2021 (3) TMI 839 - HC - VAT / Sales Tax

Period of limitation for initiating assessment - retrospective effect - period involved in the present case is the assessment period from April 2006 to March 2007 - appeal dismissed by order dated 31.12.2015, against which an appeal was preferred before the Karnataka Appellate Tribunal and the KAT has allowed the appeal preferred by the assessee on the point of limitation alone - HELD THAT - This Court in the case of M/S CIFTECH SOLUTIONS PVT. LTD., M/S. SREE SHEELE PRIVATE LIMITED, M/S. STEEL AUTHORITY OF INDIA LIMITED, M/S. SRI NIDHI GRANITES PRIVATE LIMITED, M/S. NARAYANA DEVADIGA, WIPRO LIMITED, M/S SRIDEVI AGENCIES, M/S INTERNATIONAL FLAVORS FRAGRANCES INDIA PVT. LTD., M/S. ALCOATS, SRI M.S. SRINIVAS PROPRIETOR, M/S S.V. INDUSTRIES M/S. RAMACHANDRA PHARMA CHEM M/S BINDU PROMOTERS AND DEVELOPERS M/S AYYAPPA INDUSTRIES VERSUS STATE OF KARNATAKA OTHERS 2015 (8) TMI 1389 - KARNATAKA HIGH COURT has taken a view that the amendment granting limitation to the Assessing Officer to initiate reassessment proceedings treating the period of limitation to be within eight years and that too with retrospective effect. Thus, it can be inferred that the amendment in Section 40 by virtue of the Amendment Act, is with retrospective effect and the KAT could not have set aside the order passed by the Assessing Officer and the First Appellate Authority by treating the assessment as barred by the period of limitation. The impugned order passed by the Karnataka Appellate Tribunal, Bengaluru is set aside - The matter is remanded back to the Assessing Officer to pass the order afresh in accordance with law. The parties will appear before the assessing officer on 1.3.2021 - petition allowed by way of remand.

Summary

Issues Involved:
1. Limitation period for reassessment under the Karnataka Value Added Tax Act, 2003.
2. Retrospective application of amendments to the limitation period.
3. Validity of the reassessment order dated 25.01.2014.

Detailed Analysis:

1. Limitation Period for Reassessment:
The primary issue revolves around the limitation period for reassessment under Section 40 of the Karnataka Value Added Tax Act, 2003. The original limitation period was five years, which was later extended to eight years by amendments effective from 01.04.2012 and 01.08.2013. The Karnataka Appellate Tribunal (KAT) allowed the appeal by the assessee, holding that the reassessment for the period April 2006 to March 2007, completed on 25.01.2014, was barred by the original five-year limitation period.

2. Retrospective Application of Amendments:
The KAT's decision was based on the interpretation that the amendments to extend the limitation period to eight years were not retrospective. However, the High Court referenced its own prior judgment in W.P. No.51802/2014, which upheld the constitutional validity of the amendment with retrospective effect, allowing the limitation period to be eight years. The High Court emphasized that the language of the amendment clearly indicated its retrospective application, aligning with the principles established in the Supreme Court's judgment in ADDITIONAL COMMISSIONER (LEGAL) AND ANOTHER VS. JYOTI TRADERS.

3. Validity of the Reassessment Order Dated 25.01.2014:
The High Court concluded that the reassessment order dated 25.01.2014 was within the extended limitation period of eight years, as established by the retrospective amendment. Consequently, the KAT's order, which had set aside the reassessment on the ground of limitation, was overturned. The High Court remanded the matter back to the Assessing Officer for a fresh decision, instructing that all issues be considered afresh without being influenced by prior orders.

Conclusion:
The High Court allowed the writ petition filed by the State Government, set aside the KAT's order, and remanded the matter to the Assessing Officer to decide afresh in accordance with law. The parties were directed to appear before the Assessing Officer on 1.3.2021, with all issues open for consideration. No costs were awarded.