In a ruling in favour of Bhima Jewellery, the Kerala High Court held that assessment cannot be re-opened by department if limitation period expired before amendment extending timeline for reopening. It was viewed that in those cases where the erstwhile period of limitation of five years had already expired before the date of the amendment of Section 25(1) in 2017, the Revenue would not be permitted to re-open assessments that had been settled.
The assessee- respondent challenged the assessment order under Section 25(1) of the Kerala Value Added Tax Act ( KVAT Act ) for the 2013-2014 assessment year. The primary contention was that the order violated the principles of natural justice, as the notice was issued on 12.02.2020, and the assessment was hastily completed on 16.03.2020 without providing sufficient opportunity for a response.
The Kerala High Court allowed the petition on the ground of limitation, aggrieved by this, the department challenged before the Kerala High Court. It was argued that the Assessing Officer’s justification for expediting the process believing the assessment had to be completed by 31.03.2020 was incorrect, as only the issuance of the pre-assessment notice was mandated by that date, allowing assessment completion thereafter.
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The department submitted that the Single Judge erred in assuming that the case of the assessee was one of the assessment order being barred by limitation. She pointed out that the assessment order would not be barred by limitation as was believed by the Assessing Officer while completing the assessment in haste.
The court found that KVAT Act was amended in 2017, whereby the period of limitation for re-opening the assessment was enhanced from five years to six years. The Division Bench of Justices A.K. Jayasankaran Nambiar and K.V. Jayakumar observed that in those cases where the erstwhile period of limitation of five years had already expired before the date of the amendment of Section 25(1) in 2017, the Revenue would not be permitted to re-open assessments that had been settled, through a fresh notice issued thereafter invoking the six-year period of limitation.
The bench set aside the order and remanded the matter to the Assessing Authority for a fresh decision on merits, after hearing the assessee. GP. Resmitha Ramachandran appeared for the appellant and K.P. Abdul Azees appeared for the respondent.
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