2019 (2) TMI 133 - HC - VAT and Sales Tax

Interpretation of statute - date on which amendment coming into effect - Payment of tax at compounded rates - turnover tax on foreign liquor - interpretation of clauses a and b of Section 7 of the Kerala General Sales Tax Act, 1963 - context of the words whichever is higher at the end of clause (b) being added in the midst of the financial year - whether the amendment is to be applied from the commencement of financial year or from the date when it got introduced? Held that - The issue is no longer res integra, the same having been decided by a Division Bench of this Court reported in Hotel Alakananda v. Commercial Tax Officer 2018 (1) TMI 1434 - KERALA HIGH COURT - Going by the aforesaid decision, the amendment can be applied from the commencement of the financial year and the compounded tax has to be the higher of clause (a) or (b) of Section 7 - petition dismissed.

Summary

Issues:
Computation under Section 7 of the Kerala General Sales Tax Act, 1963.

Analysis:
The judgment delves into the interpretation of Section 7 of the KGST Act concerning the payment of tax at compounded rates by certain establishments. The primary issue revolves around whether the assessee has the choice to compute the tax under either clause (a) or (b) of the section. The crux of the matter lies in determining if the provision stating "whichever is higher" in clause (b) applies when an assessee opts for clause (a). This query arose due to the insertion of the said phrase in the midst of a financial year, altering the computation method. The Court, citing a previous Division Bench decision in Hotel Alakananda v. Commercial Tax Officer, concluded that the amendment can be applied from the start of the financial year, mandating the compounded tax to be the higher of the two clauses under Section 7.

Furthermore, the judgment addresses a plea from the petitioner's counsel seeking permission for the assessee to exercise a fresh option under Section 7. The Court opined that granting such a request at this juncture is unwarranted, considering the passage of time. It was noted that a Circular issued by the Commissioner had previously allowed assessees to revise their choice based on the updated provision. Since the petitioner did not avail this opportunity, the Court deemed it impractical to grant a fresh option now. Consequently, the request for a new election was dismissed, with parties directed to bear their respective costs.

In conclusion, the judgment provides clarity on the application of Section 7 of the KGST Act, emphasizing the need for assessees to adhere to the revised computation method introduced during a financial year. It underscores the importance of timely actions and decisions in tax matters to avoid subsequent complications or requests for retrospective modifications.