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2019 (4) TMI 526 - HC - VAT and Sales TaxValidity of assessment - Section 25 of KVAT Act - whether an assessment under Section 25(1) can be sustained on the allegations constituting ingredients of Section 26 of the KVAT Act? - Held that - The assessment is not made under Section 26 of the KVAT Act based on any allegation that the Assessing Authority has reason to believe that the appellant was carrying on business in the name of or in association with the partnership firm to which Sri. Abdul Ashraf and Sri. Narendra Patali are partners. On the otherhand, the case seems to be that, the partnership to which the revision petitioner, his wife and daughter are the partners, was conducting business in the inspected premises. For arriving such a conclusion, there is absolutely no materials available with the Assessing Authority. The reliance placed by the Appellate Authorities on the partnership deed and lease agreement produced by the appellant, will not in any manner help the Assessing Authority to confirm the assessment made in the name of the appellant. The assessments impugned in the Revision Petitions are not sustainable - appeal allowed - decided in favor of appellant.
Issues Involved:
Assessment under Section 25 of the Kerala Value Added Tax Act, 2003 based on joint liability with other individuals. Interpretation of Section 25(1) and Section 26 of the KVAT Act for assessment purposes. Validity of assessments for the years 2008-09 and 2009-10 against the revision petitioner. Analysis: The revision petitioner and others were assessed for tax under Section 25 of the KVAT Act for the years 2007-08, 2008-09, and 2009-10. Appeals challenging the assessments were dismissed by the Assistant Commissioner and further appeals were filed before the Kerala Value Added Tax Appellate Tribunal. The Tribunal allowed the appeal for 2007-08 but confirmed the assessments for the other two years, leading to the revision petitions under Section 63 of the KVAT Act. The key question raised was whether a person not proven to be conducting business on the premises can be assessed under Section 25(1) of the Act along with the dealer occupying the premises. The Tribunal had imposed penalties jointly against five persons, including the revision petitioner, based on an inspection report indicating manufacturing activities on the premises. The assessments were completed without serving notices requiring production of books of accounts, leading to challenges regarding the validity of the assessments. The First Appellate Authority and the Appellate Tribunal upheld the assessments, considering documents like a partnership deed and a lease agreement produced by the revision petitioner. However, the High Court found that there was insufficient evidence connecting the revision petitioner to the business activities conducted by others on the premises. The assessments for 2008-09 and 2009-10 were set aside as the evidence did not support the joint liability imposed on the revision petitioner. In conclusion, the High Court held that the assessments against the revision petitioner for the years 2008-09 and 2009-10 were not sustainable. The Court found in favor of the appellant, setting aside the impugned assessments for those years.
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