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CYRIL JACOB VELLAPPALLY JACOB VELLAPPALLY AND CO. Versus COMMERCIAL TAX OFFICER (WC) , KOTTAYAM.

2016 (1) TMI 508 - KERALA HIGH COURT

Eligibility to pay VAT on works contract at compounded rates - Kerala Value Added Tax Act (KVAT) - As per the provisions of Section 8(a)(i) of the KVAT Act, as it stood on 1.4.2005, any works contractor who was not an importer or a dealer effecting first taxable sale in the State could, at his option, instead of paying tax in accordance with the provisions of the said section, pay tax at 2% of the whole contract amount. - Effect of subsequent amendment - Held that:- The amendment to Section 8(a) .....

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alty imposed on the petitioners on this ground also cannot be legally sustained. - Demand of differential tax and penalty set aside - Decided in favor of assessee.

Regarding the petitioners could have applied for a surrender of their certificate of registration under the CST Act during the assessment year 2005-06 itself, for reasons best known to them, did not choose to apply for a cancellation of the CST registration before the commencement of the assessment year 2006- 07 - Held that .....

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rate of tax under Section 8(a)(i) of the KVAT Act, cannot be said to be illegal - Decided against the assessee. - W.P.(C).NOS.17800, 18768, 19675, 21219, 23062 & 26474 OF 2007 - Dated:- 29-10-2015 - MR. JUSTICE A.K.JAYASANKARAN NAMBIAR, J. FOR THE PETITIONERS : SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMARAN JUDGMENT As all these writ petitions involve a common issue, they are taken up for consideration together and disposed by this common judgment. 2. W.P.(C).Nos.17800/2007, 18768/2007 and 21219/2007 de .....

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provisions of Section 8(a)(i) of the KVAT Act, as it stood on 1.4.2005, any works contractor who was not an importer or a dealer effecting first taxable sale in the State could, at his option, instead of paying tax in accordance with the provisions of the said section, pay tax at 2% of the whole contract amount. For those who opted for payment of tax at compounded rates, but did not satisfy the conditions in S. 8 (a)(i) of the Act, compounded tax was payable at the rate of 4% of the contract amo .....

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t. During the relevant time, the corresponding provisions of the CST Act, 1956, and in particular, Section 7(5) of the CST Act contemplated as follows: Section 7(5) of the CST Act: (5) A registered dealer may apply in the prescribed manner not later than six months before the end of a year to the authority which granted his certificate of registration for the cancellation of such registration, and the authority shall unless the dealer is liable to pay tax under this Act, cancel the registration .....

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ng into force. They had, immediately after filing their applications for payment of tax on compounded basis, also filed the necessary returns and paid tax thereon, on the basis of the applications filed by them for payment of tax, at the concessional rate of 2%, on compounded basis. In some cases, the petitioners also surrendered their CST registrations during the assessment year 2005- 06, and before the date of the amendment of S. 8 (a) (i). In the case of some others, the petitioners surrender .....

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detailed replies objecting to the said proposal, the Assessing Officers proceeded to confirm the proposals in the notices issued to the petitioners and directed the petitioners to pay the differential tax calculated on compounded basis by adopting the higher rate of tax at 4%. The said orders of the Assessing Officer are impugned in the writ petitions for the assessment year 2005-06. 4. As regards the writ petitions concerning the assessment year 2006-07, it is seen that the petitioners had appl .....

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6-07. 5. I have heard Sri.K.U.Vijayan and Sri.K.N.Sreekumar, the learned counsel appearing for the petitioners in all these writ petitions as also Sri.Liju V. Stephen, the learned Government Pleader appearing for the respondents in all these writ petitions. 6. On a consideration of the facts and circumstances of the case as also the submissions made across the bar, I find that the contention of the petitioners is essentially that, for the assessment year 2005-06, they had opted for payment of ta .....

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certificates so as to conform to the status of a dealer not holding a registration under the CST Act during the assessment year 2005-06. The case of the petitioners, therefore, is that for the assessment year 2005-06, inasmuch as it was impossible for them to comply with the requirements for cancellation of the certificate of registration under the CST Act, as contemplated in Section 7(5) of the CST Act, the respondents ought not to have denied them the benefit of payment of tax at the concessio .....

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late the holding of a registration under the CST Act as a disqualification for exercise of an option to pay tax at the concessional rate of compounded tax under Section 8(a)(i). The amendment to Section 8(a)(i) having come into force in the middle of the assessment year, and it being almost impossible on account of the statutory provisions of Section 7(5) of the CST Act, to get a cancellation of the certificate of registration issued to them under the CST Act in 2005-06 itself, it would be unfai .....

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s for erroneously opting to pay tax under Section 8(a)(i) of the Act during the said assessment year. The said writ petitions are therefore allowed, as above, with consequential reliefs to the petitioners. As regards W.P.(C).Nos.19675/2007, 23062/2007 and 26474/2007, I find that, in these cases, the petitioners, who were well aware of the amendments that were effected to Section 8(a)(i) of the KVAT Act, on 28.8.2005, with effect from 1.4.2005, and could have applied for a surrender of their cert .....

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