Tax exemption and assessment under Kerala VAT: admitted collection during exempt period sustained liability despite no Rule 10A option.

Exemption under Entry 55(2) of the First Schedule was available only until the unit became mechanised, and the petitioner's admitted collection of tax during the exempt period supported assessment of turnover and tax liability under Section 6(1A)(b) of the Kerala Value Added Tax Act. The absence of an option under Rule 10A did not negate the assessed liability, because it did not erase the admitted collection or the power to assess. Sections 30(3), 67 and 72 governed offence and penalty consequences, but did not displace the separate assessment process. Non-production of books of account and failure to attend personal hearing also justified assessment on the available material.

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Issues: Whether the assessment orders made under Section 6(1A)(b) of the Kerala Value Added Tax Act were liable to be interfered with on the ground that no option had been exercised and that the tax collected during the exemption period could only attract the penal provisions.

Analysis: The exemption under Entry 55(2) of the First Schedule was available only until the unit became mechanised. The petitioner admittedly collected tax during the exempt period and the contention that no option was filed under Rule 10A did not assist the challenge to assessment, because the absence of such option did not erase the admitted collection or the power to assess tax liability. The provisions in Section 30(3), Section 67 and Section 72 dealt with the consequence of the offence and penalty, but did not govern the separate question of assessment of turnover and tax liability. The petitioner did not produce the books of account or attend the personal hearing despite notice, and the assessment was made on the basis of verification and the available material.

Conclusion: The assessment under Section 6(1A)(b) was valid and the challenge failed.

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