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HIGH COURT OF KERALA
Shoba Annamma Eapen, J
NATIONAL COLLATERAL MANAGEMENT SERVICES LIMITED – Appellant
Versus
THE COMMERCIAL TAX OFFICER (SPECIAL TEAM) – Respondent
WP(C) 3155/2017
VAT - Assessment Quash - Kerala Value Added Tax Act - Sections 25(1), 25B - The court ruled that the assessment was time-barred under Section 25(1), reinforcing the five-year limitation period for tax assessments.
Fact of the Case:
The writ petition seeks to quash a revised assessment order for the assessment year 2010-11 based on an untimely issued notice under Section 25(1) of the Kerala Value Added Tax Act.
Finding of the Court:
The court found that the notice was issued five years after the assessment period, thus violating the limitation period established under Section 25(1) of the Act.
Issues: Whether the notice issued under Section 25(1) of the Kerala Value Added Tax Act after five years from the last date of return was valid.
Ratio Decidendi: The court established that the issuance of the notice after the five-year limitation period is invalid and based its decision on precedent cases indicating the necessity of adhering to statutory time limits.
Final Decision: The writ petition is allowed, quashing the assessment order.
The writ petition is filed seeking to quash Ext.P1 revised assessment order passed by the first respondent for the assessment year, 2010-11.
2. Heard the learned counsel for the petitioner and the learned Special Government Pleader.
3. On a perusal of Ext.P1, it is seen that the assessment year is 2010-11, in respect of which, notice under Section 25 (1) of the Kerala Value Added Tax Act , 2003 (for short, “the Act”) was issued on 17.09.2016, i.e., after five years from the last date of the period, to which the return relates.
4. In Commercial Tax Officer, Anchal and others v. S.Najeem and another [2018(4)KHC 666(DB)], a Division Bench of this Court has held that the period of limitation to determine tax payable is five years as per Section 25 (1) of the Act. In the case on hand, notice under (1) of the Act was issued on 17.09.2016, i.e., after five years from the last date of the period, to which the assessment relates, which is perfectly out of time.
5. The learned Special Government Pleader submits that the State has filed Civil Appeal No.4307 of 2022 before the apex court, challenging the judgment in S.Najeem (supra), which has been dismissed. It is further submitted that in the case on hand, the time for completion of assessment was extended by the Deputy Commissioner as per Section 25B of the Act.
6. However, even the extension of time by the Deputy Commissioner under Section 25 B of the Act also is decided against the Department by a Full Bench of this Court in Cholayil Private Limited v. Assistant Commissioner (Assessment) [2015 (4) KLT 516 (FB)], stating that even if B is to guide the Deputy Commissioner, the time limit has to be reasonable because, there cannot be an indefinite proceeding under (1) in view of the third proviso to that section. Therefore, on a consideration of the facts and circumstances, I am of the opinion that following the judgments in S.Najeem (supra) and Cholayil Private Ltd. (supra), the writ petition can be allowed.
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