Department cannot invoke Section 42(3) to reopen assessments that have already become final under the Act.

Case Details:

Issue- In the above case, the petitioner/assessees impugn the pre-assessment notices/assessment orders issued to them to complete assessments of escaped turnover by invoking the provisions of Section 42(3) of the Kerala Value Added Tax Act [hereinafter referred to as the “KVAT Act”]. It was the common case in all these writ petitions that the period envisaged for re-opening assessments under Section 25 of the KVAT Act had expired by the time the notices for re-opening assessments, invoking Section 42(3) of the KVAT Act, were issued to them. The petitioners therefore contend that in such cases, the Revenue cannot invoke Section 42(3) of the KVAT Act to re-open assessments that have already become final under the KVAT Act.

Held- the writ petition was disposed by upholding the retrospective operation of Section 42(3) of the KVAT Act, but declaring that the power to re-open assessments under the said provision cannot be exercised in relation to such assessments where the period for which the assessee concerned is obliged to retain the Books of account under Rule 58(20) of the KVAT Rules has expired. The retrospective operation of Section 42(3) of the KVAT Act will thus stand controlled by the period of limitation aforementioned, and the legality of the notices/orders impugned in these writ petitions shall stand determined by the said declaration.