where books and records may no longer be available. The text also notes that assessment orders passed without notice or hearing offend natural justice and are vulnerable on that ground as well.

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Issues: (i) Whether the assessment orders were liable to be set aside as barred by limitation and beyond the permissible power of reassessment in view of the statutory scheme under the Kerala Value Added Tax Act, 2003 and the relevant rules; (ii) Whether the assessment orders were unsustainable for non-compliance with principles of natural justice.

Issue (i): Whether the assessment orders were liable to be set aside as barred by limitation and beyond the permissible power of reassessment in view of the statutory scheme under the Kerala Value Added Tax Act, 2003 and the relevant rules.

Analysis: The assessments were made in March 2014 for assessment years 2005-06 and 2006-07. The statutory scheme under Section 25 of the Kerala Value Added Tax Act, 2003 and the relevant rule-based time limits was treated as controlling unless the case squarely fell within the exception created by Section 42(3). The Court held that the retrospective operation of Section 42(3) could not be used to reopen completed assessments in a manner that would unfairly prejudice the assessee, particularly when the assessee would no longer have the books and records ordinarily preserved only for a reasonable period. Rule 58(20) of the Kerala Value Added Tax Rules, 2005 was treated as a safeguard indicating the reasonable outer limit for exercise of power.

Conclusion: The assessments were held to be unsustainable and barred by limitation in the circumstances, and the assessee succeeded on this issue.

Issue (ii): Whether the assessment orders were unsustainable for non-compliance with principles of natural justice.

Analysis: The assessment orders were stated to have been passed without compliance with the principles of natural justice, and the absence of notice and hearing was noted as an additional defect affecting their validity.

Conclusion: The orders were held to be unsustainable on this ground as well, in favour of the assessee.

Final Conclusion: The assessment and recovery action could not be sustained, and the writ petition succeeded with the impugned orders set aside.

Ratio Decidendi: A retrospective deeming provision enabling pending treatment of assessments cannot be applied to revive or reopen completed assessments beyond a reasonable limitation period in a manner that prejudices the assessee and defeats the statutory scheme for preservation of records and fair adjudication.

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