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2017 (11) TMI 1035 - HC - VAT and Sales TaxPayment of tax on compounded basis - ice cream - the petitioner applied for payment of tax on compounded basis, by taking the view that the ice cream that was manufactured and sold by it, was an item of cooked food which was one of the items in respect of which an assessee could discharge tax on compounded basis u/s 8 of the KVAT Act - reassessment order - whether it was open to the respondent to propose a rejection of an application submitted by an assessee for payment of tax on compounded basis, at the fag end of the assessment year, in respect of which the compounding application was preferred? Held that: - when the statutory provisions detailing the procedure to be followed by an assessee, for the purpose of payment of tax on compounded basis, contemplate the consideration, by the department, of an application preferred by an assessee, and an intimation to be given to the assessee as to whether or not his application was accepted, for the purposes of enabling the assessee to discharge his liability on compounded basis, the respondent cannot, by a delayed action on its part, prevent an assessee from discharging the liability on compounded basis - In the instant case, since the assessee, after opting to pay tax on compounded basis, had to commence payment of tax on the said basis in the first quarter of the assessment year in question, any communication rejecting the request of the assessee for payment of tax on compounded basis ought to have been served on the assessee before the expiry of the said quarter. Only in such an event, would the assessee have had an opportunity to pay tax in accordance with the regular provisions of tax, as against the provisions of Section 8 of the KVAT Act - The non communication of any such rejection order by the respondent, effectively estopped it from subsequently issuing an order rejecting the application, since by that time the assessee was justified in discharging its liability in accordance with Section 8 of the KVAT Act, for which he had opted. The assessment orders impugned in these writ petitions cannot be legally sustained. The delayed action on the part of the respondent would, under the circumstances, amount to a mere change of opinion by the assessing officer and, it is trite, that in exercise of powers under Section 25(1) of the KVAT Act, a change of opinion by an assessing officer cannot be the basis of a reassessment against the assessee. The proposal to reject the application submitted by the assessee was served on the assessee only on 06.02.2017, which is in the last quarter of the assessment year 2016-17. This amounts to a serious lapse on the part of the department in the matter of issuing notices to an assessee, who in their opinion, was not entitled to opt for payment of tax on compounded basis, in respect of the product dealt with by him during the previous assessment year - It is for the Commercial Tax Department in the State to look into this lapse on the part of the officers under the department and take appropriate action against the said officers, in the event of a finding that there was negligent conduct on the part of the officers in permitting the assessee to pay tax on compounded basis. Petition allowed - decided in favor of petitioner.
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