2020 (9) TMI 1327 - HC - VAT / Sales Tax

Escaped VAT turnover reassessment after 5-year limit u/s25(1): time-barred order set aside; 2017 extension not retroactive.

The dominant issue was whether an assessment order under s. 25(1) of the Kerala Value Added Tax Act could be sustained when assessment proceedings for ... Challenge to assessment order u/s 25(1) of the Kerala Value Added Tax Act - processing of assessment within five years from the last date of the year to which the return relates - HELD THAT:- Section 25(1) of the KVAT Act empowers the authorities to initiate the assessment proceedings alleged to have been escaped within a period of five years as amendment in 2017 has been held to be prospective. The Ext.P6 is not sustainable under law - Accordingly, Ext.P6 is set aside. Petition allowed. The writ petition challenged an assessment order issued under Section 25(1) of the Kerala Value Added Tax Act for the assessment year 2013-14. The petitioner contended that, under Section 25(1), any proceedings for 'escaped' assessment must be initiated 'within five years from the last date of the year to which the return relates.' Although the statutory period was later amended from five years to six years by the Kerala Finance Act, it was argued that the extended limitation could not be applied to the relevant period. The petitioner also raised lack of proper service of the notice. Relying on precedents holding that the 2017 amendment extending limitation is prospective, the Court accepted that Section 25(1) authorized initiation only within five years for the relevant assessment year. The Government did not dispute the date of issuance of notice. Applying the settled interpretation in Baiju AA and MCP Enterprises, the Court held that the impugned order 'is not sustainable under law,' and set aside the assessment order.