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TMI Blog2009 (11) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer is directed to limit levy of interest under Section 23(3A) or Section 23(3) at compensatory rate of 12% per annum, for the entire period of delay. - ST. Rev.. No. 219 of 2009 - - - Dated:- 11-11-2009 - MR. JUSTICE C.N.RAMACHANDRAN NAIR AND MR. JUSTICE V.K.MOHANAN FOR THE PETITIONER :SRI.HARISANKAR V. MENON O R D E R Ramachandran Nair,J: The question raised in the revision filed by the assessee is whether the Sales Tax Appellate Tribunal was justified in upholding the order of the Deputy Commissioner issued under Section 35 of the Kerala General Sales Tax Act, 1963 (for short 'the K.G.S.T.Act') wherein he directed revision of assessee's assessment for the year 2003-04 at the compounded rate as provided under Section 7(1)(a) of the K.G.S.T.Act by taking into account the turnover of all the branches of the assessee in Kerala. 2. We have heard Advocate Sri.Harisankar. V.Menon appearing for the revision petitioner and the Government Pleader appearing for the respondent. 3. The facts leading to the controversy are the following:- The assessee is engaged in the business of gold jewellery. It has it's head office at Ernakulam and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the order is time barred and that the regular assessment completed by the assessing officer is permissible under the provisions of the Act and Rules. On the question of limitation, the contention of the assessee was that the mistake, if any, is in the permission granted by the officer on application filed by the assessee for compounding under Rule 30 of the K.G.S.T.Rules and so much so, the revision, if any, under Section 35 should have been on the approval granted by the officer for compounding, i.e., with reference to the compounding order in Form No.21A and demand in Form No.22, for payment at compounded rate, with reference to which the matter was time barred. However, the Tribunal found that the order revised by the Deputy Commissioner was a regular assessment which was completed under Section 17(3) which led to reduced payment of tax on account of misapplication of the compounding scheme by the assessing officer and the order directing revision of assessment under Section 35 was issued by the Deputy Commissioner within the time frame prescribed therein. The Tribunal, accordingly, rejected the challenge against the order of the Deputy Commissioner on ground of limitation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an independent place of business and the provisions of this sub-section shall apply to it accordingly. 6. It is very clear from the above provisions that the payment of tax at compounded rate under Section 7 (1)(a) is an option given to the assessee to pay tax under the compounding scheme in lieu of tax payable under Section 5(1) of the Act. Therefore, necessarily, the scope of Section 7(1) has to be considered with reference to the main charging section otherwise applicable to the assessee, which is Section 5(1). There is no dispute that the liability for sales tax for a dealer under Section 5(1) is on the total turnover under Section 2(xxvi) which means the aggregate turnover in all goods of a dealer at all places of his business in the State. Therefore, the compounding, as an alternate method of payment of tax under Section 7(1)(a), is for the business as a whole irrespective of the number of branches maintained by the assessee. In fact, Section 7(1)(a) provides for payment of tax at compounded rate only in respect of one line of business, i.e., any gold or silver ornaments or wares and if assessee is engaged in any other line of business, the compounding under Section 7 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o revise the regular assessment made in consonance with the compounding scheme approved by the assessing officer. The Government Pleader, on the other hand, contended that Form No.21A is only an approval granted on application filed under Rule 30 and in such case, the dealer is permitted to file return under sub-clause(5) of Rule 30 in Form No.9 on which the assessment has to be made by the assessing officer under Section 17(1) or 17(3) of the Act. It is clear from Form No.21A and Form No.22 issued under Rule 30 that the payment of tax based on the approval and the demand notice are only provisional and the same has to find acceptance in a regular assessment. In other words, even if there is a mistake or omission in the approval granted by the assessing officer, it is within his powers to modify such order and demand the tax escaped under the compounding scheme in regular assessment or later by revising assessment under Section 19(1). The power of the Deputy Commissioner under Section 35, of course, can be exercised in respect of any order passed by the assessing officer which is prejudicial to the interest of the revenue. Therefore, the approval granted in Form No.21A and the dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department. However, the question to be considered is whether a wrong order passed on a compounding application which has resulted in reduced payment of tax at compounded rates in violation of the statutory provisions could be corrected by a higher authority exercising supervisory jurisdiction over the assessing officer. We are unable to accept the proposition that an option exercised by assessee to pay the tax under compounded scheme, accepted by the officer amounts to a contract between the assessee and the assessing officer. The assessing officer is the first authority created under the statute to determine the tax payable under the Act, which includes the scheme of payment of tax at the compounding rate provided under Section 7(1)(a). The entire scheme of levy, payment and recovery of tax and the procedure to be followed are exhaustively dealt with in the statutory provisions. If there is any violation of the provisions of the Act in regard to the filing of the application for compounding by the assessee and acceptance of the same by the officer, leading to loss of revenue, the Deputy Commissioner under Section 35 has full power to interfere with the orders issued by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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