High Court of KeralaDivision Bench2022-11-03Appeals allowed; High Court order quashing reas...

WA Nos. 1757/2020; 15/2021; 22/2021; 24/2021; 1711/2020; 1709/2020 (State Goods and Services Tax Department & State of Kerala v various dealers)

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 appeals before the Appellate Authority by enclosing a copy of the judgment within four weeks from today. Delay due to pendency of the writ petitions is excused. If filed, the appeals shall be numbered, heard on merits, and disposed of in accordance with law.
Final Disposition: Appeals allowed; High Court order quashing reassessment notices set aside; liberty granted to dealers to file appeals before Appellate Authority; merits to be considered; delays excused.

Parties to the Case

Appellants / Petitioners

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

Respondents

B. Mohanachandran Nair (Proprietor, Prasanthi Cashew Company, Mangad, Kollam)
Prasanthi Cashew Company Pvt Ltd, Mangad, Kollam (represented by its Managing Director, B. Mohanachandan Nair)
Martin George
Roopam Constructions, Edayapuram Road, Asokapuram, Aluva
V.C. Constructions, Kangarapady, Kochi
Tara Exports, Kollam

Legal Representation & Advocates

Counsels for Petitioners

• V K Shamsudheen (Sr Government Pleader)

Counsels for Respondents

• Harishankar V Menon
• Meera V Menon
• K. Krishna

Case Synopsis & Summary

These writ appeals question the Kerala High Court's decisions quashing reassessment notices issued under the Kerala VAT Act (KVAT) in favour of dealers registered under KVAT. A common issue across the batch is the proper interpretation of the limitation period for issuing reassessment notices under Section 25 of the KVAT Act, particularly after amendments introduced by Finance Act 11/2017, which extended the period from five to six years and altered the expiry date of ongoing proceedings. The appellants State Goods and Services Tax Department, represented by the Government Pleader, contend that the notices issued within the amended six-year window are valid and that the decision in Baiju A A v. State Tax Officer provides controlling guidance, though they acknowledge it was not unexpected that nuances exist. The respondents or dealers press that the Amending Act is prospective and would not apply to the subject assessment years; thus, no vested right accrues with the extension, and the pre-amendment tenets should govern. The Kerala High Court’s reasoning is reversed in part: the court finds the Amending Act to be prospective and not retroactive, sets aside the judgments under appeal, and permits the dealers to file appeals before the Appellate Authority within four weeks, with delays excused, and directs merits-based adjudication thereafter. The batch result is that the writ appeals are allowed.

Provisions of Law Cited

KVAT Act, Section 25KVAT Act, Section 25(1)KVAT Act, Section 25BFinance Act 11/2017 (amendment to Section 25)

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants argued that the core issue is squarely covered by Baiju A A v. State Tax Officer (2020 (1) KHC 39). The notice issued under Section 25 of the KVAT Act is within the amended six-year period; the 2017 amendment extended the limitation, and the period extends up to 31 March 2018 for those assessments falling within the extended window. The appellants concede to applying Baiju A A's approach in disposing of writ petitions. They contend the amended provision should be applied to the subject years and emphasize that the period of limitation was enlarged by the Amending Act, thus permitting issuance of reassessment notices within the extended window. They urge this Court to set aside the High Court’s order and allow the writ petitions holding the reassessments as valid within the extended period.

Contentions of Respondents

The respondents contended that Baiju A A and the 22.08.2022 W.A. No. 48/2020 decisions held that the Amending Act is applicable from 01.04.2017, and thus prospective in operation. They argued that the amendment is prospective and would not apply to the subject assessment years, undermining the dealers’ reliance on the extended period. They maintained that the dealers had no vested right or accrued interest in the reassessment process under Section 25, and that the unamended five-year limit may not be extended retroactively. They asserted that reliance on the Baiju A A line of reasoning should not override the statutory amendment’s prospective effect and that the matter requires a merits-based consideration in light of the amended law.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Baiju A A v. State Tax Officer	2020 (1) KHC 39	Distinguished	Cited as a controlling precedent but distinguished by the present decision on the prospective nature of the Amending Act.
Commercial Tax Officer v. Najeem	2019 (27) KTR 119 (Ker.)	Mentioned Only	Cited for background on limitation issues but not relied upon in the decisive reasoning.
W.A. No. 48/2020 (Judgment dated 22.08.2022)	W.A. No. 48/2020	Mentioned Only	Cited as a reference in related batch decisions but not followed in the present judgment.

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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