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TMI Blog2011 (3) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2008-09. We have heard advocate Sri E. P. Govindan appearing for the petitioner and the Government Pleader Sri Mohammed Rafeeq, appearing for the State. The petitioner, a dealer in paints, hardwares, etc., was claiming the benefit of lower rate of tax at 0.5 per cent under section 6(5) of the Act on the ground that its turnover for the year would be below Rs. 50 lakhs. The payment of tax under section 6(5) continued by the petitioner for 2008-09 until the assessing officer issued notice on November 3, 2008 pointing out that the petitioner is not eligible for payment of tax at 0.5 per cent of the turnover under section 6(5) of the Act, because the petitioner's turnover, even according to the petitioner's accounts, exceeded Rs. 50 lakhs on January 1, 2008 itself. In other words, the petitioner ceased to be a dealer eligible for the benefit under section 6(5) from January 1, 2008 onwards and as required under rule 12(7) of the Kerala Value Added Tax Rules, 2005 hereinafter called "the Rules", the petitioner ought to have, within 15 days therefrom, started paying tax at the rate provided under section 6(1) of the Act. The petitioner not only did not start paying tax at the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tax under section 6(1) of the Act, the contention raised by the Government Pleader is that so far as a dealer claiming benefit of payment of lower rate of tax at 0.5 per cent under section 6(5) is concerned, the provisions in the Rules have to be strictly followed for change over to the scheme of payment of tax under section 6(1) and input-tax credit can be claimed strictly in accordance with Rules. Since the VAT Act is a recent legislation, the High Court decisions are lacking on all these matters, and therefore we have to refer to statutory provisions. Admittedly the petitioner was remitting tax under section 6(5) at the lower rate of 0.5 per cent of the turnover from the beginning of the financial year 2007-08 because as estimated by the petitioner, the petitioner's annual turnover in the year would be below Rs. 50 lakhs. However, the question to be considered is as to how the petitioner should switch over from the scheme of payment of tax under section 6(5) to payment of tax under section 6(1) on the petitioner's turnover exceeding Rs. 50 lakhs in the course of a year. As on December 31, 2007, the petitioner had crossed the turnover of Rs. 50 lakhs and therefore from Jan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the petitioner because the petitioner is covered by section 42 of the Act as its turnover exceeded Rs. 40 lakhs requiring statutory audit for the petitioner. What is provided under sub-rule (8) of rule 12 is that on receipt of statutory form and the statement and other details and auditor's certificate from the dealer, as provided under sub-rule (7) above, the assessing officer should verify the claim and if he is satisfied that the claim is in order, he should permit the dealer to claim input-tax credit in respect of such goods held as opening stock in three equal monthly instalments, commencing subsequent to the order allowing such input-tax credit. What is clear from this provision is that entitlement to claim input-tax credit on the turnover crossing Rs. 50 lakhs for a dealer converting from the scheme of payment of tax under section 6(5) to section 6(1) is not automatic and it is only on the assessing officer approving the claim made by the dealer under sub-rule (7) through an order and the benefit of input-tax credit itself can be availed of by the dealer for the return period after the date of the order issued by the assessing officer under sub-rule (8). What we noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r filing form 25A. We therefore confirm the orders of the Tribunal and reject the revisions on this issue. The next issue pertains to the orders of the Tribunal modifying the penalty order sustained in first appeal by exonerating the petitioner from penalty under section 22(7) but by refixing the penalty under section 67 to equal the amount of tax as against three times the tax levied towards penalty under section 22(7) of the Act. The contention raised by counsel for the petitioner is that the Tribunal has no jurisdiction to fix for the first time penalty under section 67 of the Act. There is force in this contention because penalty challenged before the Tribunal was levied under section 22(7) whereunder the penalty levied is three times the tax and if the Tribunal felt that penalty should have been levied only under section 67 and not under section 22(7), they should have remanded the matter. The Government Pleader submitted that violation by the petitioner is covered not only by section 22(7) but also by section 67 as well. However, the Government Pleader cannot argue for sustaining penalty levied under section 22(7) because State has not so far filed any revision for restor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe to be true, such authority may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case:- Provided . . ." During hearing Government Pleader contended, and we feel, that the Tribunal's conclusions are not correct because section 22(7) exclusively provides for penalty for violations by dealers remitting tax at the lower rate of 0.5 per cent under section 6(5) of the Act. The contention of petitioner's counsel is that section 22(7) only deals with a case of penalty where a dealer remitting tax under section 6(5) does not disclose full turnover or in other words there is suppression of turnover in the returns filed and failure in regard of payment of tax on such turnover. We are unable to accept this contention because all cases of non-payment and short payment of tax by dealers paying tax under section 6(5) are covered under section 22(7). One situation is a case where a dealer whose turnover is below Rs. 50 lakhs suppresses part of his turnover leading to non-paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it covers even a violation for which penalty under section 22(7) is specifically provided. A combined reading of section 22(7) and section 67 will lead to the conclusion that for all violations of the provisions of the Act and Rules not elsewhere specifically provided, penalty could be levied under section 67 and for specific violations like the one covered by section 22(7), penalty should be considered and levied under the said provision. Since in this case, the violation is specifically covered by section 22(7), penalty has to be levied under the said provision, no matter but for the said provision, violation would have been punishable under section 67 of the Act. Counsel for the petitioner referred to the decision of the Supreme Court in Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 (SC), wherein the Supreme Court exempted a dealer from penalty for the reason that turnover was included in the accounts and the dealer only claimed exemption. Even though on facts, the case before us is not similar, in this case what we notice is that dealer has remitted tax and interest on receipt of assessment order. Further the State has not so far challenged the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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