2009 (5) TMI 889 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of liability to pay sales tax at compounded rate u/s 7(1)(a) of the Kerala General Sales Tax Act, 1963 for the year 2002-03 based on tax paid for the preceding year 2001-02.

Summary:
The High Court of Kerala, in the case concerning the liability of the respondent-assessee to pay sales tax at a compounded rate u/s 7(1)(a) for the year 2002-03, analyzed whether the tax paid for the preceding year 2001-02 was lower than the tax payable under sections 5(1) and 5A. The court considered the contention that the liability to pay tax for 2002-03 at a compounded rate is at 200 per cent of the tax paid under the scheme for the previous year. The court noted that the provisions under section 7(1)(a) mandate comparing the tax paid for the preceding year and the tax payable under sections 5(1) and 5A, with the assessee required to pay at a compounded rate of 200 per cent on the higher amount. It was established that the tax paid by the respondent for 2001-02 at a compounded rate was less than the tax payable under sections 5(1) and 5A as per the returns and accounts. Consequently, the court held that the respondent was liable to pay tax for 2002-03 at the compounded rate under section 7(1)(a) at 200 per cent of the tax payable under sections 5(1) and 5A based on the return filed for 2001-02. The court allowed the sales tax revision, overturning the decisions of the Tribunal and the first appellate authority, and reinstated the order of the assessing officer. The same principle was applied for the subsequent year 2004-05, with the revision for that year also being allowed.

In conclusion, the court clarified the interpretation of the liability to pay sales tax at a compounded rate u/s 7(1)(a) for the year 2002-03 based on the tax paid for the preceding year 2001-02, emphasizing the requirement to pay 200 per cent of the higher amount between the tax paid and the tax payable under sections 5(1) and 5A.