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TMI Blog2019 (12) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, would enable the revenue to re-open assessments in cases where, by March 31, 2017, the five year period for re-opening assessments under the unamended provisions of section 25(1) of the KVAT Act had already expired? - HELD THAT:- It is now well-settled that on the expiry of the period of limitation prescribed under a fiscal statute for re-opening an assessment, the assessee gets a valuable right in the form of immunity from assessments under the Act. The said vested right/immunity cannot be taken away through any power of extension of the period of limitation, exercised after the expiry of the said period, by any authority in whom such power to extend is conferred by the statute. The power to extend a period of limitation must be exercised before the expiry of the normal period. Whether a legislative amendment can confer such a power on a statutory authority to take away a right/immunity that has accrued to an assessee? - HELD THAT:- It is well-settled that the Legislature can, through a retrospective amendment of the statutory provisions, take away such vested rights that have accrued to assessees. But, was there such a retrospective amendment in the instant cases? As alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereto, could be justified by relying on the savings clause under section 174 of the SGST Act? - HELD THAT:- The amendments effected to section 25(1) of the KVAT Act, through the Kerala Finance Act, 2017, were before the repeal of the KVAT Act with effect from June 22, 2017. The provision as it stood then, and in particular the third proviso thereto, authorised the reopening of past assessments till March 31, 2018. The amendment effected through the Kerala Finance Act, 2018, with effect from April 1, 2018, enlarged the period for re-opening past assessments from March 31, 2018 to March 31, 2019. Under ordinary circumstances, and based on my findings above as regards the effect of the amendments brought into the third proviso to section 25(1) by the Kerala Finance Act, 2017, the legislative measures should have sufficed to justify a reopening of past assessments up to March 31, 2019, notwithstanding that the amendment itself was effective only from April 1, 2018. However, the intervention of the CAA 2016, and the consequent repeal of the KVAT Act with effect from June 22, 2017, has a bearing on the legality of the 2018 amendment. A distinction does exist between the saving of ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 13887, 13957, 14071, 14570, 14833, 15037, 15633, 15957, 16001, 16018, 16094, 16162, 16191, 16214, 16277, 16778, 16896, 16907, 17041, 17060, 17629, 17630, 17655, 18768, 18800, 19777, 19794, 20151, 20208, 20515, 21244, 21452, 21453, 21543, 22104, 23309, 23313, 23616, 23859, 24395, 24727, 27742, 27872, 28775, 30131, 30256, 31560 and 32439 of 2019. A.K. JAYASANKARAN NAMBIAR, J. For the Appellant : A. Kumar, P.J. Anilkumar, G. Mini, P.S. Sree Prasad, Abraham Job and Ajay V. Anand For the Respondent : C.E. Unnikrishnan, Special Government Pleader and T.C. Sowmiavathy JUDGMENT A.K. Jayasankaran Nambiar, J. 1. In these writ petitions, the issue that arises for consideration is the legality of the notices and assessment orders issued to the petitioners in connection with the assessment under the Kerala Value Added Tax Act (hereinafter referred to as the KVAT Act ) for the assessment years 2010-11 and 2011-12. The notices and orders are impugned, inter alia, on the ground that the authorities concerned did not have the jurisdiction to issue them since the amendments introduced to section 25(1) of the KVAT Act, through the Kerala Finance Acts of 2017 and 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation under section 25(1) for proceeding to determine the escaped turnover was changed from five years to six years from the end of the year to which the assessment relates and the third proviso thereto was amended to read as follows: Provided also that the period for proceeding to determine any assessment including those subjected to extension under section 25B which expires on 31st March, 2017, shall be extended up to 31st March, 2018. 4. The third proviso to section 25(1) was once again amended through the Kerala Finance Act, 2018, with effect from April 1, 2018 to read as follows: Provided also that the period for proceeding to determine any assessment including those subjected to extension under section 25B which expires on 31st March, 2017, shall be extended up to 31st March, 2019. 5. It is relevant to note, at this juncture, that on 8th September, 2016, the Constitution (One Hundred and First Amendment) Act, 2016 (hereinafter referred to as CAA for brevity) received the assent of the President and the erstwhile regime of levy of taxes on sale or purchase of goods, gave way to a new regime for levy of taxes on the supply of goods and services. Through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.' ... 19. Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier. 6. On going through the pleadings in the writ petitions and on considering the arguments advanced before me by counsel on either side, I find that the issues that arise for consideration in these writ petitions are as follows: (a) Whether under the provisions of section 25(1) of the KVAT Act, as amended by the Kerala Finance Act, 2017, and before the repeal of the KVAT Act on June 22, 2017, the six year period of limitation for re-opening assessments could be relied upon to issue pre-assessment notices in cases where, by March 31, 2017, the five year period for reopening assessments under the unamended provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrospective in its operation so as to revive assessments that had already attained finality prior to the date of amendment. 8. Alternatively, it is contended that even if the amendment to the main provision of section 25(1) of the KVAT Act can be seen as empowering the assessing authorities to re-open assessments for the assessment years up to six years prior to April 1, 2017, the third proviso cannot have the effect of empowering the authorities to re-open assessments beyond six years prior to April 1, 2017. This is because a proviso cannot expand the ambit of the main provision and must necessarily be subservient to it. Reliance is placed on the decisions in Gajraj Singh v. State Transport Appellate Tribunal, AIR 1997 SC 412, Gurcharan Singh Baldev Singh v. Yashwant Singh, AIR 1992 SC 180, Isha Valiamohamad v. Haji Gulam Mohamad Haji Dada Trust, AIR 1974 SC 2061 and J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422 (SC); [1994] 4 SCC 276 to support the said contention. 9. Per Contra, it is the submission of Sri C.E. Unnikrishnan, learned Special Government Pleader, that the amendment brought in with effect from April 1, 2017, conferred on the assessing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry authority to take away a right/immunity that has accrued to an assessee? The answer to that question is in the affirmative. It is well-settled that the Legislature can, through a retrospective amendment of the statutory provisions, take away such vested rights that have accrued to assessees. But, was there such a retrospective amendment in the instant cases? As already noticed, the amendment in question was expressly made effective only from April 1, 2017. The period for reopening assessments under section 25(1) of the Act was enlarged from five years to six years only with effect from April 1, 2017. The provisions of section 25(1), save the third proviso thereto, have therefore to be construed as having only a prospective operation. 12. As regards the third proviso to section 25(1), which too was amended with effect from the same date, to state that the period for proceeding to determine any assessment which expires on March 31, 2017 shall be extended up to March 31, 2018 , the position is slightly different. A Division Bench of this court in Commercial Tax Officer, Anchal v. S. Najeem [2019] 65 GSTR 127 (Ker); [2018] 4 KHC 666, while rejecting the argument of the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to interfere with the impugned judgments on the basis of the amendment made subsequent to the judgment. Though the legislature had the competence to extend the period of limitation with retrospective effect, the same was not done. We cannot but observe that even if such an exercise was carried out, necessarily there should have been a validation clause so as to get over the judgment of the writ court. Rai Ramkrishna, AIR 1963 SC 1667, Meerut Development Authority AIR 1997 SC 1467, Arooran Sugars Limited, AIR 1997 SC 1815 and Indian Aluminium Co., 1996 AIR SCW 1051 are cases in which the Legislature despite the judgment of a constitutional court; brought in amendments removing the defect pointed out in the judgments, and also provided a validation clause by which the action taken under the defective provision stood validated under the retrospective amendment made. This exercise is totally absent in the amendment made to section 25(1), substituting the period of limitation from five to six years. 13. Thereafter, however, the court referred to the decision in Binu Gopinath [2018] 55 GSTR 102 (Ker); [2018] 3 KHC 482 to observe as follows with respect to the amended provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. As we already noted, the second proviso to section 17(6) added by the amending Act is specifically intended to cover the assessment year 1994-95. When the Legislature has specifically made a provision regarding the period of limitation for completion of the assessment for 1994-95, in the absence of a challenge to the said provision it has to be given its full effect. Even in a case where the statute was amended by inserting a proviso enlarging the period of limitation for completion of assessment/re-assessment after the expiry of the period for completion of the assessment, the Supreme Court has held that the intention of the Legislature should be given its full effect. The second proviso as already noted, clearly expresses the intention of the Legislature in giving retrospective operation in respect of the assessment year 1994-95. Here it must be noted that even in the decision of the Supreme Court in S.S. Gadgil v. Lal and Co. [1964] 53 ITR 231 (SC) relied on by the assessee it was observed that the provision must be read subject to the rule that in the absence of an express provision or clear implication, the Legislature does not intend to attribute to the amending provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable; 3. It may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and 4. It may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision. 17. In the instant cases, as already noticed above, while the main part of section 25(1) clearly indicates that the extended period of six years for reopening assessments is to operate prospectively with effect from April 1, 2017, the third proviso seeks to carve out those assessments, where the period of re-opening would have expired by March 31, 2017, for a differential treatment, by stating that in such cases, the re-opening could be carried out before March 31, 2018. To treat the said proviso as having only prospective effect would render meaningless the words used by the Legislature in the said proviso and accord to it the same meaning as the main provision. Going by the tests enumerated in S. Sundaram Pitted [1985] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT Act through the Kerala Finance Act, 2018, did not have to consider the issue of legislative competence of the State Legislature to amend the KVAT Act, after the CAA, 2016, and the repeal of the KVAT Act pursuant thereto, on June 22, 2017. It is to a consideration of the said issue that I now turn. 19. As already noticed above, the amendments effected to section 25(1) of the KVAT Act, through the Kerala Finance Act, 2017, were before the repeal of the KVAT Act with effect from June 22, 2017. The provision as it stood then, and in particular the third proviso thereto, authorised the reopening of past assessments till March 31, 2018. The amendment effected through the Kerala Finance Act, 2018, with effect from April 1, 2018, enlarged the period for re-opening past assessments from March 31, 2018 to March 31, 2019. Under ordinary circumstances, and based on my findings above as regards the effect of the amendments brought into the third proviso to section 25(1) by the Kerala Finance Act, 2017, the legislative measures should have sufficed to justify a reopening of past assessments up to March 31, 2019, notwithstanding that the amendment itself was effective only from April 1, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to determine the intention of the Parliament, not only from the language used in the statute but also from surrounding circumstances and an understanding of the mischief that was sought to be remedied by the statute. When one applies the said test to the events that took place after the CAA, 2016, it cannot but be noticed that the very purpose of the CAA was to bring about a change in the system of indirect taxation in our country through the introduction of a goods and services tax, and the phasing out of the multitude of indirect tax levies, including value added taxes, that were levied and collected by the Centre and the States. Section 19 of the CAA 2016, which is the sunset clause in the said enactment, envisaged the continuation of the erstwhile system of taxation for a period of one year from the date of enactment of the CAA or till such time as the State Legislatures amended or repealed their respective VAT legislations, whichever was earlier. When the State Legislature repealed the KVAT Act, while simultaneously bringing into force the new State GST Act, with a savings clause of limited operation, it effectively acknowledged the absence of any power to legislate thereaf ..... 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