The amendment to S.25(1) of the Kerala Value Added Tax Act, 2003, effective from 01.04.2017, is prospective and does not revive assessment proceedings for periods where the five-year statutory limitation had already expired by 31.03.2017.

JUDGMENT :

P.M. Manoj, J.

The question raised before this Court in this writ petition is whether the impugned assessment order issued under Section 25(1) of the Kerala Value Added Tax Act, 2003 (for short ‘the KVAT Act’) by the 4^th respondent is illegal and without jurisdiction.

2. The short facts of the case are as follows:

The petitioner herein is a private limited company and an assessee under the KVAT Act and the Central Sales Tax Act, 1956 (for short ‘the CST Act’) on the rolls of the 4^th respondent, engaged in the manufacture and sale of Ayurvedic products and medicines.

3. In compliance with the statutory requirements under the KVAT Act, the petitioner submitted returns under the KVAT Act as well as the CST Act for the assessment year 2011–12. The petitioner reported inter-State sales, inter-State stock transfers, and export sales.

4. Subsequently, the 3^rd respondent, being the assessing authority, issued a notice under Section 25(1) of the KVAT Act on the premise that the annual return disclosed transactions of cosmetics valued at Rs.16,285.72 and medicines valued at Rs.29,66,416.57 as inter-State stock transfers. The petitioner had claimed exemption from payment of tax on such transactions but had not produced supporting documents to substantiate the claim of inter-State stock transfer. Accordingly, a notice dated 25.01.2018 was issued under Section 25(1) of the Act.

5. On receipt of the said notice, the petitioner sought time to produce the requisite documents. However, the assessing authority proceeded to complete the assessment in terms of the proposal contained in the notice, as evidenced by Ext.P1.

6. The primary contention of the petitioner is that the assessment was completed without granting sufficient opportunity to produce the requisite documents, despite the petitioner having sought time for the same. It is further contended that the proceedings for the assessment year 2011–12 are barred by limitation and that no proceedings could have been initiated for the said year at all.

7. The petitioner submits that the Kerala Finance Act, 2017 introduced amendments to Section 25 of the KVAT Act, whereby the period of limitation for completing assessment was enhanced from five years to six years with effect from 01.04.2017. According to the petitioner, the said amendment has no retrospective effect. It is contended that the period of limitation can only be reckoned based on the law in force during the relevant assessment year. It is further submitted that, in the absence of any express provision making the amendment retrospective, it cannot be presumed that the extended period of six years would apply to the assessment year ending on 31.03.2017.

8. A proviso was also introduced to Section 25, whereby the period for completing assessments that expired on 31.03.2017 was extended up to 31.03.2018. However, the petitioner contends that, the self assessment by the petitioner/assesse 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 25.01.2018. 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 25.01.2018.

9. 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