2012 (6) TMI 766 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of liability u/s 7(1)(a) for payment of tax at compounded rates.

Summary:
The judgment by the Kerala High Court addressed the review petitions concerning the liability under section 7(1)(a) for payment of tax at compounded rates. The court considered the contention that tax payable under the provision should be with reference to the preceding year's tax liability as reduced by exemptions. The section specifies that the tax payable is 200 per cent of the highest amount among the tax payable by the dealer as conceded in the return, tax payable based on accounts for the immediately preceding year, and the tax paid for the immediately preceding year. The court noted that the liability is the higher amount between the tax payable in the return and the tax payable based on turnover of sales and purchases available in the accounts. The tax paid in the preceding year is to be reckoned for determining the liability under the compounding scheme, but in this case, the tax payable based on accounts was higher than the tax paid in the preceding year. Therefore, the court dismissed the review petitions as devoid of any merit.