9911796707
TMI Blog2015 (8) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... place of business. No opportunity of being heard was given to petitioner – Assessing authority must give valid reason why such shifting deserves such treatment – Unless reasoning was mentioned it may not be ground upon which permission can be cancelled without valid and sufficient reason –In light of the said observations, orders of Tribunal lacks consideration and orders deserve to be set aside – Decided in favour of Assesse. - OT. Rev. No. 110 of 2013 - - - Dated:- 24-3-2014 - MS. MANJULA CHELLUR AND A. M. SHAFFIQUE, JJ. K. P. Abdul Azees, Smt. C. Amrita and Smt. T. Archana for the petitioner. Bobby John, Government Pleader, for the respondent JUDGEMENT This revision petition is directed against the order of the Appellate Tribunal dated May 30, 2013. The brief facts that led to filing of this revision are as under:- The revision petitioner is running M/s. A1 Ahali Business Trade Link . (P) Ltd., a registered dealer in jewellery of gold, silver and platinum group of metals with the brand name Malabar Gold at City Centre, Thrissur. The revision petitioner shifted its business premises to Sankara Iyer Junction, M. G. Road, Thrissur, after intimating as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is justified in rejecting the application for composition under section 8(f) of the Kerala Value Added Tax Act, 2003 for the year 2011-12 (next year) when this issue was specifically raised before the Tribunal? (d) Having complied with the requirements of section 8(f)(v)(d) of the Kerala Value Added Tax Act, 2003 by paying tax as provided therein during the year 2011-12, has not the Tribunal committed an error in law by holding that the rejection of the compounding facility for the year 2011-12 under section 8(f)(ii) of the Kerala Value Added Tax Act, 2003, is in order? (* year is changed as per order in IA. No. 2578 of 2013 in O. T. Rev. No. 110 of 2013) (e) Ought not the Tribunal should have interfered in the order of the assessing authority as per annexure A5, when the notice or the order as per annexures A3 and A5 issued by the assessing authority does not refer anything about the mandatory requirement of prior approval of District Deputy Commissioner as provided under proviso clause to section 8(f)(ii) of the Kerala Value Added Tax Act, 2003? (f) Ought not the Tribunal should have found that the District Deputy Commissioner should have granted opportunity of being he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation in which it is now placed. The learned counsel for the revision petitioner relies upon AIR 1965 SC 1325 in the case of (Chittoori Subbanna v. Kudappa Subbanna) to contend that pure question of law if not depending on facts can be raised as a new plea. He also relies upon Commissioner of Sales Tax, Madhya Pradesh, Indore v. Radhakisan[1979] 43 STC 4 (SC);[1979] 2 SCC 249 regarding presumption of constitutionality. He further contends, while considering the validity of a statute, presumption is always in favour of its constitutionality and the burden is upon the person who attacks it to show that there has been a clear transgression of constitutional principles. He further contends that it must always be presumed that Legislature understands and correctly appreciates the need of its own people and that discrimination, if any, is based on adequate grounds. Courts will be justified in giving a liberal interpretation to the section in order to avoid constitutional invalidity. These principles have given rise to the rule of reading down the sections if it becomes necessary to uphold the validity of the sections. He further relies upon[2001] 247 ITR 192 (SC);[2001] 1 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5B, providing an enhanced composition fee with retrospective effect from April 1, 1988, was the subject-matter. It was held that State Legislature is competent to enact such a provision. There is no compulsion for the assessee to opt for the composition scheme, hence no prejudice is caused in any manner whatsoever. Challenge to the provisions as constitutionally invalid was repelled. The decision in State of Tamil Nadu v. M. K. Kandaswami[1975] 36 STC 191 (SC) is relied upon to contend that while comparing section 5A of the Kerala General Sales Tax Act, their Lordships had an occasion to deal with section 7A of the Madras General Sales Tax Act. Section 7A of the Madras General Sales Tax Act was challenged, questioning the competency of State Legislature to impose tax on the use and consumption of goods, therefore the said section was ineffective. While referring to the judgment of the Kerala High Court in Yusuf Shabeer v. State of Kerala[1973] 32 STC 359 (Ker), their Lordships opined that goods, the sale or purchase of which is liable to tax under the Act in section 7A(1) means, taxable goods, that is, the kind of goods, the sale of which by a particular person or dealer may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e situation by opting for compounding based on the turnover and the tax paid for previous year for a shop situated in the suburbs of city and subsequently, shifting the place of business to the heart of the city. One of the grounds introduced was shifting the place of business. Therefore, shifting of place of business itself is a sufficient ground to refuse permission for compounding. Approval of higher authorities is only an administrative check on the assessing authorities. The same was received before issuance of the order to the assessee. No material was produced by the dealer before the factfinding authority that shifting of business premises has not resulted in substantial increase in the turnover. During the year 2010-11, the assessee conducted business in the old building for three months and thereafter for nine months in the new building. Hence, the sales tax turnover comparison has to be done month-wise during 2010-11 and 2011-12. In order to understand the real question of controversy, it would be apt to refer to the statutory provision, i.e., section 8(f) of the Act, which reads as under:- 8. Payment of tax at compounded rates:- Notwithstanding anything contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m group metals to pay tax at compounding rate instead' of paying tax in accordance with the provisions of section 6. No doubt, this is a benefit or concession given to the dealer to opt a method under which he intends or desires to pay tax depending upon the turnover. By this method, no doubt, interest of the Revenue is also protected. However, in the present case, one has to see whether there is strict compliance of the provision by the authority while considering the application of the dealer for compounding rate of tax for the year 2011-12 and whether authority concerned did exercise its power in accordance with the provisions contemplated. So far as the proviso to section 8(f)(ii), according to the revision petitioner, there is nothing on record to show that there was prior approval of the District Deputy Commissioner before rejecting the application of the dealer seeking permission for payment of tax at compounding rate. According to the revision petitioner, there was no application of mind on the part of the competent authority before it rejected the application of the dealer. This must be evident from the facts borne on record. Therefore, on perusal of the show-cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 8(f)(v) of the Act as they have shifted their place of business during the year 2010-11 after obtaining the compounded proceedings at the old business place in Door No. XXV/1130/1, City Centre, Round West. In reply to the notice they have stated that the business place was shifted with effect from July 1, 2010 from City Centre to Sankara Iyer Road, and the fact has been communicated to the assessing authority sufficiently early as per their Lr. No. M/TCR/2010-2011 dated June 25, 2010 under proper acknowledgment. The then assessing authority issued a notice to the assessee under clause VI of section 8(f)(i) introduced as per the Finance Act, 2010, that since the dealer is doing the business under a brand name, they have to disclose the highest tax payable by the principal or the franchisee who were selling the goods in brand name Malabar Gold, for treating the business place as a branch or franchisee. For that notice the assessee gave no reply. However, the compounding proceedings was not cancelled. Since the dealer had requested for a personal hearing, an opportunity for hearing was granted. Sri P. Abdul Karim, Authorized Representative appeared and was heard. Since the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r rejecting the claim was altogether different. They say, the assessing officer issued notice to the dealer asking them to disclose the highest tax payable by the principal or the franchisee who were selling the goods in brand name Malabar Gold, for treating the business place as a branch or franchisee. But no reply was given. However, compounding proceedings were not cancelled initially and later, since the assessee has been doing business not as a branch or franchisee of Malabar Gold and since they have shifted their place of business to a more spacious show room at a conspicuous location in the heart of the city, they are not eligible to the benefit under section 8(f)(i)(v)(d) of the Act. So far as this reasoning of the Assistant Commissioner, no opportunity of being heard was given to the revision petitioner. The reason indicated at annexure A3 is altogether different from annexure A5. Therefore, there is no application of mind. In the case of Josco Gold Corporation Pvt. Ltd. v. Commercial Tax Officer, Ist Circle, Kottayam[2014] 2 VST-OL 554 (Ker);[2014] 22 KTR 58 (Ker), a Division Bench of this court had an occasion to deal with the provisions of section 8(f) of the Act whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, can refuse permission to pay tax at compounding rate or cancel the permission already granted. It says valid and sufficient reasons like shifting of business place, furnishing of false information, etc. If shifting of business place was to be a valid and sufficient reason, instead of just opining registration is cancelled on account of shifting of place of business, the assessing authority must give a valid reason why such shifting deserves such treatment. Unless such reasoning is mentioned per se, shifting of place of business may not be a ground upon which permission can be cancelled without valid and sufficient reason. In the absence of such valid and sufficient reason, it is nothing but arbitrary and illegal. As already stated above, the reasoning in the show-cause notice is enlarged to much larger issue by the time permission came to be cancelled at annexure A5. Therefore, the assessing authority has not applied its mind while cancelling the permission. Further, there was no opportunity to the assessee to explain the valid and sufficient reason to shift his place of business before cancelling the permission on the ground of shifting the place of business. Consequences of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
