The Kerala High Court set aside the order of a single judge which directed to deposit 25% of the dues of tax assessed within two weeks as a condition for grant of stay of recovery of balance tax, interest and penalty. It was found that the assessment order was passed beyond 6 years which is the Limitation period under the Kerala Value Added Tax ( KVAT ) Act, 2003.
The interim order of a Single Judge while adjourning the writ petition to a later date to enable the Government Pleader to file a counter affidavit in the matter, further directed the appellant M/s URC Construction Pvt Ltd to deposit 25% of the dues of tax assessed under assessment order within two weeks as a condition for grant of stay of recovery of balance tax, interest and penalty pending disposal of the writ petition.
Counsel for the appellant submitted that since the appellant could not deposit the 25% as directed by the Single Judge within the time granted in the writ petition, the said stay was vacated subsequently by another Single Judge by the order dated 13.03.2024 and the writ petition was posted in due course to enable the Government Pleader to file a counter affidavit.
The issue urged in the writ petition was essentially with regard to the legality of order of assessment, which according to the counsel had been passed beyond the period of limitation prescribed under the statute (KVAT Act). The assessing authority appears to have ignored the said contention on limitation apparently, because the assessment order was passed pursuant to an audit objection raised in terms of Section 25A of the KVAT Act.
The issue as to whether an audit objection under Section 25A of the KVAT Act would have the effect of overriding the limitation period prescribed under Section 25(1) of the said Act is pending consideration before another Single Judge of the Court.
Since the issue of applicability of the limitation provision under Section 25(1) on the facts of the instant case is under consideration before the Court, the division bench of Dr. Justice A K Jayasankaran Nambiar & Justice Syam Kumar V M viewed that the appellant herein had established a prima facie case for the grant of a stay pending disposal of the writ petition. This is more so because the express provisions of Section 25(1) of the KVAT Act clearly indicate that the limitation period for completion of assessment is six years from the end of the relevant assessment year.
The Court allowed the writ appeal setting aside that part of the impugned order of the Single Judge that directs the appellant to deposit 25% of the dues of tax assessed within a period of two weeks as a condition for grant of stay of recovery of balance tax, interest and penalty pending disposal of the writ petition.
While allowing the appeal, the court held that pending disposal of the writ petition, recovery proceedings for recovery of the amounts confirmed against the appellant by order shall be kept in abeyance.
Smt. K. Krishna, the counsel appeared for the appellant and Sri.V.K.Shamsudheen, the Government Pleader for the respondents.
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