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TMI Blog2018 (12) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... unding was allowed by the AO; which was not the subject of suo motu revision. Sub-rule (1) of Rule 30 speaks of an application to be filed at the commencement of the year, at least before the first of May of that assessment year. Form Nos. 21 and 21A also indicate that the permission is granted for a specific period; mostly the assessment year. Rule 30 and the Forms prescribed thereunder are period specific; while Rule 30A and the Forms prescribed thereunder are contract specific, is the contention of the assessee, which we are inclined to accept. If that be so, when the compounding has been applied for the first year, necessarily, it has to be applied in the second year also, when the very same contract is continued in the second year. The cancellation of the suo motu order is set aside - The refund shall be only after the working of the assessments under the compounding scheme and under the regular scheme - appeal allowed in part. - WA. No. 713 of 2015 - - - Dated:- 10-9-2018 - MR K. VINOD CHANDRAN AND MR ASHOK MENON, JJ. For The Appellant : SR. GOVERNMENT PLEADER V K SHAMSUDEEN For The Respondent : ADV. SRI. A. KUMAR JUDGMENT Vinod Chandran, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) is the assessment for the year 2000-2001. Ext. P6(b) is the assessment order for the year 2001-2002. Ext. P7 is the order of the AO rejecting the compounding application filed for the year 2000-2001. As far as the assessment year 2001-2002, the AO had rejected the compounding application by Ext. P8. The learned Single Judge found that Ext. P8 is also in terms of Ext. P3, but however, refused to interfere with the same in deference to Ext. P2 Division Bench judgment produced in W. A. No. 713/2015. Hence, as far as 2001-2002, there is no issue pending in appeal, since the direction is only to carry out the assessment as per the Division Bench judgment of this Court in Ext. P2 produced in W. A. No. 713/2015. 4. Before we go into the controversy in the present Writ Appeals, we have to look at the judgment in Ext. P2 produced in W. A. No. 713/2015 as also the subsequent orders passed by the Hon'ble Supreme Court wherein the decisions were challenged. The Division Bench in Ext. P2 was concerned with a Writ Appeal and a Writ Petition. The Writ Appeal was against the judgment in the Writ Petition, wherein the learned Single Judge refused to interfere with the assessment made base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led earlier itself as evidenced from Ext. P13 and Ext. P16 issued by the Deputy Commissioner. These documents clearly indicate that an application for compounding was filed prior to 2001 and the acceptance of the tax payment under the compounded rate further evidences the fact of a permission having been granted. It is submitted that the AO not being able to trace out the compounding application filed earlier, had requested the assessee to file a fresh one in the year 2004 on which the entire exercise was carried out by the AO finding the delay and permission for compounding not having been granted. The learned Counsel would contend that the Division Bench judgment of this Court in 2009 (23) VST 274 (Ker) [Johnson Johnson Limited v. Assistant Commissioner (Assessment), Special Circle, Ernakulam and others], which was relied on by the learned Single Judge, applies squarely on facts. The learned Senior Government Pleader would, however, rely on three decisions of the different Division Benches of this Court to contend that the assessing authority ought not have considered the compounding at all for reason of the gross delay occassioned: S. T. Rev. No. 297/2007 [M. P. Raju v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contract amount even before registration under the KGST Act and had after the registration filed an application for compounding. 8. Reliance Construction Company (supra) is a case in which the question arose as to whether the assessee is entitled to payment of tax under the compounding scheme under sub-Section (7) or (7A) of Section 7 of the KGST Act. The revision by the State was only challenging the order of the Tribunal directing the AO to permit the assessee to pay tax under Section 7(7). The Division Bench, however, framed a question as to whether the application under Section 7 itself was maintainable finding therein that the AO on receipt of an application under Section 7 for payment of tax at the compounded rate under subsection (7) informed the assessee that the application was defective and he could only opt under sub-section (7A). No such application having been filed, the AO proceeded to tax the assessee as per the provisions of sub-section (7A) of Section 7. The Division Bench deprecated the procedure adopted by the assessing authority while completing the assessment, since there was no permission granted to the assessee. Pertinent is the fact that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular assessment was challenged under Article 226 specifically taking the ground of lack of jurisdiction for reason of the very same contract having been permitted to be compounded in the earlier year. To buttress the above contention, the learned Counsel for the assessee has also taken us through the provisions in the KGST Act. 12. Admittedly compounding is permissible of the works contract of the assessee as available in sub-section (7) of Section 7 of the KGST Act; the work being one of civil work of construction of a bridge. The procedure for making an application and granting permission to a works contractor under the compounding scheme, when such works contract is covered under sub-section (7) of Section 7 is prescribed in Rule 30A of the KGST Rules, 1963. Rule 30A(1) speaks of every contractor engaged in civil works being entitled to pay tax in accordance with sub-section (7) of Section 7 in respect of each such contract. Sub-rule (2) also speaks of an application having to be filed before the assessing authority in duplicate before the receipt of the contract amount or any installment thereof. Sub-rule (3) is an enabling provision in so far as not insisting for a specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal from that portion of the order, we do not think that there could be any interference caused to the same. We, hence, reject the appeals of the Government, subject only to any short-fall in turnover being entitled to be assessed in 1999-2000 and 2000-01; but levying tax only under Section 7(7). The regular assessments made for the said years would stand set aside. As for the regular assessment in the year 2001-02, the assessment shall be only with respect to the turnover for that year, after deducting the turnover already assessed under Section 7(7) in the previous two years. 15. We, hence, partly allow the appeal of the Government in W. A. No. 961/2015 setting aside the cancellation of the suo motu order. We have made it clear that the suo motu order only interferes with the assessment made and not the compounding permitted by the AO. Hence, the short-fall in quantum shall be determined and the assessment completed under the compounding scheme itself. Likewise, for the year 2000-01, the assessment shall be completed again under the compounding scheme adopting estimation of the turnover only if the assessee fails to produce the turnover details, including the work carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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