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2020 (11) TMI 25 - HC - VAT and Sales Tax


Issues:
Challenge to assessment orders and recovery notices under Kerala Value Added Tax Act and Central Sales Tax Act.

Analysis:
The petitioner, a Private Ltd. Company, challenged assessment orders and recovery notices issued by the first and second respondents. The petitioner contended that the assessment orders were issued without providing an opportunity for a hearing or serving any notice. The petitioner argued that the assessment orders were void ab initio as they were hopelessly barred by limitation, citing the judgment of the Hon'ble Supreme Court in a relevant case.

The Government Pleader argued that the case was not a simple assessment under Section 25(1) of the 2003 Act. Referring to Section 42(3) of the Act, it was contended that failure to file certain documents could keep the assessment pending, and the time limit mentioned would not be applicable in such cases. The Government Pleader relied on previous court judgments to support this argument and urged the court to dismiss the writ petition.

After hearing both parties and reviewing the documents, the court noted that the assessment orders and recovery notices were issued without compliance with the principles of natural justice. The court also considered the amendment that extended the time limit for assessment from five to six years. However, it was held that the amendment was prospective in nature, and assessment proceedings initiated after the expiry of five years were beyond limitation. The court examined whether the retrospective effect of the amendment to Section 42 would apply and concluded that the assessment orders were not sustainable due to the retrospective operation of the newly introduced provision.

The court discussed the implications of the retrospective operation of Section 42(3) on reopening assessments completed years back, highlighting the challenges faced by the assessee in defending against allegations of suppressed turnover. It emphasized the importance of maintaining books for a reasonable period and interpreted the provisions to avoid unconstitutional results. The court concluded that the assessment orders were not sustainable and set them aside, allowing the writ petition.

 

 

 

 

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