The third proviso of Section 25 of the KVAT Act pertains to completion of assessment and does not extend the period for initiating reassessment proceedings.

1. Delay condoned.

2. Delay of 98 days in Diary No(s).11977/2022 and 308 days in Diary No(s). 15704/2022 condoned.

3. Leave granted in Diary No(s).11977/2022 and Diary No(s). 15704/2022.

4. In this batch of cases, the Assistant Commissioner (Assessment), State of Kerala and the Deputy Commissioner, Commercial Taxes, Thrissur, Kerala have assailed the judgment of the Division Bench of the Kerala High Court dated 05.07.2018. By the said judgment, the Kerala High Court, by following the judgment of the Division Bench in Tirur Medical Stores vs. State of Kerala , 1978 KLT 415, as reaffirmed by Full Bench in Cholayil Pvt. Ltd. vs. Assistant Commissioner (Assessment), 2015 (4) KLT 516 , quashed the notices assailed in the Writ Petitions as being beyond the limitation period prescribed under Sub-Section (1) of S.25 of the Kerala Value Added Tax Act , (hereinafter referred to as 'the KVAT Act' for the sake of convenience).

5. The central issue of controversy between the parties is with regard to the interpretation to be placed to sub-section (1) of S.25 of KVAT Act as well as the third proviso of the said Section. At this stage itself, it may be stated that initially the third proviso was not part of the Section but was later inserted in the year 2010 by the Finance Act 2010 and every year till Finance Act, 2018 the said proviso has been substituted. As far as these cases are concerned, the proviso was substituted by the Finance Act, 2017 (Act 11 of 2017). However, prior thereto the third proviso of the Finance Act 2015 is relevant.

6. For the sake of convenience, S.25 is extracted below:
'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 underassessed 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 turnover 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 sub-section 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 S.31 and thrice the interest as settlement fee.
PROVIDED ALSO that the period for the completion of assessments including those subjected to extension under S.25B which expires on 31st March, 2015 shall be extended up to 3 1st March, 2016.
(2) The time limit mentioned in sub-section (1) shall not apply where the turnover which escaped assessment relates to any business done by such dealer as benamidar or through a benami or where it relates to a dealer, who being liable to get himself registered under this Act and the rules made thereunder, has failed to do so or where the escaped turnover is on account of the dealer having claimed any input tax credit on the basis of an