2016 (7) TMI 1429 - HC - VAT and Sales Tax

Presumptive dealer - It is stated that benefit has been denied illegally and therefore the assessment order should have been set aside by this Court - Held that - Though it is true that suppression of turnover has been detected and an equal amount of turnover has been added, still the fact remains that the total turnover now quantified by the Assessing Officer is much less than 60 lakhs of rupees provided in Section 6(5). Section 6(5) of the Act do not contain a provision that an assessee in whose case suppression of turnover is detected will be denied the benefit of Section 6(5) of the Act. Even in spite of the turnover suppressed, since the turnover of the assessee is still below 60 lakhs of rupees, according to us, the assessee ought to have been given the benefit of Section 6(5) of the Act. The matter will stand remitted to the first respondent, who will pass fresh assessment order with notice to the assessee - appeal allowed by way of remand.

Summary

Issues:
Challenge to assessment order under KVAT Act for the year 2012-2013 - Denial of benefit as a presumptive dealer under Section 6(5) - Dismissal of writ petition by single Judge - Interpretation of Section 6(5) regarding tax rate - Suppression of turnover and denial of benefit - Applicability of Section 6(5) despite turnover suppression.

Analysis:
The appellant challenged the Ext.P3 assessment order for the year 2012-2013, which levied tax at 13.5% instead of the presumed 0.5% under Section 6(5) of the KVAT Act. The appellant contended that the benefit of being a presumptive dealer was wrongly denied, leading to the dismissal of their writ petition by a single Judge, who advised pursuing the statutory remedy of appeal. The assessment order included unaccounted purchases and suppressed turnover, resulting in a total turnover of ?41,08,511 on which the higher tax rate was applied.

The dispute centered on the denial of the presumptive tax rate under Section 6(5) despite the appellant being a registered dealer who had opted for this provision. The Department argued that the benefit was withheld due to detected turnover suppression. However, the Court noted that even with the suppressed turnover, the total turnover remained below the ?60 lakhs threshold specified in Section 6(5). The Court emphasized that Section 6(5) does not contain provisions for denying the benefit to dealers with detected turnover suppression. Therefore, the appellant should have been granted the benefit of the presumptive tax rate despite the suppressed turnover, as long as the total turnover was below the specified threshold.

Consequently, the Court set aside the judgment under appeal and the Ext.P3 assessment order for the year 2012-2013. The matter was remitted to the first respondent for the issuance of a fresh assessment order with notice to the assessee. The writ appeal was disposed of in favor of the appellant, emphasizing the importance of correctly applying the provisions of Section 6(5) of the KVAT Act to eligible dealers, irrespective of turnover suppression.