TMI Blog2023 (12) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law. It is also well settled that even when grounds on which the jurisdiction can be invoked by the High Court are present, it should be invoked sparingly and only when there is something which goes to the route of the matter and it would be injustice to the petitioner to relegate to alternate forum. From the facts, as narrated in the show cause notice and the order impugned, it is evident that the petitioner/assessee has not made true and correct disclosure, and there has been a pattern of untrue and incorrect returns for all the quarters for the year 2013-14 suppressing substantial volume of taxable contract receipts evading the tax. Therefore, there is little substance in the submission of the learned counsel for the petitioner that there was no deliberate suppression of the contract receipts as recorded in the impugned order - The assessment proceedings have also been completed under Section 25 of the Act for the year 2013- 2014 and a demand of Rs. 5,53,85,288/- has been issued against the petitioner. The petitioner has filed an appeal against the said order before the first appellate authority and paid 20% of the tax amount. The impugned order passed by responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, in the absence of books of accounts and other relevant documents, the documents and material recovered and data collected from the petitioner's business premises were processed, and it was noticed that there was suppression of huge volume of turn over and tax evasion for the year 2013-2014, and accordingly a notice under Section 67(1) of the KVAT Act proposing to impose penalty of Rs. 14,61,80260/- was issued to the petitioner/dealer. 3. The petitioner had filed a statement which reflected total contract receipts of Rs. 1114088582/- for the year 2013- 2014. However, on verification of the annual return, it was noticed that the petitioner/dealer had conceded a contract receipt of Rs. 441995458/- only for the year 2013-2014 and had claimed deductions of Rs. 670808933/- for the year 2013-2014 without any supporting evidence. The said deductions were not allowed in the absence of supporting evidence, and it was held that the petitioner/dealer had supressed the actual receipts with a view to evade payment of tax. It was also noticed that Rule 24B required that every contractor, developer or builder who undertook construction or development of flats, apartments or villas shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. It was also stated that the variance was not considered as 'Suppressed Turnover'. The next contention raised by the petitioner/dealer was that they were following the method of accounting as per AS-7, i.e., percentage completion method for recognition of income/turnover for their profit and loss account. Any receipt for the project which had not attained 15% progress would be deducted from the receipts and same would be accounted as receipts on exceeding 15% of the project, i.e. when the project advances above 15% completion, the whole amount is added to the turnover and VAT would be paid. Thus, there was no portion of any turnover which escaped assessment during the life time of the project, and it was stated that there was no suppression and it was only a timing difference. Additionally, it was said that some initial bookings also would get cancelled and the advance paid for such booking would be like a deposit only which would be refunded in full. In normal case, it would be the liability and the same was not therefore, included in the taxable receipts. 7. With a view to settling and putting an end to the proceedings initiated against the petitioner/dealer and to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler would not be entitled for any concession provided under the Act. This order is under challenge in the present Writ Petition. 11. Sri Mayankutty Mather, learned counsel for the petitioner has submitted that the petitioner/assessee had effected the tax at the compounding rate of 3% under Section 8 of the KVAT Act and paid the maximum penalty of Rs. 8 lakhs, the proceedings under Section 67(1) of the Kerala Value Added Tax Act, 2003 ought not have been initiated. He, therefore, submits that respondent No. 1 did not have the jurisdiction to initiate the penalty proceedings to pass the impugned order imposing the penalty of Rs. 6,06,16,380/- and demand of Rs. 5,18,07,197/- after adjusting the compounding fee and tax of Rs. 8,00,000/- and Rs. 80,09,183/- respectively is illegal and liable to be quashed. 12. The next contention of the learned counsel for the petitioner is that the petitioner was not afforded an opportunity of hearing and, therefore, the impugned order passed is in violation of the principles of natural justice. Therefore, this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, should interfere with the impugned order and quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. It is further submitted that the impugned order itself would disclose that the petitioner was afforded an opportunity to produce the Books of Account and documentary evidence and filed their objection to the proposal for imposing the penalty of Rs. 14,61,80,260/-. As there had been a pattern by the petitioner of tax suppression of substantial volume of taxable contract receipts on all the quarters for the year 2013-2014, the compounding application has not been granted and the penalty proceedings have been finalised in the impugned order. 15. The petitioner was also given an opportunity of being heard in the matter. The said notice was served on the petitioner/dealer on 14.10.2014. In response to the said notice, the petitioner requested further time for producing documentary evidence vide letter dated 27th October 2014. The Managing Director of the petitioner appeared on 27.11.2014 and produced documents as mentioned in the impugned order. The petitioner also filed objection by way of reply dated 27.11.2014. 16. I have considered the submissions. 17. In the present Writ Petition, the only question which is required to be considered is whether the order of penalty can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded rates.- Notwithstanding anything contained in Section 6,- (a)(i) any works contractor not being a dealer registered under the provisions of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), and who is not an importer may, at his option, instead of paying tax in accordance with the provisions of the said section, pay tax at three per cent of the whole contract amount; (ii) any works contractor not falling under clause (i) above may, at his option, instead of paying tax in accordance with the provisions of the said section, shall pay tax at three per cent of the contract amount after deducting the purchase value of goods excluding freight and gross profit element consigned into the State on stock transfer or purchased from outside the State and for the purchase value of goods to deducted shall pay tax at the scheduled rate applicable to such goods. Provided that notwithstanding anything contained in sub-clause (ii) above, the compounded tax payable by any works contractor under this clause in respect of works contracts awarded by Government of Kerala, Kerala Water Authority or Local Authorities shall be four per cent of the whole contract amount: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis relating to the years in which such payment of tax have been made. 22. Thus, a dealer who opts for making payment at compounded rate under Section 8 is required to file quarterly returns in Form -10, 10A, 10B and 10F for the quarter ending 30th June, 31st September and 31st March to the Assessing authority in respect of a contractor/promotor/developer of flats, apartments/ villas, declaration is required to be filed in Form-49 along with returns disclosing information as required under the Rule 24-B. The permission to pay tax under the compounding scheme is issued in Form 1B available along with the Rules. The form obligates the assessee to declare the Works Order Number, date, description of work, the name of the awarder, the amount of the contract and the period of the contract in explicit terms. There is no permission which has been granted to the petitioner after issuance of the notice dated 14th October 2014, Ext.P7 for remitting the tax at the compounding rate. Therefore, the contention of the learned counsel for the petitioner that once the permission was granted to make payment on compounding rate with maximum penalty, the respondent could not have proceeded wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate proceedings and have different and distinct scope. 26. From the facts, as narrated in the show cause notice and the order impugned, it is evident that the petitioner/assessee has not made true and correct disclosure, and there has been a pattern of untrue and incorrect returns for all the quarters for the year 2013-14 suppressing substantial volume of taxable contract receipts evading the tax. Therefore, there is little substance in the submission of the learned counsel for the petitioner that there was no deliberate suppression of the contract receipts as recorded in the impugned order. 27. The assessment proceedings have also been completed under Section 25 of the Act for the year 2013- 2014 and a demand of Rs. 5,53,85,288/- has been issued against the petitioner. The petitioner has filed an appeal against the said order before the first appellate authority and paid 20% of the tax amount. 28. Considering the aforesaid facts, I am of the considered view that the impugned order passed by respondent No. 1 is neither without jurisdiction nor in violation of the principles of natural justice as alleged and therefore, this Court would not like to exercise its jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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