High Court of KeralaDivision Bench2022-11-03Appeals allowed; judgments under appeal set asi...

WA Nos. 1757/2020; 15/2021; 22/2021; 24/2021; 1711/2020; 1709/2020

Case / Petition Number:WA Nos. 1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: S. V. Bhatti
Bechu Kurian Thomas
Judgment Date: 2022-11-03
Court Decision / Holding: Appeals are allowed. The judgments under appeal are set aside. The dealers/respondents are given liberty to file appeal before the Appellate Authority by enclosing a copy of the judgment within four weeks from today. The delay occasioned during the pendency of the appeal and writ petition is excused. The appeals, if filed, shall be numbered, heard on merits, and disposed of in accordance with law.
Final Disposition: Appeals allowed; judgments under appeal set aside; liberty to file appeals before Appellate Authority within four weeks; delays excused; matters to be heard on merits

Parties to the Case

Appellants / Petitioners

Deputy Commissioner-III, Special Circle, State Goods and Services Tax Department, Kollam
State of Kerala, represented by its Secretary, Taxes Department

Respondents

B. Mohanachandran Nair
Prasanthi Cashew Company Pvt Ltd
Martin George
Roopam Constructions
V.C. Constructions
Tara Exports

Legal Representation & Advocates

Counsels for Petitioners

• V K Shamsudheen

Counsels for Respondents

• Harisankar V Menon
• Meera V Menon
• K. Krishna

Case Synopsis & Summary

This batch of writ appeals from the Kerala High Court concerns reassessment notices issued under the Kerala Value Added Tax Act (KVAT) and the interpretation of the amended statute extending the limitation for reassessment. Heard by a Division Bench consisting of Justice S.V. Bhatti and Justice Bechu Kurian Thomas, the appeals challenge notices issued under Section 25 and the amendments to Section 25B. The core issue is whether the Finance Act 2017 amended period of limitation (from five to six years) applies to assessments and reassessments for years prior to 01.04.2017 and whether such amendment is prospective or retrospective. The appellants, i.e., the Deputy Commissioner-III and the State of Kerala, contend that the six-year period extends the window for issuing reassessment notices and rely on the Baiju A A decision and related rulings to strike down reassessment notices issued after the pre-amendment window. The respondents/dealers counter that the amended provision is prospective and would not apply to the subject assessment years, arguing for adherence to older judgments. The court analyzes these contentions, finds that the amended provision affects the applicable window and that the judgments under appeal cannot be sustained. Consequently, the court allows the appeals, sets aside the challenged judgments, directs filing of appeals before the Appellate Authority within four weeks, and excuses delays, so the matters may be adjudicated on merits under the law.

Provisions of Law Cited

KVAT Act, Section 25(1)KVAT Act, Section 25B

Legal Doctrines & Maxims

Prospective vs retrospective operation of statutes
Vested rights doctrine (right accrued)
Construction principles for amended statutes in relation to ongoing proceedings

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants contend that the batch of appeals raises the issue whether the amended six-year period for issuing reassessment notices under the KVAT Act is applicable to the subject years. They submit that the decision in Baiju A A v. State Tax Officer and related rulings have guided the approach, and that the notices within the extended window are valid. They seek to quash judgments to the extent they rely on the pre-amendment framework and urge that reassessments be governed by the amended period, with liberty to pursue appeals before the Appellate Authority.

Contentions of Respondents

The respondents argue that the Amending Act 2017 provides a prospective extension and would not apply to the subject assessment years. They rely on Baiju A A and the 22/08/2022 W.A. No.48/2020 decision as support for a limited or non-retroactive effect, and contend that the pre-amendment framework governs those years. They urge the court to sustain the lower judgments based on older interpretations.

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
Baiju A A v. State Tax Officer	2020 (1) KHC 39	Overruled	The present judgment overturns the Baiju A A line of decisions by holding that the Amending Act extends the period and that the judgments relying on Baiju A A cannot be sustained.
Commercial Tax Officer v. Najeem	2019 (27) KTR 119 (Ker.)	Mentioned Only	Cited as a test considered by the court but not adopted as controlling authority in the batch.
Tax Officer v. Najeem	2018 (3) KLT 877	Mentioned Only	Referenced in context of limitations and rights accrued but not a dispositive authority in the present decision.
W.A. No. 48 of 2020	Judgment dated 22.08.2022	Overruled	Earlier decision cited but rejected in this judgment as being inconsistent with the current interpretation of the amended Act.

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Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 3[RD] DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WA NO. 1757 OF 2020 AGAINST THE JUDGMENTWP(C) 21510/2020 OF HIGH COURT OF KERALA ## APPELLANT/S: - 1 THE DEPUTY COMMISSIONER -III, SPECIAL CIRCLE, STATE GOODS AND SERVICES TAX DEPARTMENT, KOLLAM 691 002. - 2 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM 695 001. BY SR GOVERNMENT PLEADER V K SHAMSUDHEEN ## RESPONDENT/S: B. MOHANACHANDRAN NAIR PROPRIETOR, MS. PRASANTHI CASHEW COMPANY, MANGAD, KOLLAM. BY ADV HARISANKAR V MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.11.2022, ALONG WITH WA.15/2021, 22/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **-2-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 3[RD] DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WA NO. 15 OF 2021 AGAINST THE JUDGMENTWP(C) 21506/2020 OF HIGH COURT OF KERALA APPELLANT/S: - 1 THE DEPUTY COMMISSIONER-III, SPECIAL CIRCLE, STATE GOODS AND SERVICES TAX DEPARTMENT, KOLLAM-691002. - 2 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM-695001. BY SR GOVERNMENT PLEADER V K SHAMSUDHEEN RESPONDENT/S: PRASANTHI CASHEW COMPANY PVT LTD, MANGAD, KOLLAM, REPRESENTED BY ITS MANAGING DIRECTOR, B.MOHANACHANDRAN NAIR. BY ADV HARISANKAR V MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.11.2022, ALONG WITH WA.1757/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **-3-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 3[RD] DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WA NO. 22 OF 2021 AGAINST THE JUDGMENT WP(C) 23283/2020 OF HIGH COURT OF KERALA APPELLANT/S: - 1 THE STATE TAX OFFICER(WORKS CONTRACT), STATE GOODS AND SERVICES TAX DEPARTMENT, MATTANCHERRY, KOCHI 682 002 - 2 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN 695 001 BY SR GOVERNMENT PLEADER V K SHAMSUDHEEN ## RESPONDENT/S: MARTIN GEORGE, AGED 49 YEARS, BUILDING NO. VI/114 KACHAPILLY HOUSE, ANGAMALY SOUTH P.O, ERNAKULAM 683585 BY ADV HARISANKAR V MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.11.2022, ALONG WITH WA.1757/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **-4-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 3[RD] DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WA NO. 24 OF 2021 AGAINST THE JUDGMENTWP(C) 20799/2020 OF HIGH COURT OF KERALA ## APPELLANT/S: - 1 THE STATE TAX OFFICER (WORKS CONTRACT),STATE GOODS AND SERVICES TAX DEPARTMENT,MATTANCHERRY,ERNAKULAM - 682 002. - 2 STATE OF KERALA,REPRESENTED BY ITS SECRETARY,TAXES DEPARTMENT,GOVT. SECRETARIAT,THIRUVANANTHAPURAM695 001. BY SR GOVERNMENT PLEADER V K SHAMSUDHEEN ## RESPONDENT/S: ROOPAM CONSTRUCTIONS EDAYAPURAM ROAD, ASOKAPURAM P.O., ALUVA - 683 101, REPRESENTED BY ITS MANAGING PARTNER SRI.V.S.MYTHEEN. BY ADVS.SRI.HARISANKAR V. MENON,SMT.MEERA V.MENON SMT.K.KRISHNA THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.11.2022, ALONG WITH WA.1757/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **-5-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 3[RD] DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WA NO. 1711 OF 2020 AGAINST THE JUDGMENTWP(C) 24438/2020 OF HIGH COURT OF KERALA ## APPELLANT/S: - 1 THE STATE TAX OFFICER (WC), STATE GOODS AND SERVICES TAX DEPARTMENT, ERNAKULAM-682 018 - 2 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM,PIN695 001 BY SR GOVERNMENT PLEADER V K SHAMSUDHEEN ## RESPONDENT/S: V.C.CONSTRUCTIONS, VANACHIRACKAL HOUSE, XIII/294, KANGARAPADY, THRIKKAKKARA ,KOCHI-682 021, REPRESENTED BY ITS MANAGING DIRECTOR, YEJO JOHN BY ADV HARISANKAR V MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.11.2022, ALONG WITH WA.1757/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **-6-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 3[RD] DAY OF NOVEMBER 2022 / 12TH KARTHIKA, 1944 WA NO. 1709 OF 2020 AGAINST THE JUDGMENTWP(C) 21135/2020 OF HIGH COURT OF KERALA APPELLANT/S: - 1 ASSISTANT COMMISSIONER (ASSESSMENT), SPECIAL CIRCLE, STATE GOODS AND SERVICE TAX DEPARTMENT, KOLLAM-691 002 - 2 STATE OF KERALA, REPRESENTED BY SECRETARY, TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM-695 001 BY SR GOVERNMENT PLEADER V K SHAMSUDHEEN RESPONDENT/S: TARA EXPORTS, NO.11,MUSALIAR NAGAR, 2ND MILE STONE, KILIKOLLOR ,P.O.KOLLAM-691 004, REPRESENTED BY ITS MANAGING PARTNER, NARAYAN BHARATHAN BY ADV HARISANKAR V MENON THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.11.2022, ALONG WITH WA.1757/2020 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **==> picture [16 x 9] intentionally omitted <==** **==> picture [109 x 15] intentionally omitted <==** [WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020] S.V. Bhatti, J. Heard Mr V K Shamsudheen, learned Senior Government Pleader and Mr Harisankar V Menon for parties. 2. A common identical question arises for consideration in the subject appeals. The State Goods and Services Tax (SGST) Department, represented by its Officers/Revenue is the appellant. The respondents are individual and independent dealers registered under the KVAT Act. The judgment under appeal reads as follows: “It is agreed by the Counsel on either side that the issue involved in this writ petition is squarely covered in favour of the petitioner by the decision of this Court in **Baiju A A and others v. State Tax Officer [2020 (1) KHC 39** ]. Accordingly, following the said judgment, the writ petition is allowed by WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **==> picture [16 x 10] intentionally omitted <==** quashing Ext.P2 assessment order with consequential reliefs to the petitioner.” 3. Mr Shamsudheen appearing for the appellants, contends that in the batch of appeals the applicability of the principle laid down in _**Baiju A A v. State Tax Officer**_[1] arises in the circumstances in each one of the cases. The notice issued under Section 25 of the KVAT Act is well within the period of limitation for issuing a re-assessment notice under Section 25(1) of the KVAT Act. Without mincing any expression, the learned counsel fairly states that for want of instructions or proper verification the appellants’ counsel consented to disposing of the writ petitions by following the principle laid down in _**Baiju A A**_ Case. Statement by the counsel appearing for both parties ignores a crucial test considered by this Court in _**Commercial**_ 1 2019 (27) KTR 119 (Ker.) WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **==> picture [16 x 10] intentionally omitted <==** _**Tax Officer v. Najeem**_[2] and _**Baiju A A**_ , namely with the expiry of 5 year period of limitation on the completion of 31.03.2017, a right is said to have been accrued in favour of dealers from the rigour or ordeal of reassessment. Therefore, as the Amended Act is made effective from 01.04.2017, notice under Section 25 of the KVAT Act could not be issued. To fit his argument it is stated, that the 5-year period expires by 31.03.2017 up to the Assessment Year 2011-12. Section 25(1) of the KVAT Act, as amended with effect from 01.04.2017, reads thus: “(3) in section 25, in sub-section (1), - (i) for the words "five years", the words "six years" shall be substituted; (ii) for the third proviso, the following proviso shall be substituted, namely: "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 > 2 2018 (3) KLT 877 WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **==> picture [22 x 10] intentionally omitted <==** extended up to 31st March, 2018."; 4. In the cases on hand one has to examine whether the notices issued are within the period of limitation stipulated by the amended provision and also before a right accrued in favour of the dealer. Even assuming that _**Baiju A A**_ case was confirmed by a Division Bench of this Court, to which one of us (Justice S V Bhatti) was a party, still, if the notice was issued within the period of limitation, then it cannot be quashed by referring to the principles laid down in _**Baiju A A**_ case. The following table was commended for clarity on the period within which the notice has to be issued. |WA No|Year|5 year only|6 year only|Notice issued on| |---|---|---|---|---| |1757/20|2014-15|31.03.20|31.03.21|25.06.2020| |1709/20|2013-14|31.03.19|31.03.20|03.02.2020| |15/21|2014-15|31.03.20|31.03.21|25.06.2020| |1711/20|2014-15|31.03.20|31.03.21|15.06.2020| WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 ## **-11-** |22/21|2013-14|31.03.19|31.03.20|19.02.2020| |---|---|---|---|---| |24/21|2013-14|31.03.19|31.03.20|23.01.2020| Therefore, he prays for setting aside the judgment under appeal. 5. The learned counsel appearing for the respondents does not dispute the dates referred to above, but the argument in support of judgment under appeal is that the judgments in _**Baiju A A**_ case and judgment dated 22.08.2022 in W.A. No.48/2020, have held that the Amending Act is applicable from 01.04.2017. Therefore, it is argued that the amendment since is prospective and would not be applicable to the subject Assessment Years. We are afraid the said argument, firstly, is against the well-established principles of construction on whether a Statute is prospective or retrospective, and, secondly, against the very dictum considered and laid down by this court WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **==> picture [22 x 10] intentionally omitted <==** in the decisions referred to above. 6. Illustratively stated, in W.A. No.1709 of 2020 the dealer is served with a reassessment notice for the year 2013-14. According to the unamended period of limitation, the Department has jurisdiction to issue a reassessment notice on or before 31.03.2020. The period of limitation is changed with effect from 01.04.2017. Therefore, as on the date, when the period is enlarged from 5 years to 6 years, the dealer does not have a vested right or accrued interest _vis-à-vis_ the reassessment procedure under Section 25. 6.1 When the provision is amended enhancing the period of limitation from 5 years to 6 years, the issuance of notice is well within the jurisdiction, and no exception could be taken. The argument of the respondents is accepted by this Court then, the amendment made through Finance Act 11/2017 is made WA Nos.1757/2020, 15/2021, 22/2021, 24/2021, 1711/2020, 1709/2020 **==> picture [22 x 10] intentionally omitted <==** more prospective than what is intended by the Legislature and the judgments of this Court. The subtle attempt made to sustain the judgments under appeal does not find favour with us for the above reasons. Hence, the judgments under appeal are set aside. The dealers/respondents herein are given liberty to file appeal before the Appellate Authority by enclosing a copy of the judgment within four weeks from today. The delay occasioned during the pendency of the appeal and the writ petition is excused. The appeals if filed shall be numbered, be heard on merits, and disposed of in accordance with law. Appeals are allowed. Sd/- S.V.BHATTI JUDGE Sd/- BECHU KURIAN THOMAS JUDGE jjj