2024 (1) TMI 78 - HC - VAT and Sales Tax

Compounding scheme - it is submitted that the assessment order in Exhibit P-2 treating the petitioner s return under the compounding scheme is unsustainable - HELD THAT - The assessee has been filing his return under the compounding provision and it is not the first time that he has filed the returns under the compounding provision for the financial year 2020-21. This Court therefore, cannot believe the petitioner was not aware of the difference of filing of normal return and return under the compounding provision. In fact, the petitioner has remitted the tax as per the compounding scheme provided under the Act. Since the rate of tax has been reduced for certain period during which the Bar Attached Hotels were entitled for parcel sale of Indian made Foreign Liquor, the petitioner found that the his returns filed under the compounding scheme should be treated as normal return and the Assessing Authority should proceed to complete the regular return. There are no illegality in the impugned orders - petition dismissed.

Summary

Issues:
The issues involved in the judgment are the application for remitting the compounded Turn Over Tax (TOT) for the financial year 2021-22, the treatment of returns filed under the compounding scheme, and the challenge to the assessment order passed by the Deputy Commissioner.

Application for Remitting Compounded TOT:
The petitioner, registered under the Kerala General Sales Tax Act, applied for remitting the compounded Turn Over Tax for the financial year 2021-22. The impugned order allowed the application and directed the petitioner to pay the differential amount of tax along with interest. The petitioner challenged this order on the grounds that in the absence of a decision on the application, the returns filed should be treated as normal returns and not under the compounding provisions.

Treatment of Returns Under Compounding Scheme:
The Government Pleader argued that as per Section 7(1)(a) of the KGST Act, when an application for compounding is pending, the returns filed should be considered under the compounding scheme. Citing a previous judgment, it was emphasized that once an application for compounding is filed and acted upon by the assessee, they cannot backtrack and request assessment based on normal returns. The petitioner's act of filing returns under the compounding scheme indicates acceptance of the application, and they cannot deviate from this position.

Challenge to Assessment Order:
The Court considered the petitioner's contention that due to a reduction in tax rates during a specific period, the returns filed under the compounding scheme should be treated as normal returns. However, the Court rejected this argument based on the previous Division Bench judgment, which held that once an assessee acts upon a compounding application by remitting tax as per the application, they cannot later request assessment based on normal returns. Consequently, the writ petition challenging the assessment order was dismissed for lack of merit.

Separate Judgment:
The judgment was delivered by the Honourable Mr. Justice Dinesh Kumar Singh.