Retrospective tax amendment upheld, but reassessment under the deeming fiction remained subject to a reasonable limitation period.

The amended Section 42(3) of the Kerala Value Added Tax Act, 2003 was upheld as retrospectively valid, but the deeming fiction was read harmoniously with the Act's limitation scheme. The provision could not be applied literally to erase temporal limits or permit indefinite reopening of concluded assessments. Reassessment under the amendment was confined to a reasonable period linked to the dealer's obligation to retain books and records, preserving certainty and consistency within the statutory framework.

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Issues: Whether the amended Section 42(3) of the Kerala Value Added Tax Act, 2003 could be applied retrospectively to reopen assessments and whether such reopening was confined by a reasonable period of limitation despite the deeming fiction that the assessment was treated as pending.

Analysis: The amendment was held to be within legislative competence and capable of retrospective operation from the date fixed by the Legislature. However, the deeming fiction in Section 42(3), if read literally and without restraint, would erase the limitation structure built into the assessment and reassessment scheme of the Act, create uncertainty, and permit reopening of stale assessments indefinitely. The Court harmonised Section 42(3) with the rest of the statute and accepted that reassessment under the provision cannot be exercised beyond the period during which the dealer is obliged to retain books and records, so as to preserve certainty and avoid inconsistency with the limitation framework under the Act.

Conclusion: The retrospective validity of the amendment was upheld, but its operation was confined by a reasonable limitation period and could not be used to reopen time-barred assessments indefinitely.

Ratio Decidendi: A retrospective fiscal amendment creating a deeming fiction must be construed harmoniously with the statute as a whole, and it cannot be applied so as to extinguish limitation and reopen concluded or time-barred assessments beyond a reasonable statutory period.

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