Retrospective extension of reassessment limitation cannot revive time-barred tax proceedings, and post-repeal amendment lacked competence.

An amendment to the Kerala Value Added Tax Act extending the reassessment limitation from five to six years was held prospective because it took effect from 01.04.2017 and contained no express or implied language reviving proceedings already time-barred by 31.03.2017. The later amendment to the third proviso, made after GST and repeal of the KVAT regime, was held beyond the State's legislative competence because the displaced tax field could no longer support further extension of liability under the repealed law. The reassessment notices were therefore unsustainable on both grounds, and the assessee's challenge succeeded.

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Issues: (i) Whether the amendment to Section 25(1) of the Kerala Value Added Tax Act, 2003 by the Kerala Finance Act, 2017, substituting six years for five years, operated retrospectively so as to reopen assessments whose limitation had expired by 31.03.2017. (ii) Whether the amendment to the third proviso to Section 25(1) of the Kerala Value Added Tax Act, 2003 by the Kerala Finance Act, 2018 was within the legislative competence of the State after the introduction of GST and repeal of the KVAT Act.

Issue (i): Whether the amendment to Section 25(1) of the Kerala Value Added Tax Act, 2003 by the Kerala Finance Act, 2017, substituting six years for five years, operated retrospectively so as to reopen assessments whose limitation had expired by 31.03.2017.

Analysis: The amendment introduced by the Kerala Finance Act, 2017 was given effect from 01.04.2017, and the text of the statute showed a clear legislative choice as to commencement and operation. The substituted period of six years could not be read to travel beyond the express language of the amendment so as to unsettle assessments for which the earlier limitation had already expired. In the absence of express words or necessary implication giving greater retrospectivity, the amendment was confined to future operation and did not revive time-barred reassessment powers.

Conclusion: The amendment was prospective and could not reopen assessments whose limitation had expired by 31.03.2017; this issue is answered in favour of the assessee.

Issue (ii): Whether the amendment to the third proviso to Section 25(1) of the Kerala Value Added Tax Act, 2003 by the Kerala Finance Act, 2018 was within the legislative competence of the State after the introduction of GST and repeal of the KVAT Act.

Analysis: After the constitutional changes brought about by GST and the repeal of the KVAT Act, the State's power to legislate further on taxes on sale or purchase of goods stood curtailed except to the extent preserved by the constitutional scheme and the saving provisions. The power to amend a statute is part of legislative power itself, and the State could not invoke the repealed enactment to extend limitation by amending it after its legislative field had been displaced. The 2018 amendment therefore lacked the requisite competence.

Conclusion: The amendment by the Kerala Finance Act, 2018 was beyond legislative competence and invalid; this issue is answered in favour of the assessee.

Final Conclusion: The challenge to the reassessment notices succeeds on both substantive grounds, and the assessee's position is sustained.

Ratio Decidendi: Where the statute fixes a clear commencement date, an amendment enlarging limitation will not be construed as retrospectively reviving time-barred proceedings unless the legislature says so in express terms or by necessary implication; further, once the legislative power over the repealed field is lost, the statute cannot be amended to extend liability under that repealed regime.

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