The court established that amendments to the KVAT Act's limitation provisions are prospective and do not apply retroactively to past assessments.

ORDER :

A.K. Jayasankaran Nambiar, J.

This Revision Petition pertains to the assessment year 2011–12 under the Kerala Value Added Tax Act [hereinafter referred to as the “KVAT Act”], and the petitioner is aggrieved by the order dated 28.11.2022 of the Kerala Value Added Tax Appellate Tribunal in T.A. (VAT).No.73 of 2020 that decided issues including the issue of limitation against the petitioner. In the Revision Petition before us, the following questions of law are raised :

(i) Whether the Appellate Tribunal is justified in law on the finding that the plea of rejection of limitation on the assessment proceedings which was made for the year 201112 on 09.07.2018 is in order.

(ii) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is erred in not appreciating the fact that the claim of sales return in the case of end customers is supported by statements as prescribed under rule 59 of the KVAT Rules 2005 which are produced before the assessing authority.

(iii) Whether on the facts and in the circumstances of the case, the Appellate Tribunal went wrong in interpreting section 25AA with respect to the suppression of sales turnover and allowing corresponding claim of input tax claim from the purchase of registered dealers.

(iv) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is erred in not considering the duplication of assessment of sales return while calculating the turnover as well as in the computation of tax due.

During the course of the proceedings, it was accepted by the learned counsel that questions of law nos.(ii), (iii) and (iv) would have to be answered against the petitioner/assessee and in favour of the Revenue. However, the answer to question (i) above would determine whether or not the petitioner would be liable to pay any amount to the Department for the assessment year 2011-12. This is because if we find in favour of the petitioner/assessee on the question of limitation, then the entire demand for the said assessment year, which include the demands relating to the issues covered by questions (ii), (iii) and (iv), would have to be set aside.

2. The self assessment by the petitioner/assessee for the assessment year 2011-12 was sought to be re-opened by the Assessing Authority in terms of Section 25(1) of the KVAT Act by a notice dated 24.01.2018. As per the provisions of Section 25(1) of the KVAT Act as it stood then, the Assessing Authority had time only upto 31.03.2017 to issue the notice for assessment of escaped turnover, and in this case, the notice was issued only on 24.01.2018. The Assessing Authority however proceeded to complete the assessment in relation to the petitioner for the said assessment year by passing an order dated 09.07.2018.

3. In appeal proceedings pursued by the petitioner/assessee, initially before the First Appellate Authority and thereafter before the Appellate Tribunal, although the petitioner raised a contention regarding limitation, the same was rejected by the authorities. It is therefore that the petitioner is before us in this O.T. Revision impugning the order of the Appellate Tribunal inter alia on the issue of limitation.

4. Inasmuch as we are concerned with the provisions of Section 25(1) of the KVAT Act, as it stood with effect from 01.04.2017, we deem it appropriate to extract the provisions of Section 25(1) of the KVAT Act as it stood immediately prior to its amendment with effect from 01.04.2017:

“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, pro