M/S. Engineering Projects INDIA LTD. vs. The State Tax Officer-Ii (Works Contract)
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Cause title — parties, addresses and appearances
J U D G M E N T The petitioner is a Public Sector Undertaking engaged in execution of work contract, having registration under the provisions of the Kerala Value Added Tax Act, 2003 (for brevity 'the KVAT Act'). The petitioner had filed returns under the KVAT Act satisfying the tax payable thereunder. The 1st respondent issued Ext.P1 notice dated 18.01.2020 under Section 25(1) read with Section 42(3) of the KVAT Act for the assessment year 2013- 2014 proposing to carryout assessment for escaped turnover. On receipt of Ext.P1 notice, the petitioner submitted Exts.P2 reply dated 12.03.2020 and P2(a) reply dated 20.03.2020 along with supporting documents pointing out that the allegations in Ext.P1 are not correct and requested to drop the same. The assessment was finalised on 21.03.2020 as evidenced by Ext.P3 order. As per Section 25(1) of the KVAT Act, assessment of escaped turnover has to be assessed by the assessing authority within five years from the last date of the year to which the return relates. An amendment was brought into force through the Finance Act, 2017 extending the period for proceeding to determine any assessment from 5 years to 6 years with prospective effect, i.e., from
-3- W.P(C)No.23129 OF 2020(M) 01.04.2017. According to the petitioner, the period of limitation with respect to the assessment year 2013-14 had expired on 31.03.2019 itself and therefore the entire proceedings pursuant to Ext.P1 notice is barred by limitation. Raising such a contention, the petitioner has filed this writ petition seeking a writ of certiorari to quash Ext.P3 order issued by the 1st respondent.
Heard the learned counsel for the petitioner and also the learned Government Pleader for the respondent.
In Baiju A.A and others v. State Tax Officer and others [2020 (1) KHC 39], this Court held that after Constitution Amendment Act, 2016, and repeal of KVAT Act pursuant thereto, on 22.06.2017, State Legislature has lost residual power of legislation so as to amend provisions of Section 25(1), through the Kerala Finance Act, 2018. Under the provisions of Section 25(1), as amended by Kerala Finance Act, 2017, and before repeal of KVAT Act on 22.06.2017, six year period of limitation for re- opening assessments cannot be relied upon to issue pre- assessment notices in cases, where by 31.03.2017, five year period for re-opening assessments under the unamended provisions of Section 25(1) had already expired. In the said
-4- W.P(C)No.23129 OF 2020(M) decision, this Court declared that the amendments to Section 25 of the KVAT Act, through the Kerala Finance Act, 2018 are illegal and unconstitutional inasmuch as they were beyond the legislative competence of the State Legislature.
In the instant case, the period of limitation with respect to the assessment year 2013-14 had expired on 31.03.2019. Therefore, Ext.P1 notice dated 18.01.2020 issued under Section 25(1) read with Section 42(3) of the KVAT Act, for the assessment year 2013-14, proposing to carryout assessment for escaped turnover, is clearly barred by limitation. In the result, this writ petition is disposed of by setting aside Ext.P3 order dated 21.03.2020 and declaring that the assessment in respect of which the period of limitation for re-opening under Section 25 of the KVAT Act was to expire by 31.03.2019 cannot be re-opened on 18.01.2020 by issuing Ext.P1 notice. ANIL K.NARENDRAN, JUDGE bkn/-
-5- W.P(C)No.23129 OF 2020(M) APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 COPY OF PRE-ASSESSMENT NOTICE ISSUED BY THE 1ST RESPONDENT EXHIBIT P2 COPY OF REPLY FILED BY THE PETITIONER EXHIBIT P2(a) COPY OF REPLY FILED BY THE PETITIONER EXHIBIT P3 COPY OF ORDER ISSUED BY THE 1ST RESPONDENT
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.