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TMI Blog2019 (11) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... or only for that portion of the year when it was functioning as a business entity? HELD THAT:- As per the charging section under the KVAT Act (Section 6), there can be a levy of tax under the Act only when the taxable event of sale or purchase of goods occurs. In other words, there cannot be a levy of tax under the Act, either actual or notional, for the period when the assessee did not occasion a taxable event - In the instant case, although the petitioner had exercised his option to pay tax on compounded basis, in lieu of the regular method of payment of tax under the Act, the assessment and consequential collection of tax from him could only have been for the period during which he carried on a business of sale or purchase of goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis in lieu of the regular method of paying tax under Section 6 of the KVAT Act. While so, in December 2012, the petitioner decided to open a new branch for their business. The issue then arose as regards the basis for payment of tax for the business carried on in the new branch. As per the provisions of Section 8(f), as it stood during the relevant time, an assessee who had opted to pay tax on compounded basis in respect of the principal place of business, had necessarily to pay tax on compounded basis in respect of all branches that existed in the year to which the option related. This meant that in the case of the petitioner, who was paying tax on compounded basis at the principal place of business, payment of tax in relation to the bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erential tax payable. The said assessment is impugned in this writ petition. 2. A statement has been filed on behalf of the respondents wherein reference is made to the provisions of Section (8)(f) of the KVAT Act and in particular, Explanation 3 and Explanation 5 thereof, which read as under: Explanation 3.-- Dealers opting for payment of tax under this clause shall pay compounded tax in respect of all their branches existing in the year (to which the option relates.) Explanation 5.-- Where a dealer opens a new branch in the current year, the additional compounded tax payable under this clause in respect of such branch shall be the average of the tax payable by him in respect of his pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross the Bar, I find that the payment of tax under Section 8(f) of the KVAT Act, in respect of the category of dealers enumerated therein, is in lieu of payment of tax in terms of Section 6 of the KVAT Act. It follows, therefore, that an assessee opting to pay tax on compounded basis must necessarily accept the statutory mandate for payment of tax in accordance with the formula prescribed in Section 8(f) and cannot choose to pay tax on a different basis. The issue that arises in the instant case, however, is whether or not the petitioner herein is obliged to pay tax on compounded basis, in respect of the newly opened branch, for the whole year or only for that portion of the year when it was functioning as a business entity. The provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the tax paid in relation to the principal place of business, but for the period during which the branch functioned as a business entity during the relevant assessment year. The assessment of the petitioner for the year 2012-13 would, therefore, have to be completed by adopting the figure of ₹ 23,07,180/- as the compounded tax payable for the principal place of business and adding to the said sum, an amount of ₹ 7,67,269/- [(2307180/12) x 4] as the compounded tax payable for the newly opened branch. Inasmuch as in Ext.P3 assessment order, the assessment has not been completed in the manner indicated above, I allow this Writ Petition by quashing Ext.P3 and direct the 1st respondent to pass a fresh order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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