Disposed

M/Shotel Prince v. the Commercial Tax Officer

Kerala HC12 Jul 2013WP(C)/22149/2008

Case brief

AI extract

What is this about?

In this writ petition, the petitioner hotel dealer sought relief regarding tax liability arising from a delayed compounding order under the KGST Act. The court directed that balance tax must be paid but exempted the petitioner from paying interest because the delay was not their fault.

What did the court decide?

Petitioner directed to pay balance tax of Rs. 28,80,796/- without interest if paid within two months of this judgment's receipt; otherwise interest applies.

M/Shotel Prince Vs the Commercial Tax Officer — GST and Indirect Tax | Kerala HC (2013)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE B.P.RAY

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FRIDAY, THE 12TH DAY OF JULY 2013/21ST ASHADHA, 1935

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WP(C).No. 22149 of 2008 (J)

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PETITIONER:

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M/S. HOTEL PRINCE M.C. ROAD, KALADI, REPRESENTED BY E.J. JOSE MANAGING PARTNER.

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BY ADVS.DR.K.B.MUHAMED KUTTY (SR.) SRI.K.M.FIROZ

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RESPONDENT:

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THE COMMERCIAL TAX OFFICER ANGAMALI, THRISSUR DISTRICT.

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BY SPECIAL GOVERNMENT PLEADER SRI.S.SUDHISH KUMAR

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 12-07-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 22149 of 2008 (J)

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APPENDIX

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PETITIONER'S EXHIBITS

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EXT.P1. COPY OF THE APPLICATION DATED 26.04.2007 BEFORE THE SALES TAX OFFICER, ANGAMALY.

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EXT.P2. COPY OF THE MONTHLY RETURNS FOR APRIL 2007 TO FEBRUARY 2008.

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EXT.P3. COPY OF THE APPLICATION DATED 17.03.2008 BEFORE THE RESPONDENT AND THE ACKNOWLEDGEMENT RECEIPT.

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EXT.P4. COPY OF THE ACKNOWLEDGEMENT RECEIPT DATED 29.3.2008.

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EXT.P5. COPY OF THE NOTICE NO.24160288/07-08 DATED 23.03.2008.

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EXT.P6. COPY OF THE CHALAN FOR THE PAYMENT OF RS.5,00.,000/- AS PER REGULAR ASSESSMENT.

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EXT.P7. COPY OF THE ORDER NO.24160288/07-08 DATED 29.02.2008.

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EXT.P8. COPY OF THE DEMAND NOTICE NO.24160288/07-08 DATED 29.02.2008 ISSUED BY THE RESPONDENT.

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EXT.P9. COPY OF THE DEMAND NOTICE NO.F (RR) 495/08-09 DATED 2.8.2008 ISSUED BY THE SECOND RESPONDENT.

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RESPONDENT'S EXHIBITS : NIL

/ TRUE COPY /

P.A. TO JUDGE

B.P. Ray, J.

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W.P.(C)No.22149/2008

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====================================

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Dated this the 12^th day of July, 2013.

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JUDGMENT

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Heard the learned senior counsel appearing for the petitioner and the

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learned Senior Government Pleader for Revenue Sri.Sudheesh Kumar.

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The case of the petitioner is that the petitioner is a dealer in foreign liquor, a commodity governed by the Kerala General Sales Tax Act, hereinafter referred to as “the Act” even after the introduction of the VAT system. By virtue of Section 7 of the KGST Act, the petitioner is entitled to pay tax at compounded rate for the supply of liquor in its hotel instead of the turnover tax payable under Section 5 of the said Act. Under Rule 30 of KGST Rules, a dealer has to make an application to the assessing authority for permission to pay tax at the rate specified on or before 1^st day of May of the year to which the option relates. As per Rule 30(2), on receipt of the application, the

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W.P.(C)No.22149/2008 -:2:-

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assessing authority shall conduct necessary enquiries and shall pass

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such order granting or rejecting the application. In this case, the petitioner made an application vide Ext.P1 on 26.4.2007. Since he is not in receipt of any order till 1^st of May, 2007 he went on paying the admitted tax as per regular assessment turnover. On 29.2.2008 an order was served on the petitioner showing that the petitioner has to pay compounded tax. Learned senior counsel for the petitioner vehemently urged that since no order was passed in Ext.P1 in terms of Rule 30(2) of the KGST Rules, the petitioner went on paying tax almost upto the end of the financial year.

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During the course of hearing, I directed the learned Senior Government Pleader to produce the records which shows that an order to pay at the compounding rate notice was despatched on 11.5.2007. Senior counsel seriously disputes the said service of order to pay the tax at the compounding rate. But, however, no order was passed under Rule 30(2) of the said Rules but which was passed in the month of February, 2008. Learned counsel for the petitioner

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W.P.(C)No.22149/2008 -:3:-

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submits that since the authority allowed the petitioner to pay tax at the actual turnover, they are estopped from making an order directing

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the petitioner to pay tax at the compounding rate at the fag end of the financial year. Petitioner was made to believe that his application has not been considered by the authorities. Therefore he is liable to pay tax at the actual turnover.

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Learned Senior Government Pleader has drawn my attention to a Division Bench judgment of this Court in S.T.Rev.77 of 2009 wherein this Court by judgment dated 25.5.2009 held that even though there is belated demand, the assessee is bound to pay the tax at the compounding rate inspite he has filed monthly returns and paid tax in terms of the Rules. The Division Bench further held that a combined reading of the provisions on compounding and the filing of return indicate that an assessee who has opted to pay tax at the compounding scheme is bound to file monthly returns like any other dealer but needs to start paying tax only after order of compounding and demand notice on compounding rate are received by him. In this

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W.P.(C)No.22149/2008 -:4:-

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case, the petitioner has paid the admitted tax on the turnover on monthly basis. Therefore, what is needed is the balance tax payable in pursuance to compounding order. A statement has been filed showing that the petitioner is liable to pay balance amount of `28,80,796/-. In the judgment referred above, this Court has held that since the petitioner is in no way responsible for the delayed passing of compounding order and payment of compounding tax, he cannot be fastened with the liability to pay interest. Following the aforesaid ratio, I direct that the petitioner need not pay any interest on the entire amount, if the amount is paid within two months from the date of receipt of a copy of this judgment. In case of default, the interest payable shall be calculated and recovered from the petitioner. Writ petition is disposed of accordingly.

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B.P. Ray, Judge.

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sl.

M/Shotel Prince v. the Commercial Tax Officer

Case brief

What is this about?

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M/Shotel Prince v. the Commercial Tax Officer

Case brief

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