P.D. George v. Assistant Commissioner, KVAT Special Circle, Commercial Taxes Department, Kottayam; Deputy Commissioner (Appeals), Commercial Taxes Department, Ernakulam; Secretary, Kerala Value Added Tax Appellate Tribunal, Ernakulam; Commissioner, Commercial Taxes Department, Thiruvananthapuram; State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **WEDNESDAY, THE 11TH DAY OF DECEMBER 2013/20TH AGRAHAYANA, 1935** ## **OT.Rev.No. 60 of 2013 ()** **------------------------T.A.(VAT) NO.1640/2011 DATED 15/11/2012 OF KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM.** **.......** ## **REVISION PETITIONER/APPELLANT IN T.A.:** **---------------------------------------------------------------** **P.D. GEORGE, MG. PARTNER, M/S.APPOLLO JEWELLERY, CENTRAL JUNCTION, KOTTAYAM.** **BY ADV. SRI.C.K.SREEJITH.** **RESPONDENTS:** **------------------------** **1. ASST. COMMISSIONER, KVAT SPECIAL CIRCLE, COMMERCIAL TAXES DEPARTMENT, KOTTAYAM.** ## **2. DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES DEPARTMENT, ERNAKULAM.** ## **3. SECRETARY,** **KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM.** **4. COMMISSIONER, COMMERCIAL TAXES DEPARTMENT, THIRUVANANTHAPURAM.** **5. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.** **BY GOVT. PLEADER MR.BOBBY JOHN PUILIKKAPARAMBIL.** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 11-12-2013, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **rs.** ## **OT.Rev.No. 60 of 2013** ## **APPENDIX** ## **PETITIONER'S ANNEXURES:-** - **ANNEXURE A1 COPY OF THE TRIBUNAL ORDER IN TA(VAT) NO.1640 & 1641/2011 DATED 15/11/2012 (COMMON ORDER) ISSUED FOR 2009-10 AND 2010-11.** - **ANNEXURE A2 COPY OF THE KVAT REGISTRATION CERTIFICATE NO.32050221952 DATED 14/05/2007 ISSUED BY THE 1ST RESPONDENT.** - **ANNEXURE A3 COPY OF THE LETTER DATED 12/10/2007 INFORMING STOPPAGE OF SHOW ROOM AT YMCA BUILDINGS, KOTTAYAM WITH EFFECT FROM 12/10/2007.** - **ANNEXURE A4 COPY OF THE APPLICATION FOR PERMISSION TO PAY TAX U/S. 8(F)(I) IN FORM NO.1D DATED 15/06/2009 FILED BEFORE THE 1ST RESPONDENT.** - **ANNEXURE A5 COPY OF THE LETTER DATED 08/06/2009 FILED ALONG WITH ANNEXUREA3 BEFORE THE 1ST RESPONDENT.** - **ANNEXURE A6 COPY OF THE PERMISSION U/S.8(F)(I) FOR 2009-10 DATED 13/07/2009 ISSUED BY THE 1ST RESPONDENT.** - **ANNEXURE A7 COPY OF THE PETITION DATED 20/08/2009 FILED BY THE PETITIONER BEFORE THE HON'BLE MINISTER FOR FINANCE.** - **ANNEXURE A8 COPY OF THE RELEVANT PAGE OF THE BUDGET SPEECH FOR 2010-11 MADE BY THE HON'BLE MINISTER FOR FINANCE GOVERNMENT OF KERALA, TRIVANDRUM ON 05/03/2010.** - **ANNEXURE A9 COPY OF THE RELEVANT PORTION OF SEC-8(F)(I) OF THE KVAT ACT-03 OF THE KERALA FINANCE BILL-2010.** - **ANNEXURE A10 COPY OF THE JUDGMENT IN WP(C).NO. 8433/2010 DATED 17/05/2010 OF THE HON'BLE HIGH COURT OF KERALA.** - **ANNEXURE A11 COPY OF THE ORDER NO.C1-36955/09/CT DATED 07/08/2010 OF THE 4TH RESPONDENT.** - **ANNEXURE A12 COPY OF THE APPLICATION FOR PERMISSION TO PAY TAX U/S.8(F) FOR 2010-11 IN FORM NO.1D DATED 25/05/2010 FILED BEFORE THE 1ST RESPONDENT.** - **ANNEXURE A13 COPY OF THE LETTER DATED 24/05/2010 FILED BEFORE THE 1ST RESPONDENT ALONG WITH APPLICATION IN FORM 1D DATED 25/05/2010.** ## **OT.Rev.No. 60 of 2013** **ANNEXURE A14 COPY OF THE APPLICATION FOR PERMISSION U/S 8(F) FOR 2010-11 DATED 22/02/2011 ALONG WITH DEMAND NOTICE CONTAINS A DIRECTION IN THE FORM TO NOTE TO REVISE THE RETURNS FROM APRIL 2010 TO TILL DATE.** **ANNEXURE A15 COPY OF THE APPEAL MEMO FOR 2009-10 DATED 10/11/2010 FILED BEFORE THE 2ND RESPONDENT. ANNEXURE A16 COPY OF THE APPEAL MEMORANDUM FOR 2010-11 DATED 07/03/2011 FILED BEFORE THE 2ND RESPONDENT.** **ANNEXURE A17 COPY OF THE APPELLATE ORDER NO.KVATA NO.3660/2010 & 904/2011 DATED 05/09/2011 FOR 2009-10 AND 2010-11 ISSUED BY THE 2ND RESPONDENT.** **ANNEXURE A18 COPY OF THE 2ND APPEAL DATED 22/12/2011 FILED BEFORE THE 3RD RESPONDENT FOR THE YEAR 2009-10. ANNEXURE A19 COPY OF THE 2ND APPEAL DATED 22/12/2011 FILED BEFORE THE 3RD RESPONDENT FOR 2010-11.** **RESPONDENT'S ANNEXURES:NIL.** ## **//TRUE COPY//** ## **P.A. TO JUDGE** **rs.** ## **MANJULA CHELLUR,C.J. & A.M.SHAFFIQUE, J.** **= = = = = = = = = = = = = = = = O.T.R. No.60 of 2013 = = = = = = = = = = = = = = = = = = = = = Dated this the 11th day of December, 2013** ## **JUDGMENT** ## **Manjula Chellur,CJ** Revision Petitioner admittedly is a dealer in gold. Apart from having Head Office of his business at YMCA Building, Kottayam, he also had branch at Thanikkal Central Junction, Kottayam. According to him, with effect from 12.10.2007 the Head Office business was closed and was duly intimated to the Assessing Authority. Admittedly, he was paying tax for the years 2003 onwards till 2008-09. 2. For the year 2009-10, he opted for payment of tax at compounding rate for the first time as provided under Section 8 (f)(i) of the Kerala Value Added Tax Act and Rules( the Act for short). According to the petitioner, though he specifically asked for compounding pertaining to his branch office business at Central Junction, in the light of closing the business at Head O.T.R.No.60 of 2013 **2** Office YMCA Building, the Authority granted compounding tax, taking into account previous years and compounded at 150% with reference to tax paid for the year 2007-08. 3. According to the revision petitioner, in the light of closing down of one shop, there is no justification for the authorities to take into account the tax paid for the year 2007-08 which included turnover of two shops that is, Head Office and the branch as well. Aggrieved by the same, the appeals were filed before the First Appellate Authority which ended in dismissal and again the petitioner approached the Tribunal in a second appeal, which also came to be dismissed. Aggrieved by the same, the petitioner is before us in the above revision. 4. As against this, learned Government Pleader places reliance on the latest decision of this Court in **Fashion Jewellery vs Commercial Tax Officer** (2013(4) KLT 76) to bring to our notice that provisions under Section 8(f)(i) does not provide for classification of establishment of assessee, whether having one branch or two branches, for the purpose of determining total turnover to determine annual turnover for the purpose of tax. He specifically places reliance on paragraphs 2 and 3 which read as under:- O.T.R.No.60 of 2013 **3** “2. The liability of a dealer to pay tax under the KVAT Act is in terms of S.6, which is the charging provision. The optional system of payment of tax at compounded rates is permitted in terms of S.8. S.8(f)(i) relates to dealers in ornaments or wares or articles of gold, silver or platinum group metals etc. Clauses (a) to (d) under that provision clearly show that the compounded tax has to be determined on the basis of the annual turnover of the assessee. Therefore, those provisions do not admit any classification of the establishment of the assessee into branches, for the purpose of determining the total turnover to determine the annual turnover, for the purpose of such determination. 3. Explanation 3 under S.8(f)(i) is also categoric to the effect that dealers opting for payment of tax under that clause shall pay compounded tax in respect of their branches existing in the year ( to which the option relates). While that Explanation excludes any dissection of the establishment for payment of tax, the principle that the compounded tax has to be determined on the basis of annual turnover remains the same. Therefore, there cannot be any splitting up or proportionate reduction of the annual turnover of the previous year to determine the compounded tax that could be paid in terms of that provision.” 5. Reading of the above paragraphs clearly indicates, to determine the rate of compounding tax that can be paid in terms of the provisions, there cannot be splitting up or bifurcation to arrive at proportionate reduction of annual turnover of the previous years. O.T.R.No.60 of 2013 **4** 6. In the present case, though the petitioner has indicated that one of the shops was closed, according to the revision petitioner's counsel, the request could have been rejected and he must have been asked for regular assessment instead of compounding. Therefore, the Assessing Authority was not justified in proceeding with the compounding, if it was possible for bifurcating the previous year's turnover and reduced proportionately the tax to be paid. 7. Both the revision petitioner's counsel and Government Pleader place reliance on sub-rule 2 of Rule 11, procedure to be followed while considering option of the dealer for payment of compounding tax. Sub-rule 2 of Rule 11 says, if the application is not in order, the assessing authority shall reject the application, for reasons to be recorded in writing, and after giving the dealer an opportunity of being heard. 8. As a matter of fact, sub-rule 2 indicates how the permission could be granted. The question is, if the request of the revision petitioner could not be entertained, can it be considered as an application not in order? Once the application is accepted and the Assessing Authority completed the O.T.R.No.60 of 2013 **5** assessment, the question of either hearing the revision petitioner or rejecting the application seeking compounding would arise. Therefore, the reason brought out in the revision petition that the Assessing Authority if could not bifurcate the turnover of 2007-08 for the purpose of arriving at the proportionate tax, ought to have rejected as considering the application not in order cannot be accepted and the Appellate authority after placing reliance on **Zodiac Regency v. Commissioner of Commercial Taxes and another** [(2012) 20 KTR 382] was justified in saying, once the dealer had opted out and paid tax under the Scheme of compounding, can never be allowed to revert back. Even for the other reasons discussed above, we are of the opinion, there is no justification in any of the grounds raised in the revision petition. Accordingly, revision petition is dismissed. ## **MANJULA CHELLUR, CHIEF JUSTICE** ## **A.M.SHAFFIQUE, JUDGE.** sj 11/12