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2020 (6) TMI 141 - KERALA HIGH COURTReduction in tax liability - payment of tax at compounded rate - Section 8(f) of the Kerala Value Added Tax Act, 2003 - Explanation added in the year 2014 - clarificatory in the nature or not - Section 43B of the Income Tax Act - assessee contended before the learned Single Judge that the only measure that could be adopted by the Assessing Officer to correct the mistake if at all occasioned, was the devise of rectification for which limitation is prescribed of four years - HELD THAT:- Section 8(f)as available in the subject assessment year and as amended in the year 2014 have been extracted by the learned Single Judge which we need not repeat. Suffice it to find that the entire provision itself was substituted, on amendment, but however, sub-clause (i) in its effect remained the same. The tax payable under the year of option was dependent upon the turnover of the previous year and had to be at the rate of 115% of the tax paid or payable, if the turnover for the preceding year was ₹ 10 lakhs or below, 120%, if it were above ₹ 10 lakhs and up to ₹ 40 lakhs, 135%, above ₹ 40 lakhs and up to Rupees one crore and 150% above Rupees one crore. The percentage being determined on the highest tax conceded or paid in the three consecutive years preceding the year under option. In the present case no curative exercise having been carried out by the amendment of 2014. Clause (f) of Section 8 was substituted in its entirety with six explanations where as the original clause (f) had eight explanations. If Explanation 3 in the new clause (f), as introduced in 2014, is found to be clarificatory, it has to be bodily taken out of the amended provision and placed in the un-amended clause (f) which is not a permissible exercise. The Explanation in the amended clause(f) applies to that provision and not to the earlier one. Clause (f) as amended in 2014 can only apply prospectively and the Explanations therein are intended at explaining the meaning and intendment of the section itself, to clarify any obscurity or vagueness thereat, to make meaningful and workable the dominant object of that particular provision and not do any or all of these with respect to the un-amended provision, which had all-together different explanations - Explanation 3, of the amended Section 8(f) if available in the year 2011-12 and 2012-13 would not enable a reduction insofar as the determination of the quantum of the tax payable under the compounding provision for the year under option merely for reason of the closure of the business in the previous year, which in the present case is on the last date of closure, ie, 31st of March. Explanations, of the year 2014, speak only of a closure in the year of option and does not reckon a closure in the previous year. The option available was very clear insofar as the tax payable under the compounding scheme to be at a percentage above the tax liability of the previous year. The assessee with open eyes applied under the scheme and obtained permission. There was no cause for any exclusion since the closed down branch had business in the previous year for which tax was also paid at the compounded rate. Coming to the relevant years, 2011-12 and 2012-13 again the assessee could not have claimed any deduction since the provision remained as such - The assessee however carried on that branch's business for the entire year - there is no such exclusion of a liability for the previous year can be granted under the provisions under Section 8(f) as it existed in the year 2011-12 and 2012-13. The closure of branch on 31.03.2010 is irrelevant insofar as the tax liability determined in the years 2011-12 and 2012-13 on the basis of the tax conceded or paid in the three consecutive years preceding the year under option. Appeal allowed - decided in favor of appellant.
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