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2016 (6) TMI 750 - HC - VAT and Sales TaxWorks Contracts - benefit of compounding of tax - validity of assessment orders u/s 25(1) of the KVAT Act, 2003 - The Intelligence Officer verified the accounts and found that they have suppressed contract receipt and penalty was imposed for the year 2009-10. - On verification it was found that petitioner has not filed any compounding application with the related documents as required under Sub rule 1 of Rule 11, but has remitted tax adopting the compounding rate. No application has been filed as provided under the Rules. In so far as no order had been issued, the allegation that tax has been paid at compounding rate which has to be ascertained is not sustainable. Held that:- It is clear from the reading of Section 25 that it is a special power given to the assessing officer to take action if for any reason the whole or any part of the turnover of the business of a dealer has escaped assessment in any year or has been under assessed. Therefore, when a fact situation gives rise to a situation warranting interference under Section 25(1), Section 22 cannot control Section 25. Section 25 is an independent power available to the Department to consider and take action in respect of escaped assessment, under assessment etc,. That apart, Section 22(2) would further clarify that even in an instance where revised return is filed, assessment is deemed to be completed subject to Section 25 of the Act. Therefore merely for the reason that the authorities did not invoke Section 22 within the prescribed period does not preclude them from invoking Section 25, if the facts give rise to an eventuality as provided therein. Hence, I do not find anything wrong in the action of the Department in invoking Section 25(1). In this case, no compounding application was ever filed and there is no question of any other person claiming benefit based on the same. In order to invoke Section 8 (a) of the Act, option is to be exercised by the works contractor. Option can be exercised only on compliance of the statutory format. In so far as the petitioner did not comply with such procedure, the Department was justified in acting accordingly as if petitioner had not opted for payment of tax at compounded rate. On facts itself, it is clear that the matter came to be noticed when a crime file was investigated by the officers where penalty had been imposed on the petitioner. Therefore, the said ground also is not available to the petitioner. - Decided against the petitioner.
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