Jyothy Labs Pvt. Ltd. Vs Assistant Commissioner (Kerala High Court)
The Kerala High Court allowed a writ petition challenging a notice dated 14.12.2020 issued under Section 25A read with Section 25(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act), for reopening the assessment for the year 2009-10 based on audit objections raised by the Accountant General of Kerala.
The petitioner contended that the notice was barred by limitation and relied on earlier decisions of the High Court. During the hearing, the State also conceded that the issue was covered by the Division Bench decision in State of Kerala v. M/s. Chowdhary Rubber & Chemicals Pvt. Ltd..
The Court referred to the Division Bench judgment, which held that although Section 25A empowers the Assessing Officer to act on audit objections, the reassessment must be carried out by following the procedure prescribed under Section 25(1) of the KVAT Act. The Court observed that procedural safeguards, including the statutory limitation period, are integral to the reassessment process. It further held that tax can be levied and collected only in accordance with law, and permitting reassessment without any limitation period would be contrary to the principles of fairness in taxation and the rule of law. The Division Bench had also clarified that if an audit objection is received after the limitation period prescribed under Section 25(1), it cannot be treated as a lawful audit objection for initiating reassessment under Section 25A.
