2021 (9) TMI 548 - HC - VAT and Sales Tax

Best Judgement Assessment - cancellation of compounding tax permitted for the year 2014-15 - HELD THAT - On a perusal of the judgment in THAKKARAM RESTAURANT VERSUS STATE OF KERALA 2020 (11) TMI 1014 - KERALA HIGH COURT it is seen that the cancellation of payment of compounded tax under section 8(c)(i) has been upheld by this court ; holding that pursuant to such a cancellation, regular assessment can be resorted to by the assessing officer. The learned counsel for the assessee after perusing the abovesaid judgment fairly conceded that the matter is already covered by the said judgment. Revision dismissed.

Summary

Issues:
Cancellation of compounding tax for the year 2014-15 and consequential best judgment assessment.

Analysis:
1. Question A: The Appellate Tribunal's decision to allow the appeal filed by the respondent was challenged. The petitioner contended that the cancellation of permission for compounding due to an omission in purchase details should not lead to revocation of the compounding permission granted under section 8(c)(i) of the KVAT Act. However, the Tribunal justified the cancellation under rule 11(6) of the KVAT Rules.

2. Question B: The petitioner argued against the Tribunal's finding that they defaulted in tax payment under section 6(2) despite remitting the tax before proceedings began. The Tribunal upheld the cancellation of permission based on rule 11(6) of the KVAT Rules, emphasizing any failure to pay tax under section 6(2) could lead to revocation of compounding permission.

3. Question C: The constitutionality of rule 11(6) of the KVAT Rules was questioned, arguing it exceeded the rule-making power as there was no substantive provision empowering the assessing authority to cancel compounding permission under section 8(c)(i) of the KVAT Act. However, the Tribunal's decision to cancel permission was upheld based on this rule.

4. Question D: The Tribunal's decision to cancel permission for a mere violation of conditions in the compounding order was contested. The petitioner argued that the reasons for such violations should have been considered before revoking permission. Despite this, the Tribunal upheld the cancellation based on rule 11(6) of the KVAT Rules.

5. The case involved an assessee running a restaurant granted permission for compounded tax payment under section 8(c)(i) of the KVAT Act. The permission was revoked due to undisclosed purchases and failure to remit purchase tax for meat bought from unregistered dealers. The assessee admitted the mistake, compounded it by paying the fee, and revised the return. However, the assessing authority canceled the permission invoking rule 11(6) of the KVAT Rules.

6. The first appeal in favor of the assessee was overturned by the Tribunal, which justified the cancellation under rule 11(6) of the KVAT Rules. The counsel for the assessee argued against the cancellation, but the Senior Government Pleader pointed out a previous judgment supporting the Tribunal's decision.

7. Referring to a previous judgment, the court upheld the cancellation of compounded tax payment under section 8(c)(i) and allowed regular assessment by the assessing officer. The counsel for the assessee acknowledged the judgment's applicability to the present case, leading to the dismissal of the revision based on the identical issue involved.