9911796707
TMI Blog2015 (2) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as they stood on 01.04.2011 were as follows : "8. Payment of tax at compounded rates: (f) [(i) any dealer in ornaments or wares or articles of gold, silver or platinum group metals including diamond may at his option, instead of paying tax in respect of such goods in accordance with the provisions of section 6, pay tax at, - (a) one hundred and fifteen per cent, in case their annual turnover for the above goods for the preceding year was rupees ten lakhs or below; (b) one hundred and twenty per cent, in case their annual turnover for the above goods for the preceding year was above rupees ten lakhs and up to rupees forty lakhs; (c) one hundred and thirty five per cent; in case their annual turnover for the above goods for the preceding year was above rupees forty lakhs and up to rupees on crore; and at (d) one hundred and fifty per cent; in case their annual turnover for the above goods for the preceding year exceeded rupees one crore; of the highest tax payable by him as conceded in the return or accounts, or tax paid by him under this Act, whichever is higher, for a year during any of the three consecutive years preceding that to which such option relates.; Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collect tax on the sales at the rate not exceeding the rate prescribed for the commodity under this Act, but where the tax so collected during the year is in excess of the tax payable for the year under this clause, the tax collected in excess shall be paid over to Government in addition to the tax payable under this clause. (ii) The assessing authority, for valid and sufficient reasons, such as shifting of place of business, holding of stock exceeding double the quantity held in the previous year, furnishing of false information, suppression of relevant information, failure to furnish such information demanded, may refuse permission to pay tax under this section and cancel the permission if any granted: Provided that no orders under this sub-clause shall be issued without giving the dealer an opportunity of being heard and without prior approval of the District Deputy Commissioner. (iii) Notwithstanding anything contained in sections 55 or 60 of this Act, orders under sub-clause (ii) shall be appealable only to the Appellate Tribunals. (iv) In case where permission has been cancelled, the amount, if any paid based on the permission, shall be apportioned against the output tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and five per cent of such", the words "the same amount of" shall be substituted; (ii) In item (b), for the words "one hundred and ten per cent", the words "one hundred and five per cent" shall be substituted; (d) Sub-clause (vi) shall be omitted;" 3. Thereafter, there was a change in Government in May, 2011, and consequent to that, a new Finance Bill was introduced, which was later passed as the Kerala Finance Act, 2011 (Act 16 of 2011). By the said Act, the provisions of Section 8(f) of KVAT Act were further amended with effect from 01.04.2011, to read as follows : "(v) Where a dealer had paid tax under this clause for the previous year, the tax payable for the succeeding year under this clause shall be calculated at the rates mentioned in item (i) or (ii) below, whichever is higher, - (i) (a) at the same amount of tax paid during the previous year, in case their turnover for the above goods for the preceding year was rupees ten lakh or below; (b) at one hundred and five per cent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year was above rupees ten lakh and up to rupees forty lakh; (c) at one hundred and fifteen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been validly done or taken under the respective Acts and no action shall lie against any dealer or authority on the ground of short levy or refund of excess tax or duty and tax or duty collected, if any, by a dealer or an authority, as the case may be, shall be paid over to the Government. 5. The petitioners herein filed their applications for payment of tax at compounded rates before the official respondents within the time stipulated under the KVAT Act and Rules. In many of the cases, the authorities concerned considered the applications, and granted permission to the petitioners to pay tax at the compounded rates as per the provisions in force during the period between 01.04.2011 and 19.07.2011. In some cases, although the petitioners had filed their applications within the period envisaged in the Statute, the authorities concerned did not pass orders on the said applications immediately, but passed orders only subsequently, after the coming into force of the Finance Act, 2011. Even in such cases, however, it is not in dispute that the petitioners, after filing their applications, went ahead and filed the necessary returns in accordance with the provisions of the Act and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT Act, as if the said amendment had been in force at all material times. It is pointed out that the validation clause envisaged that no action would lie against any dealer or authority on the ground of short levy, or refund of excess tax or duty, and tax or duty collected, if any, by a dealer or an authority as the case may be, would be paid over to the Government. 8. It is the contention of the petitioners, therefore, that on account of the validation clause in the Finance Act, 2011, their payment of tax at compounded rates as per the pre-amended provisions, stood validated, and they could not be fastened with any demand for differential tax. The petitioners would place reliance on the decision of the Supreme Court in Varkisons Engineers v. State of Kerala and another [(2009) 25 VST 1 (SC)] as also the decision of this Court in Baniyas Granite Industries v. Agricultural Income Tax & Commercial Tax Officer [2015 (1) KLT 657]. 9. Per contra, the stand of the Government is that, insofar as the Finance Act, 2011 made the amendments, that it introduced, effective from 01.04.2011, the petitioners, who had opted for payment of tax at compounded rates, could not be heard to complain o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the KVAT Act, either expressly through an order or impliedly through their conduct, there comes into existence a contract from which neither side can resile. This legal position with regard to the binding nature of compounding proceedings has been reiterated in a number of judgments of the Supreme Court, the latest being the decision in Bhima Jewellery v. Assistant Commissioner (Assessment), Kerala & Another [(2014) 71 VST 110 (SC)]. I am of the view, therefore, that there was no justification in the respondents proceeding against the petitioners with a demand for differential tax based on the amended provisions introduced through the Finance Act, 2011. 12. There is yet another aspect to be noticed. The Finance Act, 2011, when enacted, contained a validation clause that made it clear that, the passage of the Finance Act would not affect any action taken in terms of the provisions of the Kerala Finance Bill, 2011 (Bill No.426 of the 12th Kerala Legislative Assembly). In the instant cases, the payment of tax at compounded rates, and the acceptance of the said tax by the respondents, all took place when the provisions of the Kerala Finance Bill, 2011 (Bill No.426 of the 12th K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 (1) KLT 661] where the Division Bench found that when a compounding application had been permitted on the basis of the rate of tax provided in the Kerala Finance Bill, 2009, and the said rate of tax was enhanced by the Kerala Finance Act, 2009 which was enacted subsequently, it could not be said that there was an enhancement of tax prejudicial to the interest of the assessee, since the permitted rate of compounded tax had not existed in the Statute at any point of time. In the said decision it was held that the payment of the tax by the assessee on the basis of the provisions of the Kerala Finance Bill, 2009, could only be viewed as one effected under a mistake of law and hence the enhanced tax consequent to the enactment of the Finance Act could be validly collected from the assessee. The said decision cited by the learned Special Government Pleader is also clearly distinguishable as it did not have to deal with a validation clause such as the one contained in the Kerala Finance Act, 2011, that validated any action that was taken in terms of the provisions of the Kerala Finance Bill, 2011 (Bill No.426 of the 12th Kerala Legislative Assembly). 14. Thus, in any view of the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
