Writ Petition Couldn’t Have Been Allowed On Grounds Of Limitation When Such Issue Wasn’t Raised By Assessee: Kerala HC sets aside Single Bench Order

The writ appeal before the High Court had been preferred by the State against the judgment of a Single Judge in a Writ Petition filed by the respondent/assessee challenging an assessment order passed against it under Section 25(1) of the Kerala Value Added Tax Act, (KVAT Act) for the assessment year 2013-2014.

The Division Bench of Justice A.K. Jayasankaran Nambiar & Justice K. V. Jayakumar asserted, “...the only relief that the assessee sought in the writ petition was for a re-examination of the issue on merits before the Assessing Officer, as the assessee itself did not have a case of the assessment order being barred by limitation. It was only on account of the erroneous assumption of the learned Single Judge that the writ petition came to be allowed on the ground of limitation.”

GP Resmitha Ramachandran represented the Appellants while Advocate K.P. Abdul Azees represented the Respondent.

It was the assessee’s case that the Assessment Order was vitiated on account of a non-compliance with the rules of natural justice and the notice under Section 25(1) of the KVAT Act was issued without affording an effective opportunity to the assessee to reply to the notice. While the Assessing Officer was of the view that he had to complete the assessment by March 31, 2020, according to the assessee, the said assumption was wrong since, as per the law as it stood then, only a pre-assessment notice under Section 25(1) of the KVAT Act had to be issued before March 31, 2020 and the assessment pursuant thereto could have been completed beyond 31st March. The Single Judge Bench allowed the writ petition. Aggrieved thereby, the State filed the instant appeal.

The Government Pleader for the appellant/State argued that the Single Judge erred in assuming that the case of the writ petitioner was one of the assessment orders being barred by limitation. It was her contention that the argument of the writ petitioner was essentially with regard to violation of the rules of natural justice while passing the assessment order, and in that context, the Single Judge ought not to have allowed the writ petition by finding the assessment order as having been passed beyond the period of limitation.

The Bench found force in this submission and also took note of the fact that the assessment year in question was 2013-14 under the KVAT Act. “The KVAT Act was amended in 2017, whereby the period of limitation for re-opening the assessment was enhanced from five years to six years. No doubt, in those cases where the erstwhile period of limitation of five years had already expired before the date of the amendment of Section 25(1) in 2017, the Revenue would not be permitted to re-open assessments that had been settled, through a fresh notice issued thereafter invoking the six-year period of limitation”, it said.

The Bench also noted that the limitation period for reopening assessment under Section 25(1) of the KVAT Act was six years. The notice under Section 25(1) having been issued on February 12, 2020 was well within the period of six years contemplated under Section 25(1) as it stood then.

As the limitation issue did not arise in the writ petition, the Bench set aside the impugned judgment of the Single Judge and allowed the appeal to that limited extent. The High Court also set aside the Assessment Order that was impugned in the writ petition as the writ petitioner/assessee was not heard prior to the passing of the assessment order.

Remanding the matter to the Assessing Authority for a fresh decision on merits, after hearing the petitioner/assessee, the Bench further held that it shall not be open to the assessee to raise the issue of limitation.

Cause Title: The Assistant Commissioner of State Tax v. Bhima Jewellery and Diamonds P. Ltd. [Neutral Citation: 2024:KER:86407]

Appearance:

Appellants: GP Resmitha Ramachandran

Respondent: Advocate K.P. Abdul Azees

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