IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 206 of 2007()
1. STATE OF KERALA.
... Petitioner
Vs
1. M/S.NOBLE INDUSTRIES,
... Respondent
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.K.P.HAREENDRAN
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :26/11/2008
O R D E R
H.L. DATTU, C.J. & A.K. BASHEER, J.
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S.T. Rev. No. 206 of 2007
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Dated this the 26th day of November, 2008
Order
H.L. Dattu, C. J:
The Revenue has called in question the legality or
otherwise of the orders passed by the Kerala Sales Tax Appellate
Tribunal, Additional Bench, Kozhikode in T.A.No.417 of 2004 dated
24th April 2006. By the impugned order the Tribunal has confirmed the
orders passed by the Appellate Assistant Commissioner in
STA.No.46/2004 dated 27/5/2004 and has set aside the orders passed
by the Additional Sales Tax Officer-I, Kuthuparamba dated 9/10/2003.
2. The assessee is engaged in the production of granite
metal using mechanized granite crusher. For the assessment year
2001-02, the assessee had applied for permission to pay the tax at the
compounded rate as provided under section 7 of the Kerala General
Sales Tax Act (the Act, for short) with reference to its mechanized
granite crushing unit, of size 16 X 9.
3. Nowhere in the revision petition it is stated by the
Revenue that the permission sought for by the assessee for payment of
tax at the compounded rate as envisaged under Section 7 of the Act
had been accepted by the assessing authority and was informed to the
assessee.
4. For the relevant assessment year 2001-02 up to 23rd July
2001, the rate of tax payable under Section 7 of the Act, if an assessee is
permitted to pay the tax under the compounded rate, was only a sum of
Rs.30,000/-. By Finance Act 2001, the compounding fee was increased
from Rs.30,000/- to Rs.90,000/- with effect from 24/07/2001. Immediately
after introduction of the Bill, the assessee had filed an application before
the assessing authority, inter alia, requesting him to permit the assessee to
withdraw the application filed by it to pay tax at the compounded rate and
had further requested the assessing authority to complete the assessment for
the year 2001-02 by regular assessment under Section 17 of the Act. The
assessing authority has passed an order for the assessment year 2001-02
dated 9/10/2003 directing the assessee to pay tax at the compounded rate
as envisaged in the Finance Act 2001.
5. Aggrieved by the order so passed by the assessing
authority, the assessee had filed an appeal before the first appellate
authority. The first appellate authority has granted relief to the assessee.
6. The State had carried the matter before the Tribunal, being
aggrieved by the orders passed by the first appellate authority. The Tribunal
by its detailed and well considered order, has rejected the Revenue’s appeal
and has confirmed the orders passed by the first appellate authority. It is the
correctness or otherwise of the order passed by the Tribunal is the subject
matter of this revision petition filed by the State under Section 41 of the
Act.
7. The revenue has framed the following questions of law for
our consideration and decision:
“A. Whether the Appellate Tribunal is right in
law in holding that the assessee is not liable to
pay the enhanced compounded rate of tax
introduced in the midst of the assessment year?
B. Whether the Appellate Authority and the
Tribunal are right in law in ordering
completion of regular assessment permitting the
assessee to retract from the compounding
method of assessment voluntarily opted by the
assessee?
c. Is not an assessee bound to pay the
compounded rate of tax with reference to
the rate prevailing during the currency of
the year? Can an assessee claim avoidance of
the enhanced rate stating that he has already
opted for compounding before the introduction
of the enhancement?”
8. From the facts noticed by the first appellate authority
and the Tribunal, one thing that is evident is that the assessee had only
filed his application before the assessing authority for permission to
pay the tax at the compounded rate as envisaged under Section 7 of the
Act. It is not stated anywhere in the orders passed either by the first
appellate authority or the Tribunal or even in the revision petition filed
by the State, that, permission had been granted by the assessing
authority to pay the tax at the compounded rate. Even before the
assessment could be completed, since there was no permission granted
by the assessing authority for payment of the tax at the compounded rate,
the assesee has withdrawn his application filed for payment of tax at the
compounded rate and had requested the assessing authority to complete
the assessment for the assessment year 2001-02 by way of regular
assessment as envisaged under Section 17 of the Act. For the reasons
best known, the assessing authority has rejected the request of
the assessee. The error committed by the assessing authority is now
rectified by the first appellate authority and that order has been confirmed
by the Tribunal.
9. In the instant case, the assessee has not withdrawn his earlier
request for payment of tax at the compounded rate as provided under
Section 7 of the Act. It is no doubt true, that, he had filed an application to
pay the tax at the compounded rate and it appears to us that the said
application was ever considered by the assessing authority and a formal
order as required under the Rules was passed by the assessing authority, and
therefore, the assessee was entitled to withdraw his earlier application, since
no order was passed on the request made by the assessee. Therefore, it is
not a case where the assessing authority has accepted the request of the
assessee for payment of tax at the compounded rate and later it was
withdrawn, but a case where orders were not passed on the application filed
by the assessee for payment of tax at the compounded rate. Therefore, in
the present case, we need not have to decide whether the assessee can
withdraw his application which has already culminated into order, in view
of the orders passed by the assessing authority. This issue, we
will keep it open, to be agitated in an appropriate proceedings. In the
peculiar facts and circumstances of the case, we are of the opinion that
neither the first appellate authority nor the Tribunal has committed any error
which would call for our interference in a petition under Section 41 of the
Act. Therefore while rejecting the revision petition, we answer the question
of law raised by the Revenue against the Revenue and in favour of the
assessee.
Ordered accordingly.
H.L. DATTU
Chief Justice
A.K. BASHEER
Judge
an/dk.