Reassessment limitation and natural justice under VAT law: notice was timely, but the assessment was set aside for lack of hearing.

A reassessment notice under Section 25(1) of the Kerala Value Added Tax Act was held to be within the extended six-year limitation period applicable after the 2017 amendment, so the limitation objection failed. However, the assessment order was passed without a meaningful opportunity of hearing, amounting to a violation of natural justice, and was therefore set aside. The matter was remanded to the Assessing Authority for a fresh decision on merits after affording the assessee an effective hearing.

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Issues: (i) Whether the reassessment notice under Section 25(1) of the Kerala Value Added Tax Act was barred by limitation; (ii) Whether the assessment order was liable to be set aside for violation of natural justice and the matter remanded for fresh consideration.

Issue (i): Whether the reassessment notice under Section 25(1) of the Kerala Value Added Tax Act was barred by limitation.

Analysis: The assessment year was 2013-14 and the reopening period under the provision, as applicable after the 2017 amendment, was six years. The notice issued on 06.02.2020 fell within that period, and the premise on which the writ petition had been allowed on limitation was erroneous.

Conclusion: The limitation objection was rejected.

Issue (ii): Whether the assessment order was liable to be set aside for violation of natural justice and the matter remanded for fresh consideration.

Analysis: The record showed that the assessee had not been effectively heard before the assessment order was passed. The proper course was to set aside the assessment order and require a fresh decision on merits after affording an opportunity of hearing.

Conclusion: The assessment order was set aside and the matter was remanded for fresh assessment after hearing the assessee.

Final Conclusion: The challenge to the assessment on limitation failed, but the assessment order could not stand for want of hearing, so the matter was restored to the Assessing Authority for a de novo decision on merits.

Ratio Decidendi: Where a reassessment notice is within the extended statutory period of limitation, the assessment cannot be struck down on limitation, but an assessment made without affording a meaningful opportunity of hearing is liable to be set aside and remanded.

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