SANGEETH KUMAR M v. ASST.COMMISSIONER-II SPECIAL CIRCLE, STATE GST DEPARTMENT, THIRUVANANTHAPURAM; THE COMMISSIONER, STATE GST DEPARTMENT, THIRUVANANTHAPURAM; STATE OF KERALA REPRESENTED BY SECRETARY (TAXES), GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE EASWARAN S.`** ``` FRIDAY, THE 26[TH] DAY OF JULY 2024 / 4TH SRAVANA, 1946 ``` ``` WP(C) NO. 32577 OF 2018 ``` ## **`PETITIONER/S:`** ``` SANGEETH KUMAR M PROPRIETOR M/S GUHAN GAS AMBALATHARA THIRUVANANTHAPURAM PIN CODE-695026 ``` ``` BY ADVS. U.BALAGANGADHARAN V.JAYANANDAKUMAR ``` ## **`RESPONDENT/S:`** - **`1 ASST.COMMISSIONER -II SPECIAL CIRCLE STATE G S T DEPARTMENT THIRUVANANTHAPURAM PIN-695002`** - **`2 THE COMMISSIONER, STATE GST DEPARTMENT, THIRUVANANTHPAURAM, PIN-695002`** - **`3 STATE OF KERALA REPRESENTED BY SECRETARY (TAXES), GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN-695001.`** ``` SRI. SYED M. THANGAL- SPL. GP ``` ``` THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15.7.2024, THE COURT ON 26.07.2024, DELIVERED THE FOLLOWING: ``` W.P.(C) No.32577 of 2018 2 ## **EASWARAN S. , J.** ## **------------------------W.P.(C) No.32577 of 2018 ----------------------------------Dated this the 26[th] day of July 2024** ## **JUDGMENT** The petitioner who is an assessee on the rolls of the 1st respondent has come up before this Court challenging Ext.P2 order issued under Section 25(1) of the Kerala Value Added Tax Act, 2003 (‘the KVAT Act’, for short ). The petitioner was issued with a notice of assessment dated 10.7.2018 under Section 25(1) of the KVAT Act reopening the assessment for the years 2011-2012. Though the petitioner filed reply challenging the jurisdiction of the 1st respondent, to initiate the assessment proceedings under Section 25(1) of the KVAT Act, without considering the same, the assessment was completed. The order of assessment is challenged on the ground that the proceedings for reopening of the assessment is without W.P.(C) No.32577 of 2018 3 jurisdiction and therefore the petitioner need not avail the alternate remedy of filing an appeal against Ext.P2 order. 2. The 1st respondent has filed a counter affidavit in which it is stated that Section 42(3) of the KVAT Act, 2003 and Section 10(4) of the Finance Act, 2018 permits the assessing authority to complete the assessment for the year 2011-12 up to 31.03.2019. Further, reliance is placed on Ext.R1(a), notice dated 8.11.2017, which according to the 1st respondent is a sufficient compliance of the provisions of Section 25(1) of the KVAT Act. 3. I have heard Sri. U Balagangadharan, the learned counsel appearing for the petitioner and Sri. Sayed M Thangal, the learned Senior Government Pleader. 4. The point which falls for consideration of this Court is W.P.(C) No.32577 of 2018 4 as to whether Ext.P2 order of assessment would withstand the scrutiny of law. 5. The learned counsel for the petitioner would rely on the judgment of the Division Bench of this Court in **Commercial Tax Officer and Ors. vs. S Najeem and another** [2020 (28) KTR 1 (Ker)] to contend for the proposition for proceeding under Section 25(1), necessarily a notice under Section 25(1) of the Act is required. According to the learned counsel, the judgment of the Division Bench was affirmed by the Honourable Supreme Court in Civil Appeal Nos.4306 of 2022 and connected cases. Therefore, according to the learned counsel appearing for the petitioner, the order of assessment is _per se_ without jurisdiction and therefore the writ petition is perfectly maintainable. W.P.(C) No.32577 of 2018 5 6. On the other hand the learned Government Pleader placed reliance under Section 42(3) of the KVAT Act to contend that in a proceeding under Section 42(3) of the KVAT Act, there is no limitation provided and therefore the revenue is entitled to initiate appropriate proceedings without being affected by the rigor placed on Section 25(1) of the KVAT Act. It is further contended that the petitioner, while filing his return, had deliberately failed to disclose the imposition of penalty and there was a suppression in the turn over. It is under these circumstances that, by Ext.P1, the assessing officer intended to reopen the assessment. 7. I have considered the rival submissions raised across the Bar. 8. The only question to be considered by this Court is as W.P.(C) No.32577 of 2018 6 to whether the respondents are entitled to invoke Section 42(3) of the KVAT Act in order to sustain Exts.P1 and P2. It is admitted that the assessment year for which the proceedings are now initiated are for the year 2011-2012. Going by the scheme of the Value Added Tax, the period fixed for reopening of the assessment admittedly expired on 31.3.2018. This is as per the provisions contained under Section 25(1) of the KVAT Act as stood amended on 1.4.2017. The question as to whether the assessment could be reopened without any notice under Section 25(1) was considered by the Division Bench in **Commercial Tax Officer and Ors. vs. S Najeem and another** [2020 (28) KTR 1 (Ker)]. Going by the principles laid down by the Division Bench, it is explicitly clear that, for initiation of proceedings under Section 25(1), a prior notice is W.P.(C) No.32577 of 2018 7 required. The further question would be as to whether the notice issued under Ext.R1(a) would be a sufficient compliance to the provisions of Section 25(1) of the KVAT Act. If, as contended by the learned Government Pleader, Ext.R1(a) was sufficient, then the assessing authority need not have issued Ext.P1 notice under Section 25(1) of the KVAT Act. Admittedly, the said notice was issued on 10.7.2018 which is beyond the period of six years as contemplated under the provisions of Section 25(1) as amended in the year 2017. 9. The next question to be considered would be as to whether the assessing officer would rely on sub-section 3 of Section 42 of the provisions of the KVAT Act. In **MCP** **Enterprises vs State of Kerala** [2020 (2) KLT 295] this Court was called upon to decide the interplay between Section 25(1) W.P.(C) No.32577 of 2018 8 and Section 42(3) of the KVAT Act 2003. It was held by the Learned Single Judge that though Section 42(3) would operate retrospectively the operation of the said provision is controlled by the limitation prescribed under Section 25(1). The State of Kerala appealed against the said Judgment in W.A. No.676 of 2020. The Division Bench by judgment dated 30-11-2022 upheld the findings of the Learned Single Judge in **MCP Enterprises (Supra).** The Division bench while affirming the judgment of the learned Single Judge specifically found that the rigor of Section 25(1) of the KVAT Act could not be diluted by placing reliance on the provisions under Section 42(3) of the KVAT Act. 10. Therefore, in view of the above discussion, this Court finds that the present proceedings initiated by the 1st W.P.(C) No.32577 of 2018 9 respondent under Section 25(1) of the KVAT Act is _per se_ illegal and without jurisdiction. Consequently, the order of assessment also has to fail for want of jurisdiction. Accordingly, the writ petition is allowed. Ext.P1 notice and Ext.P2 assessment order are quashed. The writ petition is ordered accordingly. No order as to costs. Sd/- **EASWARAN S. , JUDGE** NS W.P.(C) No.32577 of 2018 10 ## **`APPENDIX OF WP(C) 32577/2018`** ## **`PETITIONER EXHIBITS`** ``` EXHIBIT P1A TRUE COPY OF THE NOTICE DATED 10/7/2018 ISSUED U/S.25(1) OF KVAT ACT, 2003 BY THE 1ST RESPONDENT EXHIBIT P2A TRUE COPY OF THE ORDER DATED 31/8/2018 ISSUED BY THE 1ST RESPONDENT ```