AI Drafter 
TaxTMI 
TaxTMI 
2022 (8) TMI 1246
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....JAN JAMES BY ADV ANNIES GEORGE BY ADV ADV.P.S. SOMAN(B/O) WA Nos. 48/2020, 1562/2019, 2/2020, 314/2020, 323/2020, 324/2020, 328/2020, 332/2020, 333/2020, 339/2020, 342/2020, 343/2020, 361/2020, 365/2020, 379/2020, 383/2020, 385/2020, 394/2020, 398/2020, 399/2020, 400/2020, 402/2020, 412/2020, 431/2020, 437/2020,447/2020, 448/2020, 449/2020, 451/2020, 459/2020, 463/2020, 467/2020, 475/2020, 477/2020, 480/2020, 481/2020, 487/2020, 490/2020, 497/2020, 512/2020, 514/2020, 516/2020, 518/2020, 520/2020, 539/2020, 540/2020, 541/2020, 542/2020, 551/2020, 562/2020, 567/2020, 568/2020, 569/2020, 571/2020, 574/2020, 580/2020, 587/2020, 589/2020, 591/2020, 596/2020, 606/2020, 607/2020, 611/2020, 615/2020, 617/2020, 621/2020, 628/2020, 629/2020, 630/2020, 643/2020, 652/2020, 662/2020, 669/2020, 703/2020, 722/2020, 742/2020, 785/2020, 877/2020, 892/2020, 912/2020, 986/2020, 1019/2020, 1528/2020, 1558/2020, 3/2021, 7/2021, 8/2021, 10/2021, 48/2021, 51/2021, 52/2021, 75/2021, 94/2021, 98/2021, 99/2021, 117/2021, 142/2021, 143/2021, 245/2021, 284/2021, 1056/2021 State Of Kerala, The State Tax Officer, (Works Contract), Assistant Commissioner, Now Designated As Assistant Commissioner Of State ....
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....g Officers. The said challenge examined the competence of the Assessing Officer under amended Section 25(1) of the KVAT Act through Kerala State Finance Act Nos.11/2017 and 5/2018. The parties are referred to as arrayed in the writ appeal. 3. The writ petitioners/respondents herein moved this Court to declare that the amendment to Section 25(1) of the KVAT Act, through Finance Act 11/2017, substituting the limitation period for initiating assessment under Section 25(1) from five years to six years does not apply to the Assessment Year 2010-11 because the amendment does not, by letter and application, have a retrospective operation. Secondly, the Proviso cannot be understood as expanding the meaning of the substantive portion of amended Section 25(1) of the KVAT Act. Thirdly, the amendment to Section 25(1) of the KVAT Act through Finance Act 5/2018 is without legislative competence. Hence, the notices issued under Section 25(1) of the KVAT Act are illegal and without authority. The common judgment disposes of the writ petitions. The operative portion reads thus: "(i) the assessments in respect of which the period of limitation for re-opening under Section 25 of the KVAT ....
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....adverted in Section 25(1) of the KVAT Act. The time limit is five years as per the unamended provision, or six years as per the amended provision is one of convenience for the Department and the dealer. The underlying idea in the assessment of escaped turnover is to assess and realize the tax component from the dealer legitimately due to the Government. Therefore, as understood, the expiry of limitation merely effaces the remedy but not the right of the Department. The argument that the claim is on an accrued or vested right is without basis. To bring home his statement on vested or accrued rights and further the legislative competence to amend the existing provision, he relies on reported judgment in Income Tax Officer v. Calcutta Discount Co. Ltd. AIR 1953 Cal. 721. 6.1 The following excerpts are relied on by the learned counsel for the appellants. "The Indian Income-tax Act, 11 of 1922, has recognised from the beginning that, for various reasons, the income of an assessee during a particular year may escape assessment altogether or that an assessment made of it may not bring the whole of the assessable income under tax or may not charge the proper amount of tax on it....
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....icer would be entitled to issue a notice within eight years from the end of any assessment year in respect of which proceedings or further proceedings seemed to be called for. One has only to read the Act, standing so amended on 30-3-1948 and one finds at once a clear provision that all assessment years, ending within eight years from that date, are covered by it, as also all assessment years ending within eight years from subsequent dates. It is immaterial that some of them may be years ended before 30-3-1948. The question is not one of retrospective operation at all but a question of what the section says and how far the section, having come into force on 30-3-1948, extends by its own words. Had the section merely created a right in favour of the Income-tax Officer to issue a notice in respect of escaped or under-assessed income and not included a provision as to the period up to which computed from the end of the assessment year concerned, the right could be exercised, a question might conceivably arise as to whether it was intended to be retrospective in operation, but in view of its clear terms, the section gives rise to no such question. The plain effect of the subst....
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....Prashar v. Vasantsen Dwarkadas AIR 1963 SC 1356 and Ahmedabad Manufacturing and Calico Printing Co. Ltd v. S.G. Mehta AIR 1963 SC 1436. "S.C. Prashar v. Vasantsen Dwarkadas Per S.K Das, J. I am of the opinion that in its true scope and effect, S. 31 of the Amending. Act of 1953 puts beyond any doubt that the view expressed by the learned Chief Justice in 1953-23 ITR 471: (AIR 1953 Cal 721) is the correct view and amended S. 34 applies to assessment years prior to 1948-49, but it does not say that an assessment which had become final and in respect of which reassessment proceeding had become time-barred before the amended section came into force could be re-opened. 19. My conclusion, therefore, is that S. 31 of the Amending Act of 1953 does not validate the notice issued in the present case-a notice issued on April 30, 1954 long before which date the assessment had become final and in respect of which reassessment proceedings had become time-barred. The short answer to the argument based on S. 31 is that the notice in the present case was not issued in accordance with sub-section (1) of S. 34, and the first part of S. 31 requires that the notice m....
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.... our opinion after the passing of the 1948 Amendment which came into force on March 30, 1948, the Income-tax officer could take action in all cases in which the assessment years ended within eight years of the date of his action and in which there was an escapement of an assessment for the reasons indicated in clause (a) of the section as amended. In other words. Action could be taken retrospectively in the cases indicated by Chakravartti C.J. If there be any doubt about the powers of the Income-tax officer the validating section passed in 1953 (S. 31) quite clearly indicates that section 34 as amended in 1948 was to be read in this manner. Ahmedabad Manufacturing and Calico Printing Co. Ltd v. S.G. Mehta Under the well-settled rules of statutory construction no statute which impairs an existing right or obligation except as regards a matter of procedure, shall have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Put differently, a statute is not to be construed to have a greater retrospective operation than its language renders necessary and it is submitted that "the general....
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....operate from the inception of enactment. *** *** *** 32. Having gone through the gamut of decisions placed before us, both by the State and the respondent-assessees, from which we have copiously referred to, we find the State's contention to be supported only by the judgment of the Full Bench of the Karnataka High Court, which we have dissented from. We have demonstrated from the various decisions of the Hon'ble Supreme Court placed before us by both the parties that there is no irrefutable rule that an amendment by substitution is invariably retrospective. We find the amendment by substitution in the present case, extending the period of limitation from 5 years to 6 years to be not applicable to those assessments which stood completed and the 5 year period for re-opening of assessment under S.25(1) stood expired. We do not see any reason to interfere with the impugned judgments on the basis of the amendment made subsequent to the judgment. Though the legislature had the competence to extend the period of limitation with retrospective effect, the same was not done. We cannot but observe that even if such an exercise was carried out, necessarily th....
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....oviso had expired. Here, it is the completion of assessment or reassessment under Section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 1985-86 could be reopened up to 31-3-1994. Authorisation by the Commissioner of Sales Tax and completion of assessment or reassessment under sub-section (1) of Section 21 have to be assessee follows the authorisation by the Commissioner of Sales Tax, its service on the assessee is not a condition precedent to reopen the assessment. It is not disputed that a fiscal statute can have retrospective operation. If we accept the interpretation given by the respondents, the proviso added to sub section (2) of Section 21 of the Act becomes redundant. Commencement of the Act can be different than the operation of the Act though sometimes, h both may be the same. The proviso now added to sub-section (2) of Section 21 of the Act does not put any embargo on the Commissioner of Sales Tax not to reopen the assessment if the period, as prescribed earlier, had expired before the proviso came into operation. One has to see the language o....
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....ision or clear implication, the Legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned". Hence all the decisions of the Supreme Court are to the effect that it is the legislative intention that must be given full effect. Hence in view of the authoritative prononcements of the Supreme Court discussed above, the contention of the petitioner that the assessment is barred by limitation has no substance. It is accordingly rejected." The impugned judgment is unsustainable for yet another contention, viz. that State of Punjab v. Shreyans Industries Ltd. (2016) 4SCC 769 is relied, which dealt with an issue under Punjab Sales Tax Act visa-vis power of Commissioner under Section 11(10) of Punjab General Sales Tax Act to extend three years period of limitation. It is argued that the legislature's plenary power is considered and decided in the negative by relying on a principle laid down in the background of the power of a functionary under the Punjab General Sales Tax Act. In conclusion, it is argued, once the distinguishing features of the Shreyans Industries Ltd case in fact and law are appreciated, the conclusion on t....
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....six years is retrospective and covers the assessments for which the period of limitation expired by 31.03.2017 would give more retrospective effect than what is expressed by the Legislature. (iii) The assessments for which unamended provision is applicable by 31.03.2017, the jurisdiction to issue a notice under Section 25(1) is completed. Therefore, a right or defence is created in such cases where the five years were completed on 31.03.2017, and no steps for reassessment were taken up. In cases where a right is accrued or vested is noticed, the interpretation of the provision in the amended portion must receive strict construction. (iv) The argument of appellants/State is that by expression and necessary implication, the amendment to Section 25(1) is retrospective; it is against the established principles of the construction of the statutes. (v) There could be different dates for commencement of the Act and the operation of the Act. In the amendment carried out by Finance Act 11/2017, the commencement and operation of the Act could be the same, but two different dates are incorporated. [See Jyothi Traders case: Commencement of the Act can be dif....
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....e third proviso is an amendment to a repealed Act which power cannot be stated as saved by Section 174(4) of Kerala State Goods and Service Tax Act. The legislative competence is not traced through the saving provision, and the competence is traced to the present, i.e., when the legislature by amendment is carried out. (xii) the citations relied on by them in support of their argument are: (i) A. Hajee Abdul Shakoor and Company v. State of Madras AIR 1964 SC 1729 (ii) Somaiya Organics (India) Ltd v. State of U.P. 2001 (5) SCC 519 (iii) The C.I.T Bombay v. Onkarmal Meghraj (H.U.F) 1974 (3) SCC 349 (iv) K.M Sharma v. Income Tax Officer, Ward 13(7), New Delhi 2002 (4) SCC 339 (v) S.S Gadgil v. Lal and Co. AIR 1965 SC 171 (vi) Commercial Motors Limited v. Commissioner of Trade Tax, Uttar Pradesh, Lucknow 2015 (15) SCC 168 (vii) Reliance Industries Ltd. v. State of Gujarat 2020 (4) TMI 499 (viii) M/s. Sri Sri Engineering Works and others v. The Deputy Commissioner (CT), Begumpet Division, Hyderabad and others 2022 (7) TMI 420 The Counsel pray for dismissing the appeals. 9. We have noted the rival subm....
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.... the same or different. (iii) The plenary power of legislature enables the making of prospective and retrospective laws. (iv) Law of limitation is normally considered procedural; the object of time limits in Section 25(1) of the KVAT Act does not create any right but prescribes periods within which proceedings may be initiated for reopening of assessment. (v) As a general rule, almost invariable rule, a legislature makes law for the future, not for the past. (vi) The presumption against retrospectivity is a guide to interpretation but not a constitutional imperative because the presumption applies even when the constitution does not forbid retroactive. Therefore, the presumption is a canon of interpretation and not a rule of constitutional law, so a Statute can explicitly or by clear implication be made retroactive. (vii) The central issue in considering whether the right was acquired or is carried out will generally be whether steps that remain to be taken under the repealed statute were the steps necessary for acquiring a right or incurring liability or whether these steps were required merely for enforcing a right or liability that ha....
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....ent of the Act or for the operation of the Finance Act 11 of 2017. For the said purpose, we would refer to Section 1(2), which is excerpted above, and it begins with the words 'Save as otherwise provided in the Act, the Act shall be deemed to have come into force on the 1st day of April 2017'. The Legislative Assembly on 16.06.2017 passed the Finance Act, but the commencement of the Act is from 01.04.2017. There is no prohibition in law to have two dates, one for commencement and another for the operation of provisions. The amendment in Section 6(3) intended for Section 25 of the KVAT Act substitutes the words "five years" with the words "six years". It is here the State argues that the substitution, which is though from the phraseology used in Finance Act 11/2017 spells out 01.04.2017, still, the amendment is a substitution hence will have retrospective operation touching the assessments which are time-barred with the completion of 31.03.2017, i.e., for the assessment year 2010-11. The amendment in Act 11/2017 should not be read in isolation of the words saved as otherwise provided in this Act. Because of the plain language employed in Section 1 of Finance Act 11/2017, it would be....
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....the view taken in the judgment on the point. Therefore, we agree with the reasons and conclusions of the learned Single Judge on this behalf. 16. The line of submissions now made by the appellant are additional arguments conceived to get over the conclusions recorded in Najeem's case. The decisions relied on by the appellants before us, a substantial number of judgments were considered, and a conclusion that Section 25(1) amended by Finance Act 11/2017 is prospective has been recorded by this Court in Najeem's case. The learned Single Judge followed the view expressed by the Division Bench in Najeem's case. The substantial question is whether prospective or retrospective and vested rights have accrued to the dealers or not, where the time for reassessment expired by 31.03.2017 has been considered in Najeem's case and also the impugned judgment. Though an attempt has been made to refer to the issue considered in Najeem's case and being considered by us in this batch of appeals, which needs reconsideration by the Full Bench, we are convinced that the additional grounds now canvassed by keeping in perspective Najeem's case do not change the conclusion arrived at in Najeem's case in....
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....nternational trade or commerce of such goods." Since the legislative competence is traceable to Article 246A, which speaks about goods - supply of goods or services, the argument canvassed is that under Article 246A, the State Legislature has broader power than what it had before 16.09.2016. The repeal of the KVAT Act shall not be understood as taking away the original power of the State Legislature to make amendments to the repealed Act. The amendments are not simultaneously operating along with Kerala Goods and Services Tax Act. Still, the amendments provide for the extension of the period of limitation for assessment attracting Section 25(1) of the KVAT Act, and the same is legal and constitutionally valid. 20. The learned counsel appearing for the respondents argue that CAA 101st Amendment has introduced major changes in the distribution of power to levy taxes between the State and the Centre. The KVAT Act, for all purposes, is repealed, and Section 174 of the KVAT Act cannot be understood in any way as continuing to remain with the State Legislature to make amendments to a repealed Act for all times to come. Once it is an accepted position in the constitutional scheme of....
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....ould depend on its present legislative power and not on what it possesses at the time when the enactment would be in operation. On 16.12.2019, through the impugned judgment, while answering point (c), the following conclusions are recorded by the learned Single Judge: "18. I am given to understand that an intra-court appeal against the aforesaid judgment of the learned Single Judge is pending consideration before a Division Bench of this Court. At any rate, the said judgment, which dealt with actions taken by the revenue authorities before the amendments brought in to the KVAT Act through the Kerala Finance Act, 2018, did not have to consider the issue of legislative competence of the State Legislature to amend the KVAT Act, after the CAA, 2016, and the repeal of the KVAT Act pursuant thereto, on 22.06.2017. It is to a consideration of the said issue that I now turn. 19. As already noticed above, the amendments effected to Section 25 (1) of the KVAT Act, through the Kerala Finance Act 2017, were before the repeal of the KVAT Act with effect from 22.06.2017. The provision as it stood then, and in particular the third proviso thereto, authorised the re-opening of pa....
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.... power to amend the KVAT Act, save to the extent permitted, when it did not retain any residual right to further legislate on the subject of taxes on sale or purchase of goods. 20. There is yet another aspect of the matter. It is trite that when a Court judges the Constitutionality of a legislative enactment it should try to sustain the validity of the enactment to the extent possible and it should strike down the law only when it is impossible to sustain it State of Bihar v. Bihar Distilery - IIT (1996) 10 SC 8541. At the same time, the Court must proceed to determine the intention of the Parliament, not only from the language used in the statute but also from surrounding circumstances and an understanding of the mischief that was sought to be remedied by the statute. When one applies the said test to the events that took place after the CAA, 2016, it cannot but be noticed that the very purpose of the CAA was to bring about a change in the system of indirect taxation in our country through the introduction of a Goods and Service Tax, and the phasing out of the multitude of indirect tax levies, including value added taxes, that were levied and collected by the Centre and t....
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....e amendment to the third proviso of Section 25(1) is retrospective in nature. If the same is read to be prospective, the purpose of this amendment will not be met. The Court held that the assessment whose limitation period expired on March 31, 2017 (i.e. Financial Year 2011-12), could have been undertaken till March 31,2018. Amendments made after the introduction of GST The Constitution (One Hundred and First) Amendment Act, 2016 ('CAA') which came into force on September 16, 2016, stripped the State Legislatures of their power to legislate in respect of sale or purchase of goods covered under Entry 54 of List II of the Schedule VII of the Constitution of India. The sunset clause under Section 19 of the CAA allowed continuation of the erstwhile State VAT laws till September 16, 2017 or until such statutes were repealed or amended, whichever was earlier. The KVAT Act was repealed with effect from June 22, 2017. Since the power to amend is a legislative power, the State Legislature lacked the legislative competence to amend Section 25 of the KVAT Act after the repeal of KVAT Act on June 22, 2017. Therefore, the assessments for the FY 2011-12 could not have b....
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....lating to indirect taxation. It observed that the amendment "confers concurrent taxing powers on the Union as well as the States for levying GST on transactions of supply of goods or services or both". In Baiju v. State Tax Officer, GST, a writ petition was filed challenging the legality of the notices and assessment orders issued under the Kerala Value Added Tax Act 2003 for the assessment years 2010-11 and 2011-12. The notices and orders were challenged on the ground that the authorities did not have the jurisdiction to issue them since the amendments introduced to Section 25(1) of the KVAT Act through the Kerala Finance Acts 2017 and 2018 did not operate retrospectively. The Kerala High Court had to decide whether the Kerala State legislature had the legislative competence to amend the KVAT Act after the introduction of Article 246A to the Constitution, and the repeal of KVAT pursuant to the amendment. The Court noted that the special power introduced by Article 246A allows Parliament and the State legislatures to 'simultaneously' make laws. Subsequently, while explaining the 'simultaneous' nature of power held by Parliament and State legislature, it was observed....