2009 (5) TMI 880 - HC - VAT and Sales Tax

Whether the belated order issued by the assessing officer on October 15 2007 produced as annexure A is beyond his jurisdiction and against the scheme of compounding provided under section 7 of the Act? Held that - Since the application for compounding was admittedly filed by the assessee on due date in this case and the officer has not attributed anything on the assessee for the delay in passing orders thereon and since there is a bona fide dispute about the validity of the proceedings issued and since tax returns also were filed by the assessee we direct the officer to recall penalty orders provided the assessee clears all the arrears of tax under the compounding scheme with interest in accordance with the judgment within three months from now. Since counsel for the petitioner submitted that there is error in the calculation of tax we direct the officer to modify the demand if there is any mistake based on application for rectification to be filed by the petitioner under section 43 ignoring the time-limit if application is filed within a month from the date of receipt of a copy of this judgment.

Summary

The Kerala High Court judgment from 2009 involved a revision petition by a bar attached hotel seeking to pay tax at a compounded rate under the Kerala General Sales Tax Act. The petitioner, having applied for the compounded rate, began filing monthly returns and remitting tax based on these returns as no orders were initially passed on the application. The assessing officer later issued an order demanding tax at the compounded rate, which the petitioner disputed. The main issue revolved around the timeliness of the order and whether the petitioner's actions of filing monthly returns and paying tax constituted a withdrawal of the compounding application. The court found that while the officer should ideally pass a decision on the application before the due date for the first monthly return, there was no strict time limit for doing so. The court concluded that the petitioner was not liable for interest on arrears up to the date of the order, provided all outstanding taxes were paid within the specified time frame. The court also directed the officer to reconsider penalty orders and amend the demand if necessary. The judgment emphasized the importance of timely decision-making by the officer and the need for clear communication between the parties involved.