2017 (8) TMI 761 - HC - VAT and Sales Tax

Court rejects metal crushing dealer's petition challenging compounding application rejection under KVAT Act

The court dismissed the writ petition challenging the rejection of a compounding application under Section 8 of the KVAT Act. The petitioner, a metal ... Rejection of Compounding application - the petitioner has not remitted tax along with the compounding application - for invoking the benefit under second proviso to Section 16(2), whether the petitioner will have to pay tax or not? - Held that: - proviso to Section 16(2) is a measure to entertain a belated application under Section 8. It is in that context, to enable a dealer to avail the benefit of Section 16(2), a condition was imposed that the dealer shall pay tax under Section 8 along with interest due thereon. In that view of the matter, since the petitioner had not paid tax along with interest at the time of filing the application, the petitioner is not entitled for the benefit - petition dismissed - decided against petitioner. Issues:1. Rejection of application for compounding under Section 8 of the Kerala Value Added Tax Act, 2003.2. Interpretation of the second proviso to Section 16(2) of the KVAT Act.3. Requirement of payment of tax for invoking the benefit under the second proviso to Section 16(2).Analysis:1. The petitioner, a registered dealer in metal crushing, challenged the rejection of the compounding application under Section 8 of the KVAT Act. The penalty was imposed for the year 2007-2008 due to the absence of accounts during inspection. The petitioner sought permission to exercise the compounding option, which was rejected for being filed late. An appeal was filed, and the appellate authority directed the assessing authority to consider the compounding option based on an amendment effective from 1.4.2009. This amendment allowed dealers to exercise the compounding option even if it was belated, as per the proviso to Section 16(2) of the KVAT Act.2. The dispute centered on the second proviso to Section 16(2) of the KVAT Act. The assessing authority rejected the compounding application as the tax was not remitted along with the application. The crucial question was whether the petitioner needed to pay tax to avail the benefit under the second proviso to Section 16(2.3. The impugned order detailed the tax liability of the petitioner under Section 8 of the KVAT Act, which the petitioner had not paid along with the application. The petitioner argued that tax payment was only required upon issuance of a provisional order in Form 4D, which had not occurred. However, the court held that the requirement to pay tax along with interest under Section 8 was a condition to entertain a belated application. Since the petitioner had not paid the tax and interest at the time of filing, the court concluded that the petitioner was not entitled to the benefit. Consequently, the court dismissed the writ petition, finding no grounds for interference.This comprehensive analysis of the judgment highlights the key issues, interpretations, and conclusions reached by the court in the case.