2018 (2) TMI 311 - HC - VAT and Sales Tax

Rejection of compounding facility - Section 8(c) of the Kerala Value Added Tax Act, 2003 - Held that - The prohibition available in sub-clause (d) of sub-clause (i) of clause (c) of Section 8 was introduced only in the year 2014. Considering only the fact that there is a discrepancy insofar as the provision relied on by the Assessing Officer, being subsequent to the subject years, this Court would set aside the orders and direct re-consideration - petition allowed by way of remand.

Summary

Issues:
1. Rejection of compounding under Section 8(c) of the Kerala Value Added Tax Act, 2003.
2. Levying tax regularly under the KVAT Act.
3. Non-disclosure of inter-State purchases of packing material and raw materials.
4. Cancellation of compounding for the year 2011-12.
5. Compliance with principles of natural justice.

Analysis:

1. The petitioner contested the rejection of compounding under Section 8(c) of the KVAT Act through Exhibits P1 series and the subsequent orders levying tax under the same Act through Exhibit P2 series. The petitioner had availed the compounding facility for dealers in cooked food and beverages, paying tax at a compounded rate. However, inter-State purchases of packing material and raw materials were discovered, prompting the Assessing Officer to issue notices for cancellation of compounding for the year 2011-12.

2. The Assessing Officer proceeded against the dealer based on the admitted offense of undisclosed inter-State purchases. The court noted that the prohibition in sub-clause (d) of sub-clause (i) of clause (c) of Section 8 was introduced in 2014, after the relevant years in question. Due to this discrepancy, the court set aside the orders and directed re-consideration, emphasizing the importance of compliance with natural justice principles.

3. The court highlighted that the petitioner was intimated about the proposal but failed to appear for the specified hearing. Exhibits P1 series and P2 series were set aside primarily due to non-compliance with the principles of natural justice. The court directed the Assessing Authority to reconsider the matter, taking into account the specific contention raised by the petitioner regarding the inapplicability of provisions introduced in 2014.

4. The court ordered the petitioner to appear before the Assessing Officer on a specified date for a hearing, ensuring that the petitioner or their authorized representative would be heard, and the matter would be disposed of within one month from the date of the hearing. By emphasizing the need for adherence to natural justice and proper procedural requirements, the court disposed of the writ petition, providing a fair opportunity for the petitioner to present their case effectively.