Whether the application submitted by the petitioner for payment of tax at the compounded rate under Section 8 (b) of the Kerala Value Added Tax Act, 2003 could have been rejected by referring to the course stipulated under the ‘proviso’ to Section 8 (f) (ii) ? 

2013 (1) KLT SN 33 (C.No. 32) : 2013 (2) KLJ 339 : ILR 2013 (1) Ker. 457 : 2013 (1) KHC 32

IN THE HIGH COURT OF KERALA AT ERNAKULAM

P.R. RAMACHANDRA MENON J.

W.P(C) No. 11783 of 2012 (W)

Dated, this the 2nd day of July, 2012

Ahammed Sherief Vs. Kerala Value Added Tax Appellate Tribunal

FOR PETITIONER(S): BY ADV. SRI.C.K.THANU PILLAI; FOR RESPONDENT(S): BY ADV.SMT.SOBHA ANNAMMA EAPEN, GOVERNMENT PLEADER

J U D G M E N T

Two legal questions are involved in this writ petition; first one is, whether the application submitted by the petitioner for payment of tax at the compounded rate under Section 8 (b) of the KVAT Act could have been rejected by referring to the course stipulated under the ‘proviso’ to Section 8 (f) (ii) and the second one is, whether the verdict passed by the Tribunal dismissing Ext. P12 appeal, observing that the challenge against Ext. P11 order passed by the second respondent will not lie before the Tribunal and that the same has to be preferred before the Deputy Commissioner is correct or sustainable.

2. The sequence of events as narrated in the writ petition shows that, the petitioner, who is conducting the business of metal crusher unit and a registered dealer on the rolls of the second respondent, was mulcted with penalty of Rs. 9,87,682/- in respect of the assessment year 2007 – ’08. Placing reliance on the penalty imposed, the assessment was sought to be completed fixing huge liability upon the petitioner; which was subsequently set aside by the appellate authority, simultaneously intercepting the penalty order as well and directing the original authority to pass fresh orders as specified. In the meanwhile, the petitioner filed an application to permit the petitioner for remitting the tax at the compounded rate under Section 8 (b) of the Act. The application preferred by the petitioner was however rejected without giving any opportunity of hearing, which made the petitioner to approach this Court by filing W.P.(C) No. 20811 of 2011. This Court set aside the impugned order and directed the second respondent to consider the matter complying with the statutory requirement under Section 8 of the Act and Rule 11 (2) (ii) of the Rules, as per Ext. P8 judgment. Pursuant to the above verdict, notice was issued to  the petitioner by the second respondent again, proposing to reject the option for compounding on 16.09.2011, in response to which, a detailed objection was preferred by the petitioner on 03.10.2011, vide Ext. P10. After considering the same, the application was rejected as per Ext. P11 order, observing as follows:

“In the light of the above I found that the dealer has purposefully suppressed the relevant information as per section 8 (ii) of the KVAT Act 2003 and filed application without mentioning the year along with a reply for the above 4th referred pre assessment notice belatedly in violation of Rule 11 (1) of the KVAT rules 05 after an inspection on 17.10.2007 by the intelligence squad in the business place of the dealer. Hence the application of the dealer for permission to opt payment of tax at compounded rate is not admissible. So the following orders are passed.”

3. Being aggrieved of Ext. P11 order, the petitioner preferred Ext. P12 appeal before the first respondent Tribunal, along with Ext. P13 petition for stay. After considering the matter, the first respondent held that the appeal itself was not maintainable, since the course provided under section 8 (f) (ii) and 8 (f) (iii) would be applicable only to the “gold dealers” and not the persons like the petitioner, who are operating metal crusher units covered by Section 8 (b). This in turn is under challenge in this writ petition, contending that, the only provision to prefer appeal on being aggrieved of the order rejecting application for compounding, is stipulated under Section 8 (f) (ii), which is to be uniformly applied to all the dealers, who are seeking the benefit of compounding.

4. The respondents 2 and 3 have filed a statement before this Court contending that Section 8 (f) (ii) is applicable only to “gold dealers” and since the petitioner is a dealer in granite metals, he cannot have the benefit of Section 8 (f) (ii). The respondents have also projected the circumstances under which the above provision was incorporated in the Statute Book, based on the Budget Speech 2008 – ’09 (with reference to paragraphs 165 to 167). Accordingly, it is stated that the first respondent Tribunal is perfectly justified in having rejected Ext. P12 appeal and the remedy to the petitioner, if at all aggrieved of Ext. P11, is only before the Deputy Commissioner. The petitioner has filed a reply affidavit seeking to reiterate the contentions raised in the writ petition.

5. Heard the learned counsel for the petitioner as well as the learned Government Pleader at length.