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2015 (1) TMI 1311 - KERALA HIGH COURTImposition of penalty under Sub-section (7) of Section 22 of the Act - the assessment made under Sub-section (1) of Section 25 of the Act - presumptive taxation - eligibilty for input tax credit by virtue of the amendment made to Sub-section (5) of Section 6 of the Act, by the Finance Act of 2011 - no concealment of turnover - no willful disobedience of the provisions of the Act - Held that: - A reading of Paragraph 385 of the Budget Speech 2014-15 makes it abundantly clear that, presumptive tax is made available to small dealers subject to certain conditions and in case of violation of any of such conditions, such dealers will be assessed for payment of tax as a normal dealer and they have to pay tax accordingly. As the presumptive tax dealers find it difficult to obtain input tax credit and special rebate while assessments are initiated denying their presumptive status, the Government felt the need to amend the existing provisions in the Act, which was given effect by inserting Section 25C to the Act, with effect from 1/4/2005, by the Kerala Finance Act, 2014. Going by Section 25C of the Act, in any assessment or other proceeding initiated by the assessing authority denying the eligibility of a dealer to pay presumptive tax for the violation of conditions enumerated in sub-section (5) of section 6, such dealer shall be granted input tax credit or special rebate, as the case may be. In our view, Section 25C of the Act will not in any manner absolve any dealer paying presumptive tax, against whom any assessment or other proceeding are initiated by the assessing authority denying the eligibility to pay presumptive tax for the violation of conditions enumerated in sub-section (5) of section 6, from being assessed for payment of tax as a normal dealer or from imposing any penalty under Sub-section (7) of Section 22 of the Act. It only enables such dealers to claim input tax credit on the turnover in excess of 60 lakh rupees, or to claim special rebate, as the case may be. The appeals filed by the assessee before the Tribunal ended in dismissal by orders dated 28/2/2014. On receiving the assent of the Governor to the Kerala Finance Bill, 2014, the Kerala Finance Act, 2014, was published in the Kerala Gazette on 23/7/2014, and Section 25C to the Act came into force with effect from 1/4/2005. In such circumstances, we are of the considered view that, the entitlement of the assessee for input tax credit for the period in dispute, on the turnover in excess of 60 lakh rupees, requires to be considered by the assessing authority, in terms of Section 25C of the Act. For the limited purpose of considering the entitlement of the assessee for input tax credit for the period in dispute, on the turnover in excess of 60 lakh rupees, the matters are remanded to the assessing authority, who shall pass appropriate orders, with notice to the assessee and after giving the assessee a reasonable opportunity to produce materials, if any, in support of its claim for input tax credit - appeal allowed by way of remand.
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