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TMI Blog2016 (12) TMI 1695X X X X Extracts X X X X X X X X Extracts X X X X ..... ain works contracts covered by a particular work order but not for other works that were being undertaken by them. They had, however, claimed that going by the third proviso to Section 8(ii), they are entitled to pay tax even for those works at the compounded rates. This is totally unacceptable and against the express intendment of the provisions of the section. The petitioner, having accepted the orders of the Assessing Authority under Section 8(a)(ii) of the Act to pay tax at compounded rates for certain works, cannot renege from the obligation cast upon them under the statute and then try to interpret the provisions to suit its convenience and its cause to claim benefits which they were never entitled to and which was never intended by the statute to be granted. The petitioner would be entitled to pay tax at the compounded rates only for the works for which permission was granted and not for the others. Revision dismissed. - O. T. Rev. Nos. 125 And 127 of 2015 - - - Dated:- 21-12-2016 - Mr. Thottathil B. Radhakrishnan And Mr. Devan Ramachandran, JJ. For The Petitioner : Sri. N. Muraleedharan Nair And Sri.V.K.Shamusudheen For The Respondent : Sri. Mohammed raf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the petitioner with respect to such works relating to which suppression was detected. The petitioner challenged the assessment before the first Appellate Authority, who confirmed it and therefore, the petitioner moved a second statutory appeal before the Kerala Value Added Tax Additional Appellate Tribunal, Palakkad ('the Tribunal' for brevity). The learned Tribunal, after an assessment of all the facts before it, found that the concessions made by the Intelligence Officer in determining and levying tax at compounded rates when the petitioner had sought for composition of the offences would not in any manner deter or constrain the Assessing Authority from making a proper assessment. In short, the Tribunal concluded that since the petitioner was not entitled to pay tax at compounded rates with respect to the works relating to which suppression was found, such concession given by the Intelligence Officer would not inure to the benefit of the petitioner and that the assessments made by the Assessing Authority cannot, therefore, be found fault with. The petitioner has impugned the orders of the Tribunal for the assessment years 2008-09 and 2009-10 respectively in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for individual works, file a single option for payment of tax under this clause before 30th day of April of the year to which the option relates, subject to eligibility: 5. The third proviso above makes it indubitable that a works contractor who intends to pay tax at compounded rates may, instead of filing separate applications for compounding of individual works, file a single option for payment of tax. It is this provision that is now interpreted by the petitioner to claim that they are entitled to pay tax for all the works they have undertaken for the relevant assessment year because they had filed an option for payment of tax at compounded rates. We have said that this argument is intumesce because at first blush this would appear to be appealable. However, it is obvious from a proper perspective of the provisions that this interpretation was never intended and no such benefit was sought to be given to any assessee by the provisions. 6. The true purpose and import of the provisions relating to compounding of tax have been discussed and decided by the Hon'ble Supreme Court and by our own courts in several cases. In State of Kerala and Another v. Builders Association ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir option on their own accord. 8. This position was reiterated by a Single Bench of this Court in the year 2000 in Falcon Rock Products v. Sales Tax Officer, Ii Circle, Kannur and Others (2000 (2) KLT 284) in the following manner: That apart, the compounding provision is only optional. If an assessee feels that the application of the compounding provision may work hardship in a financial year, it is not necessary for such assessee to make application for payment of the tax at the compounded rate. It is for the assessee to consider as to whether the exercise of the option is advantageous to the assessee in any particular year. Only if it is found to be advantageous, the option need be exercised. 9. Finally, in Joy Alukkas Traders (I) Pvt. Ltd. (M/s.) v. State of Kerala (2010 (1) KHC 844) the very same principles were re-stated with great vehemence in the following words, which are extracted from the judgment: It is very clear from the above provisions that the payment of tax at compounded rate under S.7(1)(a) is an option given to the assessee to pay tax under the compounding scheme in lieu of tax payable under S.5 (1) of the Act. Therefore, necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof or any local authority or any autonomous body whatever ben his total turnover for the year, shall be liable to pay tax on his sales or purchases of goods as provided in this Act. The liability to pay tax shall be on the taxable turnover. As has been already settled and re-stated by this Court in the judgments referred to above, the option to pay tax at compounded rates is an option available to the assessee to be chosen by him at his own volition as an alternative method of payment of tax which is charged by Section 6 but allowed to be paid in a different manner under Section 8 of the Act. 12. We have no doubt that Section 8 provides for an alternative method of payment which is in lieu of the tax charged under Section 6 and, therefore, the same will have to be interpreted and applied in exactly the same manner, without deviation, from the specific prescriptions and requirements contained under the said Section. The third proviso to Section 8, if read carefully, would show that a works contractor is given an option to make a single option instead of filing separate application for compounding of individual works. This one line in the proviso is sought to be interprete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compounded rates under Section 8 is obligated to file quarterly returns in Form Nos.10, 10A, 10B or 10F for the quarters ending 30th June, 30th September, 31st December and 31st March to the Assessing Authority. It is, therefore, obvious that the dealer has to prepare and present quarterly returns with respect to the works for which he has applied for payment of tax at compounded rates. The permission to pay tax under the Compounding Scheme is issued in Form No.1E available along with the Rules. The form obligates the assessee to declare the works order number and date, the description of work, the name of the awarder, the amount of contract and the period of contract in explicit terms. The provision is, therefore, very clear that the permission to pay tax under the compounding scheme is given to a particular work covered by a particular work order. The third proviso to Section 8, which talks about individual works is, therefore, only in relation to the individual components of work in a particular works contract awarded to or obtained by the assessee. In other words, once the assessee makes an application for permission to pay tax at compounded rates for a particular works contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bligated to pay tax in terms of Section 6 of the Act. 15. In the cases at hand, it is admitted by the petitioner and is evident from the permission granted under Section 8 of the Act, which orders are produced as Annexure-A in the revisions, that they had applied for compounding of certain works contracts covered by a particular work order but not for other works that were being undertaken by them. They had, however, claimed that going by the third proviso to Section 8(ii), they are entitled to pay tax even for those works at the compounded rates. This is totally unacceptable and against the express intendment of the provisions of the section. The petitioner, having accepted the orders of the Assessing Authority under Section 8(a)(ii) of the Act to pay tax at compounded rates for certain works, cannot renege from the obligation cast upon them under the statute and then try to interpret the provisions to suit its convenience and its cause to claim benefits which they were never entitled to and which was never intended by the statute to be granted. The petitioner would be entitled to pay tax at the compounded rates only for the works for which permission was granted and not for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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