2017 (2) TMI 1457 - HC - VAT and Sales Tax

Reopening of assessment - time limitation - notice issued beyond the five year period from the end of the assessment year - Section 25A of the Kerala Value Added Tax Act 2003 - HELD THAT - In the present case limitation expires on 31.03.2015. The first notice is issued on 31.10.2015 as is seen from Ext.P2. The order passed is also produced at Ext.P5. In such circumstance for reason of limitation the proceedings have to be set aside. Ext.P5 assessment order is set aside finding the initiation of proceedings to be beyond the limitation period. The writ petition would stand allowed to the extent of setting aside the assessment order.

Summary

Issues:
Re-opening of assessment order for the year 2009-10 beyond the limitation period under Section 25A of the Kerala Value Added Tax Act, 2003. Interpretation of the provision by the Full Bench decision in Cholayil Private Limited v. Assistant Commissioner. Initiation of penalty proceedings based on suppression of machineries and audit objection. Challenge to penalty proceedings and revision.

Analysis:
The petitioner challenged the re-opening of the assessment order for the year 2009-10, contending that the notice issued beyond the five-year period from the end of the assessment year violated the limitation period set by Section 25A of the Kerala Value Added Tax Act, 2003. The Full Bench decision in Cholayil Private Limited v. Assistant Commissioner clarified that the requirement for re-opening proceedings is initiation within the limitation period, not conclusion.

The Government Pleader argued that penalty proceedings were initiated due to suppression of machineries and an audit objection, justifying the re-opening beyond the limitation period. However, the notice did not mention the audit objection, and the mere detection of an offense does not extend the limitation for re-opening assessment. The Court found that the initiation of proceedings in this case was beyond the limitation period, leading to the setting aside of the assessment order.

The Court held that the first notice issued on 31.10.2015, after the limitation expired on 31.03.2015, was invalid. Consequently, the assessment order at Ext.P5 was set aside due to the proceedings being initiated beyond the limitation period. The writ petition was allowed to the extent of setting aside the assessment order, leaving all contentions open regarding the penalty proceedings, which were challenged separately and subject to revision. No costs were awarded in this judgment.