State Tax Officer & Anr Vs. Baiju A.A (Kerala High Court)
Value Added Tax (VAT) Act Cannot Be Amended After Introduction Of CGST Act, 2017
The Hon’ble High Court of Kerala while disposing a batch of writ appeals and writ petitions (lead case being State Tax Officer & Anr Vs. Baiju A.A in WA No. 48/2020) declared on 22.08.2022 that the amendment brought in to the provisions of the erstwhile Kerala Value Added Tax Act,2003 (KVAT Act for short) by Finance Act, 2018 so as to enable the Tax authorities to initiate assessment proceedings in respect of the assessments pending as on 31.03.2018 is illegal and without authority as the KVAT Act has already been repealed. Two major points considered and decided by the Hon’ble Court are that;
- Under the KVAT Act,2003 for initiating assessment proceedings U/s. 25(1) was five years. However, by Finance Act,2017 it is substituted/enlarged as six years. Whether the same has retrospective effect? Held that the amendment has no retrospective effect but only prospective.
- By Finance Act,2018 the KVAT Act has been amended by which one-year extension was given for initiating assessment w.e. from 01.04.2018. Whether such an amendment has legislative competence? Held that it is illegal and without authority since KVAT Act has already been repealed [by the state legislature] and GST Acts,2017 came into force as on 01.07.2017 through the Constitution (101st Amendment Act,2016).
FACTS OF THE CASE
The writ petitioners/respondents herein have disputed the assessment notices/orders issued U/s. 25(1) of the Kerala Value Added Tax Act given for the assessment years 2010-11 and 2011-12 as without jurisdiction and competence of the Assessing Officers. The said challenge examined the competence of the Assessing Officer under amended Section 25(1) of the KVAT Act through Kerala State Finance Act Nos.11/2017 and 5/2018. The writ petitioners/respondents herein moved the Court through writ petitions [a] to declare that the amendment to Section 25(1) of the KVAT Act, through Finance Act 11/2017, substituting the limitation period for initiating assessment U/s. 25(1) from five years to six years does not apply to the Assessment Year 2010-11 because the amendment does not have a retrospective operation [b] Secondly, the Proviso cannot be understood as expanding the meaning of the substantive portion of amended Section 25(1) of the KVAT Act and [c] Thirdly, the amendment to Section 25(1) of the KVAT Act through Finance Act 5/2018 is without legislative competence, illegal and without authority since KVAT Act has already been repealed.
The judgment impugned (in the writ petition) accepted the prayer made on the retrospective operation of Section 25(1) as amended by Finance Act 11/2017 and held that the amendment to Section 25(1) third proviso of KVAT Act through Finance Act 5/2018 is beyond the legislative competence of the State Legislature. On writ appeal being filed by the state;
HELD BY THE COURT
