Re-assessment under Section 25A of the KVAT Act is invalid if initiated after the limitation period under Section 25(1).

JUDGMENT

Dated this the 11^th day of March, 2026 Above writ petition is filed challenging Exts.P1, P2 and P3.

2. Petitioner, a registered dealer under the Kerala Value Added Tax Act, 2003 (for short,’Act, 2003’) has approached this Court aggrieved by Ext.P3 order of re-assessment invoking the power under Section 25 A of the Act, 2003 for the assessment year 2008-09, which was initiated on 27.03.2019 after a lapse of almost 9 years and 11 months. Exts.P1 and P2 are notices under A read with Section 42 (3) of the Act, 2003 proposing to redo the assessment for the year 2008-09, which culminated in Ext.P3 order of assessment. Petitioner contends that the revision of assessment invoking power under A after a lapse of almost nine years and 11 months is beyond the period stipulated for reassessment proceedings under (1) of the Act, 2003. 3. Heard the learned Government Pleader also.

4. It is brought to my notice the judgment of the Division Bench of this Court in State of Kerala v. M/s. Chowdhary Rubber & Chemicals Pvt. Ltd. [2025 KHC Online 345], where the Court was considering whether the proceedings initiated invoking the power under Section 25 A of the Act, 2003 is barred by limitation under (1) of the Act, 2003, or the provisions of Section

25A would enable the revenue to complete the reassessment by ignoring the period of limitation under Section 25 (1) of the Act, 2003. Paragraphs 7 to 11 of said judgment reads as follows:-

“7. We have considered the rival submissions. The issue that essentially arises for consideration is as to where Section 25 A of the KVAT Act fits in the Scheme of assessment under the KVAT Act ? As observed in Sales Tax Officer and Another v. Messrs Sudarsanam Iyengar and Sons – [(1969) 2 SCC 396], assessment is a comprehensive word that denotes the entirety of proceedings which are taken with regard to it. Under the Scheme of the KVAT Act, the assessment procedure commences with the filing of a return by the assessee. If the return filed by the assessee conforms to the requirements under the KVAT Act and Rules, in respect of the details of turnover to be furnished and the tax to be paid thereon, and there is no query raised by the Revenue within the period prescribed for the same, the assessment to tax is completed as a self assessment to tax by the assessee under Section 21 of the KVAT Act. If an assessee does not file a return as contemplated under the KVAT Act and Rules or files a defective return, then the assessment is completed on best judgment basis by the Revenue after following the procedure under Section 22 of the KVAT Act. In certain cases, as enumerated under Section 24 of the KVAT Act, an assessment can be completed pursuant to consideration of audit objections in relation to the details furnished by the assessee along with his returns. The assessments completed under Sections 21, 22 and 24 can still be re-opened in terms of of the KVAT Act to assess such turnover as escaped assessment to tax in an earlier assessment. The power to assess escaped turnover under has, however, to be exercised within the period stipulated under the KVAT Act for the exercise of such power. The said period was five years from the end of the assessment year concerned till 31.03.2017 and was extended to six years from the end of the assessment year concerned thereafter.

8. Section 25A begins with a non-obstante clause, and it provides for nothing more than an additional ground on which the power to re-assess can be exercised by the Assessing Authority. The scope of that power can be gathered from the words used in the provision to define it. It is a power to proceed to re-assess the dealer and the power is to be exercised only if the Assessing Officer is satisfied that the objection raised by the CAG is lawful. It is in th