IMPORTANT POINTS
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 past assessments till 31.03.2018. The amendment effected through the Kerala Finance Act, 2018, with effect from 01.04.2018, enlarged the period for re-opening past assessments from 31.03.2018 to 31.03.2019. Under ordinary circumstances, and based on my findings above as regards the effect of the amendments brought into the third proviso to Section 25 (1) by the Kerala Finance Act, 2017, the legislative measures should have sufficed to justify a reopening of past assessments up to 31.03.2019, notwithstanding that the amendment itself was effective only from 01.04.2018. However, the intervention of the CAA 2016, and the consequent repeal of the KVAT Act with effect from 22.06.2017, has a bearing on the legality of the 2018 amendment.

JUDGMENT :

In these writ petitions, the issue that arises for consideration is the legality of the notices and assessment orders issued to the petitioners in connection with the assessment under the Kerala Value Added Tax Act [hereinafter referred to as the 'KVAT Act'] for the assessment years 2010-11 and 2011-12. The notices and orders are impugned, inter alia, on the ground that the authorities concerned 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 of 2017 and 2018, notified through gazette notifications dated 19.06.2017 and 31.03.2018 respectively, did not contemplate a retrospective operation of the amended provisions.

2. Before framing the issues that arise for adjudication in these writ petitions, it would be apposite to refer to the legislative exercises that were undertaken in respect of Section 25 (1) of the KVAT Act during the period between 2016 and 2018. Section 25 (1) as it stood immediately prior to its amendment with effect from 01.04.2017 read as follows:

“25. Assessment of escaped turnover:-(1) Where for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to tax in any year or return period or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or any deduction has been wrongly made therefrom, or where any input tax or special rebate credit has been wrongly availed of, the assessing authority may, at any time within five years from the last date of the year to which the return relates, proceed to determine, to the best of its judgment, the turnover which has escaped assessment to tax or has been under-assessed or has been assessed at a rate lower than the rate at which it is assessable or the deduction in respect of which has been wrongly made or input tax or special rebate credit that has been wrongly availed of and assess the tax payable on such turn over or disallow the input tax or special rebate credit wrongly availed of, after issuing a notice on the dealer and after making such enquiry as it may consider necessary:

Provided that before making an assessment under this subsection the dealer shall be given a reasonable opportunity of being heard.

Provided further that where the escapement is due to the application of incorrect rate of tax, no assessment under this sub-section shall be made where the dealer files revised return and pays the tax which has escaped assessment along with interest under sub-section (5) of section 31 and thrice the interest as settlement fee.

Provided also that the period for the completion of assessments including those subjected to extension under section 25B which expired on 31st March, 2015, shall be extended up to 31st March, 2016.”

3. The provision was amended through the Kerala Finance Act, 2017 with effect from 01.04.2017 when the period of limitation under Section 25 (1) for proceeding to determine the escaped turnover was changed from “five years” to “six years from the end of the year to which the assessment relates” and the third proviso thereto was amended to read as follows:

“Provided also that the period for proceeding to determine any assessment including those subjected to extension under section 25B which expires on 31st March, 2017, shall be extended up to 31st March, 2018.”

4. The third proviso to Section 25 (1) was once again amended through the Kerala Finance Act, 2018, with effect from 01.04.2018 to read as follows.

“Provided also that the period for proceeding to determine any assessment including those subjected to extension under section 25B which expires on 31st March, 2017, shall be extended up to 31st March, 2019.”

5. It is relevant to note, at this juncture, that on 8th September, 2016, the Constitution (One Hundred and First Amendment) Act, 2016 (hereinafter referred to as 'CAA' for brevity) received the assent of the President and the erstwhile regime of levy of tax