2015 (12) TMI 1633 - HC - VAT and Sales Tax

Application for Payment of tax at compounded rates - even before the application was accepted and permission granted by the respondents, in June 2015, by virtue of a prohibitory order, the petitioner was constrained to stop his business activities and could not continue with the same. It his case, therefore, that the payment of tax at compounded rates should not be insisted from him for the period subsequent to June 2015. Held that - Having exercised his option to pay tax at compounded rates, and the tax having been paid by the petitioner and accepted by the department, the petitioner cannot wriggle out of his obligations under the KVAT Act - while holding that the petitioner would be liable to pay the tax due in accordance with Section 8(b) of the KVAT Act for the assessment year 2015-2016, I permit the petitioner to discharge the tax liability u/s 8(b) of the KVAT Act on or before W.P.(C). No.35496 of 2015 31.03.2016. Petition disposed off.

Summary

Issues:
1. Payment of tax at compounded rate under Section 8(b) of the Kerala Value Added Tax Act for the period 2015-2016.
2. Impact of a prohibitory order on business activities and tax obligations.
3. Consideration of leniency due to difficulties faced by the petitioner.

Analysis:
The petitioner, conducting a quarry and crusher unit, opted to pay tax at a compounded rate under Section 8(b) of the KVAT Act for 2015-2016. The petitioner began paying tax at the compounded rate even before formal acceptance of the application by the authorities. However, due to a prohibitory order in June 2015, the petitioner had to halt business activities. The petitioner argued against insisting on tax payment at compounded rates post-June 2015.

Upon hearing both parties, the court found the petitioner's initial choice to pay tax at the compounded rate was voluntary and not coerced. Despite facing difficulties due to the prohibitory order, the petitioner's obligation under the KVAT Act remained. The court acknowledged the petitioner's challenges and decided to grant leniency. The court ruled that the petitioner must pay the tax due under Section 8(b) of the KVAT Act for the assessment year 2015-2016. However, the petitioner was allowed to discharge this liability by March 31, 2016. If the petitioner complied with this directive, the liability would be considered fulfilled. Recovery steps for tax amounts were to be paused until March 31, 2016, and any further actions or penalties depended on the petitioner's compliance with the court's directions.