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TMI Blog2025 (3) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... India Pvt. Ltd., Mr. Surendra Raheja, C.A. Ajayakumar Proprietor, M/s. Royal Agencies, Keechery, Bismi Arcade, M/s. Five Star Associates, E.K. Prabhakaran, Mohammed Shaji (Proprietor) Hallmark Marketing, M/s. Swadeshi Aggregates, M/s. Valummal Jewellery, Thomas K. Vattukalam, Former Partner Godavari Agencies, Sree Vinayaka Agencies, M/s. Rajakumari Shopping [P] Ltd., Sivajith Proprietor, M/s. Sree Sathyametal Crusher, M/s. Vijay Tanks And Vessels Pvt Ltd., M/s. NJK Builders P Ltd., Anzari Hardwares, Palghat Automotive Pvt. Ltd., Smt. Savithry Amma Proprietorix, M/s. Sakthi Agencies, M/s. Koola Timber Industries & Saw Mill, M/s. Three Star Metal Crusher, Sobha Ltd., M/s. GEO Foundations And Structures Pvt. Ltd., Binu Agency, Saa Cellular Private Limited, Mullackals, Fathima Engineering Company (P) Ltd., Regal Agencies, Parackal Granite Kerala (P) Ltd., Pratap R Nair, Proprietor 'M/s. Sun Food Corporation, Kannan Devan Hills Plantations Company Pvt. Ltd., Thamara Real Estate Holding And Development Private Limited, Versus M/s. Omega Precured Treads, M/s. Kiran Granite Industries, M/s. Palliyalil Granite Industries, M/s. Pipe Land, M/s. Malabar Agencies, Thalassery, M/s. Peoples ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. K. Latha, By Adv. Sri. P.S. Soman Pulladan, By Adv. Smt. T. Radhamony (K/823/1989), By Sri. Mohammed Rafiq, Spl. Government Pleader (Taxes), ORDER DR. A.K. JAYASANKARAN NAMBIAR, J. In this batch of cases comprising of O.T. Revisions, Writ Petitions and Writ Appeal, the main issue that arises for consideration is whether notwithstanding the fact that the completion of an assessment under the Kerala Value Added Tax Act [hereinafter referred to as the "KVAT Act"] has become barred by limitation under Section 25 (1) of the KVAT Act, the mere fact that a notice is issued by the Revenue invoking the provisions of Section 25A of the KVAT Act would enable the Revenue to complete a re-assessment by ignoring the period of limitation under Section 25 (1) of the KVAT Act ? 2. While the O.T. Revisions preferred by the assessees impugn the orders of the Appellate Tribunal that uphold the contention of the Revenue that re-assessment proceedings initiated under Section 25A of the KVAT are not subject to the limitation period prescribed under Section 25 (1) of the KVAT Act, the O.T. Revisions and Writ Appeal preferred by the State impugn the orders of the Appellate Tribunal/Single Judge t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection has been made. Provided that no order under the section shall be passed without giving the dealer an opportunity being heard." As already noticed above, the main issue that arises for consideration is whether the Revenue can proceed to re-assess an assessee by placing reliance on a report of the Comptroller and Auditor General of India [CAG], by ignoring the period of limitation of five years/six years envisaged in Section 25 (1) of the KVAT Act. 4. We have heard Sri. A. Kumar, the learned senior counsel for the petitioners as also Sri. Mohammed Rafiq, the learned senior Government Pleader for the respondents. 5. The arguments of the learned counsel appearing for the assessees, briefly stated, is as follows: * Section 25A begins with a non-obstante clause and empowers the Assessing Authority to rely on an additional ground, other than those contained in Section 25 (1) of the KVAT Act, to determine whether or not to re-assess the assessee dealer. The non-obstante clause does not, however, dispense with the requirement of the Assessing Authority thereafter following the procedure under Section 25 (1) of the KVAT Act, within the period of limitation prescribed therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer. ● Elaborating on the scope and purport of Section 25A of the KVAT Act, it is the submission of the learned Government Pleader that under normal circumstances, the CAG report is one that is received by the Revenue at a later point in time after the initial assessment in relation to an assessee is completed. According to him, it is with a view to prevent an evasion of tax on account of the efflux of the time limit granted for exercise of power under Section 25 (1) of the KVAT Act, that Section 25A was introduced through the Kerala Finance Act, 2012 by deliberately refraining from prescribing a time limit for the exercise of power under that Section. His contention, in other words, is that it is precisely when an Assessing Authority is otherwise incapacitated on account of the limitation provision under Section 25 (1) that Section 25A comes to his rescue and empowers him to complete a fresh assessment against an assessee without being bound by any time limit for the exercise of the power. ● It is submitted that while the phrase "any reason" under Section 25 (1) of the KVAT Act can take in even a change of opinion by the Assessing Officer and consequently, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the KVAT Act and Rules or files a defective return, then the assessment is completed on best judgment basis by the Revenue after following the procedure under Section 22 of the KVAT Act. In certain cases, as enumerated under Section 24 of the KVAT Act, an assessment can be completed pursuant to consideration of audit objections in relation to the details furnished by the assessee along with his returns. The assessments completed under Sections 21, 22 and 24 can still be re-opened in terms of Section 25 of the KVAT Act to assess such turnover as escaped assessment to tax in an earlier assessment. The power to assess escaped turnover under Section 25 has, however, to be exercised within the period stipulated under the KVAT Act for the exercise of such power. The said period was five years from the end of the assessment year concerned till 31.03.2017 and was extended to six years from the end of the assessment year concerned thereafter. 8. Section 25A begins with a non-obstante clause, and it provides for nothing more than an additional ground on which the power to re-assess can be exercised by the Assessing Authority. The scope of that power can be gathered from the words used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les of fairness in taxation that form an integral aspect of it. We are therefore of the view that there cannot be an exercise of power under Section 25A of the KVAT Act beyond the period of limitation prescribed under Section 25 (1) of the KVAT Act. In fact the provisions of Section 25A allude to this aspect when it refers to the satisfaction to be recorded by the Assessing Officer of the "lawfulness" of an audit objection. In our view, one of the aspects of lawfulness would also be the date by which the audit objection is communicated by the CAG. If the audit objection is received at a point in time that is beyond the period of limitation envisaged for re-assessment under Section 25 (1) of the KVAT Act, then the Assessing Officer cannot treat the said objection as 'lawful' for the purposes of exercise of his power under Section 25A of the KVAT Act. 11. We thus hold that in cases where the completion of an assessment under the KVAT Act has become time barred by virtue of the limitation provisions under Section 25 (1) of the KVAT Act, the Revenue cannot proceed to re-assess an assessee on the basis of a subsequent report obtained from the CAG. 12. The O.T. Revisions are th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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