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TMI Blog2022 (4) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... MFL for the years 2006-2007 to 2008-09 as follows: 2006-07 Rs.6,67,722.83 2007-08 Rs.10,26,024.00 2008-09 Rs.11,79,924.00 3. The petitioner applied for payment of tax at compounded rate for the assessment year 2009-2010. The petitioner reckoned tax at compounded rate payable at 115% under Section 7(b), on Rs.11,79,924/- and arrived at Rs.13,56,912/-. The petitioner claims to have satisfied compounded rate tax. The Assessing Officer, on 14.01.2010, fixed the tax at the compounded rate payable by the petitioner at Rs.15,27,007/-. The calculation made by the Assessing Officer helps us in understanding the issue in law between the petitioner and the respondent arising under Section 7(b) of the Act. "a) 10% of 140% or 135% on purchase turnover of liquor. b) 115% of the highest tax paid or payable as conceded in the return or accounts for the last three years proceedings 09-10. In the case section (b) worked out as follows. Sl.No. Year Tax paid or payable Highest tax 115% Monthly return 1. 06-07 Rs.990206.00 2. 07-08 Rs.1154636.00 (as per annual return) 3. 08-09 Rs.1327832.00 4. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover of foreign liquor at 115% of the highest turnover tax paid for, in any of the previous three consecutive years. To understand the petitioner, it may be stated that for the period 2006- 2007 to 2008-09, the petitioner opted and paid tax at compounded rates, based on the highest turnover tax paid for any of the previous consecutive 3 years. The turnover tax payable as conceded in the return or account is not attracted for turnover tax paid at compounded rate is available and shall form the basis for calculation. On the other hand, the case of the respondent is that 115% of the highest turnover tax payable by the dealer on the turnover conceded in the return/accounts or the turnover tax paid for any of the previous consecutive three years constitutes the basis. The interpretation of the petitioner would substantially restrict the expression in Section 7(b) of the KGST Act. The controversy for the decision is whether for the purpose of Section 7(b), the basis is on turnover tax payable as per the turnover conceded in the return/accounts or turnover tax paid. The parties relied on the judgments reported in Hotel Alakananda v The Commercial Tax Officer 1 (2019) 27 KTR 359 (Ker.), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alphonsa does not have persuasive force before the Full Bench in view of the amendment to Section 7 of the KGST Act. Referring to the decision in Commercial Tax Officer v Hotel Breezeland Ltd. (2019(2) KLT 432), it is argued that Breezeland has not interpreted Section 7(b) in the right perspective and the ratio of the said case for the very same reason is inapplicable. It is argued that since the Full Bench ceased the matter, the question viz. whether for the purpose of paying tax at compounded rate as provided under sub section (b) of Section 7, the turnover conceded in the returns/accounts or tax paid whichever is the highest is examined and view stated. 9. Hotel Breezeland is a judgment for the proposition that the dealer who opts for payment of tax under section 7 cannot be said to have been absolved of the liability for all the consequences arising from such an assessment made for the previous three consecutive years which is the reference point for determining the tax payable in the relevant year under clause (b) of section 7. 10. Adv.Mohammed Rafiq prefaces his argument that Section 7 is an option available in law for the payment of tax under Section 7, and is an alternati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Clause 7(b) is provided by the Legislature, which in fact has been contributed only by the Commissioner as per Ext. P2 Circular, which cannot be a substitute to the legal provision. It is also pointed out that, interpretation of a provision in a taxing statute is to be strict and there is no room for any equity principle or that the lacuna, if any, cannot be filled up either by the Executive or by the Court. If there is any doubt or confusion, the benefit has to go to the assessee, submits the learned Counsel Reliance is sought to be placed on the verdict passed by a Constitution Bench of the Apex Court in Commissioner of Sales tax, U.P. vs. Modi Sugar Mills Ltd. AIR 1961 SC 1047 (paragraphs 11 and 13). *** ** * *** 34. As per Section 7(b), the amount has to be worked out at 115% of the highest turnover Tax payable by the assessee, as conceded in the returns OR accounts OR the turnover tax paid for any of the previous consecutive three years, whichever is higher. Going by the above provision there cannot be any doubt that 115 % has to be worked out with reference to the highest turnover tax, in respect of any of the preceding consecutive three years It could be the turno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grammatical peculiarities and interpretations, super relative degree is used in the first limb of the provision, qualifying the same with the word "the". In English language, 'comparative degree' is used only to compare between two instances, whereas super relative degree is to be used when there are more instances than two. For the very same reason, usage of the expression 'the highest Turn Over Tax payable' as conceded by the assessees in the return or the accounts or the turnover tax paid, definitely refers to more than two instances and as such it, evidently is in respect of the three previous consecutive years, i.e., the amount which is the highest in respect of three different consecutive years has to be reckoned for working out the quantum of 115%. The expression whichever is higher is only an instance using 'comparative degree'. It cannot be with reference to the three different instances of the tax conceded in the return or accounts or turnover tax paid (as contended by the assesses) and it is definitely in respect of something else, as noted above." 13. We have heard the learned counsel and the judgments relied on are taken note of. The question of law for considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of tax at compounded rates would be in terms of Section 7. The tax is calculated at the higher rate specified in Sec.7(a) or (b). Tax attracted or applicable is decided between Section 7(a) and 7(b), whichever is higher. Section 7(b) deals with three verifiable details viz. turnover conceded in the (a) returns or (b) accounts or (c) the turnover tax paid. The word 'highest' is a superlative degree attracts the highest from the three verifiable figures. Otherwise, the use of highest for two comparable situations would be incorrect and grammatically unacceptable. The turnover tax paid is referable to tax paid at compounded rates. The argument of Mr Harisankar V.Menon is that the turnover tax payable as per the return or account cannot be treated for any purpose as it refers to 'payable' while turnover tax paid is definite in sense, is untenable. 16. We are afraid the said argument omits to take note of the factors on which the highest turnover tax is determinable. Construed literally, the word highest is comparing all the three situations. The word 'paid' is in the company of words " turnover tax" which means the tax permitted to be paid in the previous year at a compounded ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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