2009 (12) TMI 856 - HC - VAT and Sales Tax

Correction of application for registration for obtaining registration with retrospective effect - Held that - In view of the registration obtained with effect from the date of making application, the respondent would be entitled to be treated as registered dealer from the date of commencement of business that is April 1, 2007 for the limited purposes of payment of presumptive taxes under section 6(5) or tax payable under compounded rate under section 8 because of the operation of clauses (a) and (b) to the proviso to section 16(2) of the Act. We also declare that dealers claiming benefit under the new provision will also be subject to the limitation contained in the second proviso to section 16(2) of Act.

Summary

Issues:
1. Eligibility for retrospective registration under the Kerala Value Added Tax Act.
2. Interpretation of Section 16(2) of the Act and its provisos.
3. Correction of registration application for retrospective effect.

Analysis:
1. The appeal was filed against a judgment declaring the respondent's eligibility for retrospective registration under the Kerala Value Added Tax Act from the date of commencement of business, April 1, 2007. The respondent started business on April 1, 2007 but applied for registration only on May 19, 2008, stating the commencement date as April 1, 2008. The Department collected a compounding fee for operating without registration in 2007-08. The respondent later sought to correct the registration application to reflect the actual commencement date. The single judge ruled in favor of retrospective registration, leading to the appeal.

2. Section 16(2) of the Act initially stated that registration would be effective from the application filing date. However, a proviso was later substituted, allowing registration from the business commencement date, regardless of the application date. This amendment, effective from April 1, 2009, provided benefits for tax payment and specified conditions for new and existing dealers. The respondent, already registered from April 1, 2008, sought to rectify the registration to April 1, 2007, citing the amended proviso. The court noted that the proviso's retrospective registration facility did not require officer approval and was solely for tax payment purposes under specific sections.

3. The court clarified that the proviso allowed dealers to pay taxes presumptively or at compounded rates, irrespective of retrospective registration. The respondent's application for correction to obtain retrospective registration was deemed unnecessary, as the proviso automatically provided the tax payment benefits. The court modified the judgment, stating that the respondent could be treated as a registered dealer from April 1, 2007, for tax payment purposes under sections 6(5) and 8. Dealers availing benefits under the new provision were also subject to limitations outlined in the Act's second proviso to section 16(2).