2009 (10) TMI 830 - HC - VAT and Sales Tax

Whether a registration under KVAT Act can be issued with a previous date than the date of application as date of commencement of business? Held that - The rejection of the application for correction of the date of commencement of business, is unsustainable and unjustifiable in the given set of facts and circumstances. Therefore we are inclined to set aside exhibit P9 order and to direct the respondent to allow exhibit P8 application for effecting correction of the date of commencement of business. At the same time it is made clear that such correction of date of commencement of business will be without prejudice to any of the proceedings now initiated against the petitioner with respect to the period prior to the date of submission of the application for registration, subject to various provisions contained in the KVAT Act, including section 16(2). In the result exhibit P9 is quashed. The respondent is directed to consider exhibit P8 afresh and to allow date of correction with respect to the date of commencement of business as requested therein, subject to the observations made above.

Issues:
1. Non-registration and non-payment of tax under the Kerala Value Added Tax Act, 2003.
2. Rejection of correction of the date of commencement of business in the registration particulars.
3. Interpretation of the amended proviso of section 16(2) of the KVAT Act regarding the date of commencement of business.
4. Justifiability of rejection of the application for correction of the date of commencement of business.

Analysis:
1. The petitioner failed to register under the Kerala Value Added Tax Act, 2003, despite exceeding the turnover limits, leading to non-registration and non-payment of tax for the year 2007-08. The petitioner compounded the offense, paid the compounding fee, tax due, and interest. The assessing authority completed the assessment, and an appeal against the assessment is pending.

2. The petitioner applied for registration after an inspection by the intelligence wing, but the date of commencement of business was incorrectly mentioned as April 1, 2008, instead of April 1, 2007. The application for correction of the date was rejected based on the petitioner's initial application stating the wrong date and the pending appeal against the assessment for the year in question.

3. The amended proviso of section 16(2) of the KVAT Act states that registration shall be deemed to have been granted from the date of commencement of business, regardless of the application date, for specific purposes like tax payment. The petitioner had conducted business during the relevant year, and penalties were imposed, indicating business commencement. The statute allows benefits based on the date of business commencement, and any alteration should not prejudice ongoing proceedings.

4. The rejection of the correction application for the date of business commencement was deemed unsustainable and unjustifiable. The court set aside the rejection order and directed the respondent to allow the correction application without prejudice to ongoing proceedings. The respondent was instructed to consider the correction application afresh, following the provisions of the KVAT Act, including section 16(2).

In conclusion, the court quashed the rejection order, directing the correction of the date of business commencement as requested by the petitioner, while ensuring it does not impact ongoing proceedings.

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